We help you organize your assets to reduce your current personal tax liability and limit your families inheritance tax liability on succession.
Successfully arranging your assets to
maximize their potential before and after death can be complex.
Therefore we recommend you arrange an appointment to discuss your requirements with one of our private client managers as this subject is very personal and no two clients are the same.
offshore trust, asset
protection, reduce tax, advisor planning wealth, capital growth, guaranteed
asset protection
About trusts
Although as old as the British legal system itself, the trust and more particularly the offshore trust, has become an integral part of wealth and tax planning around the globe. What started as a simple arrangement between a wealthy landowner (the Settlor) a trusted friend or relative (the Trustee) and the landowner's dependants (the Beneficiaries) has now become a sophisticated planning tool governed by modern laws tailored to meet the needs of settlors and beneficiaries employing professional trustees to protect their family or corporate wealth.
offshore trust, asset
protection, reduce tax, advisor planning wealth, capital growth, guaranteed
asset protection
You should seriously consider the use of a trust if you are concerned about the protection of your assets from financial, fiscal or political risk.
A trust is one of the most secure and flexible financial planning vehicles available, particularly when established offshore. Subject to the tax laws applicable to the settlor's estate, a trust may enable a settlor to make long term plans for the preservation or distribution of wealth during or after their lifetime in precisely the manner required. By transferring property into trust settlors can ensure that the management of that property will not be interrupted on their death by probate or other formalities, but continue in accordance with the trust instrument and their letter of wishes.
offshore trust, asset
protection, reduce tax, advisor planning wealth, capital growth, guaranteed
asset protection
A trust may also be an effective tax-planning tool, for example in respect of estate or inheritance taxes on assets situated outside the country of the settlor's nationality. It may also provide complete confidentiality and protect assets from the imposition of exchange controls or similar political measures. A trust may also be used as a means of protecting assets from the risk of unforeseen financial difficulty.
All types of assets, from personal properties such as the family home to more complicated investments, may be included in a trust structure and the use of trusts is not confined to individuals. International corporations also use trusts as an important part of their asset management strategy. In broad terms, trusts may be used to:
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Reduce tax
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Protect assets
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Arrange family matters
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Ensure confidentiality
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Taxation
By establishing certain types of trusts, individuals may remove assets from their estate thus reducing their taxable wealth, limiting exposure to income tax, capital gains tax, wealth tax, gift tax and inheritance tax.
offshore trust, asset
protection, reduce tax, advisor planning wealth, capital growth, guaranteed
asset protection
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When using trusts for tax purposes, settlors must consider the tax rules that apply to themselves, the beneficiaries and also the assets. Care must also be taken to consider the implications of transferring assets into the trust and how payments to the beneficiaries will ultimately be treated.
Some specific uses of trusts include:
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When relocating, wealthy individuals may settle assets into a trust based in a low tax jurisdiction prior to taking up resident in a higher tax location.
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Settlement of shares with long term growth potential at a time when they have a low value may allow capital growth in a tax-free structure.
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Removal of assets from an estate to avoid wealth or inheritance taxes.
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Reduction of the tax costs of providing remuneration for expatriate executives.
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Continuity of ownership in the long term for family companies.
Having worked so hard to build a valuable business or asset base, it is everyone's right to try to preserve that wealth for themselves and their family. A trustee resident in another jurisdiction may act as guardian of a family's wealth thus offering a greater level of protection over those assets. This may be of particular interest to settlors living in politically sensitive areas where their wealth could be at risk. Assets in a trust may be protected from the imposition of exchange controls or other government regulations and once removed from an estate, free the settlor from the threat of confiscation or devaluation.
By passing legal ownership of trust property to trustees, the name of the settlor is removed from title deeds and other documents of ownership and thus from the unwanted attention of third parties.
Put simply, a trust offers settlors the opportunity of divesting their assets so that in the event of business or personal disaster, the financial security of the family can be protected. However, a trust cannot be established to defeat or defraud creditors but, provided the settlor is solvent and expects to remain so, it is perfectly reasonable for a wealthy individual to hedge against the unexpected by establishing a trust.
The law in some countries dictates to whom a person may leave their assets on death and in what proportions these may be left. If this is likely to be contrary to an individual's wishes, they may consider transferring assets into a trust located in a common law jurisdiction such as Jersey, which accepts that a trust is valid, even if forced heirship issues may arise in the settlor's country of nationality.
offshore trust, asset
protection, reduce tax, advisor planning wealth, capital growth, guaranteed
asset protection
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To highlight some of the key characteristics of a trust we have included below a selection of the questions we are often asked to answer when discussing trusts with potential settlors and their families.
I) Can I still be involved with investment decisions?
Yes you can, on an advisory or consultancy basis. The trustees must always be seen to take decisions in the best interest of the beneficiaries but it is only natural that they should consult with the settlor or some other appointed person in this regard. Your letter of wishes can play a crucial role in guiding the trustees on investment strategy.
II) What if I, or one of my family needs funds from the trust?
The trustees will probably have a discretionary power to distribute accumulated income or capital to the beneficiaries. Provided the trustees consider all the beneficiaries' circumstances, they can usually assist in any way possible. Here again, your letter of wishes plays an important part in making sure that the trust operates in the best possible way for all your family.
III) How safe are the assets?
The assets in your trust are not at risk from the creditors of the trustee as property held as trustee for any other person is excluded from the property distributable to the creditors of a bankrupt.
IV) What happens if I die?
A trust is intended to continue for a specified period, which may extend well beyond the lifetime of the settlor. Your corporate trustee will ensure that your trust is always managed in accordance with the trust instrument and the most recent letter of wishes issued by the settlor or the person nominated as successor by the settlor and always in the best interest of the beneficiaries. Your wealth may also be protected from the tax and other costs that arise on death by being held on trust.
V) Why should I use a professional trustee?
The standard of care that the law imposes on a professional trustee is higher than an individual or lay trustee. This feature offers settlors and beneficiaries the confidence that the trust will be administered properly at all times. In addition, by appointing a corporate trustee, settlors can be sure of the continuity they require; the availability of the trustee not depending on any given individual.
The companies we recommend respects and understand that your decision to establish a trust will not be taken lightly. We hope that the information contained in this paper has explained what a trust is and also how the settlor can remain closely involved with its administration.
Hamiltons Financial Services have a number of offshore trust companies we can recommend so should you wish to discuss the idea of a trust personally, please do not hesitate to contact us simply filling in our enquiry form.
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