subject: Offshore Trusts: An Asset Security Tool [print this page] The use of offshore trusts and offshore bank accounts proves to be an excellent way for U.S. citizens to legally and securely protect their assets from court seizures and civil and federal litigation. Offshore trusts offer an individual a fair degree of personal confidentiality, privacy, and asset protection from claimants such as an ex-spouse or business partner. If properly structured, offshore bank accounts can offer degrees of financial protection from potential future claims as well. There are popular countries where offshore trusts are most prevalent. They are as follows:
The Bahamas
Belize
Cayman Islands
Cook Islands
Cyprus
Gibraltar
Mauritius
Turks & Caicos
Most of these offshore jurisdictions offer a product that is called an offshore asset protection trust.
Offshore Asset Protection Trusts
An offshore asset protection trust is a term which covers a wide field of legal structures. It is also known as a foreign offshore asset protection trust. Some definitions of an offshore asset protection trust include the following:
Any form of trust which provides for funds to be held on a discretionary basis falls within the scope of an offshore asset protection trust.
The use of an offshore asset protection trust can be a legal tool to secure and protect assets such as real estate, bank accounts, company assets, annuities, dividends, stock portfolios, furniture, artwork, precious jewels, and estate valuables.
An offshore asset protection trust can be used to protect assets from court seizure. It is used to remove legal ownership from the debtor in spite of control residing with the debtor.
Offshore asset protection trusts are not tax shelters. The United States government makes it clear that all U.S. citizens must report offshore, foreign income and comply with tax requests
Depending upon the circumstances and the advice of legal counsel, many U.S. asset protection specialists favor structuring offshore or foreign trusts in a way that they are taxed as domestic grantor trusts.
Structuring Offshore Trusts
Protection from Creditors
Any form of an offshore asset protection trust, whether it is domestic or an offshore product, can be used to protect assets from personal or professional litigation and/or from creditor attachments.
Protection from Lawsuits
Whether they have been established in an offshore jurisdiction or not, most trust assets of a U.S. citizen can stay in America. The assets usually remain under the indirect control of the settlor (the person establishing the trust).
Such a trust will usually be irrevocable for a set term. During that period the settlor will not be a direct beneficiary of the trust.
If the trust is created properly, any creditor or anyone suing the settlor will be unable to reach or claim the assets within the trust. If the offshore asset protection trust has been structured as an irrevocable trust for a set term, at the end of the term, provided there is no current or ongoing threat, the assets can be returned to the control and direct ownership of the settlor.
Tip to Remember
There are numerous companies that offer global solutions for tax reduction. So it is important to know how offshore asset protection trusts can potentially benefit U.S. citizens.
