KHCS | UK & International Corporate Consultancy
Trusts
 
 

Offshore Trusts

Managing your personal wealth effectively requires constant evaluation and sophisticated solutions. At KHCS our specialist private client team creates and administer services that will provide for extended families, manage multiple and complex cross-border assets, and together with our specialist professional partners, navigate tax and regulatory issues and plan for estate and business succession.

We have one common goal: to create and maintain solutions that protect and enhance our clients’ assets. We can establish and administer wealth planning structures and provide full trustee, foundation and corporate management services.

As an independent third party, we work closely with accountants, lawyers, financial advisors, tax consultants and other financial service providers to alleviate complications arising over corporate governance or local regulator restrictions.


What is an Offshore Trust?

An offshore trust is primarily aimed at UK non domiciled persons. It is very much like a traditional onshore trust, except that it has the benefit of being held at an offshore financial centre. Just like a normal trust, offshore asset protection is a great method of protecting assets. It is an arrangement entered into by a person (or group) known as the “Trustee,” and a distinct person or group of people known as the “Settlor,” by which provisions are made in a binding, legal form known as the “Deed of Trust”. Overseas trusts are formed in order to hold the title to assets, funds and / or to property and to manage these assets in accordance with the deed of trust. These then provide offshore trust benefits and distributions to a person or group of persons known as the “Beneficiaries” of the trust funds. An offshore trust has the additional benefit of far greater offshore asset protection than the onshore variety.

The trustee and / or the offshore trust company entrusted with the management of the trust are bound by a fiduciary duty to uphold the agreement, and they agree to the requirements set out by the deed of trust. Attempts at describing trusts will often liken them to a corporation or foundation, they are unlike either; they are a trusting arrangement, which is supported by a written agreement that is binding in order to provide for the beneficiaries.

Offshore trusts may be created for a variety of reasons and many of our clients are now using them to ensure financial security in retirement and to provide funding for school fees and university fees, for instance.

Once you decide to setup an offshore trust to protect your assets, the type of trust must be selected, the duration of the trust, and important decisions on defining details must be made. This includes deciding whether or not the trust is revocable, whether or not the trust will be discretionary, and to specify the rights, duties, obligations, and expectations of the trustee.

With regard to revocable or irrevocable offshore trusts, they can either be revoked at any time with the provisions for this made clear by the Settlor, or they can have a pre-determined duration with no allowances for revocability, concluding only when the terms of its creation as specified in the deed of trust are fulfilled.

By contrast, a discretionary offshore asset protection trust can fall under either category and is defined as a trust with a lot of in-built flexibility with regards to how the trustee handles distributions to beneficiaries and even provides the trustee with rights to appoint or add beneficiaries. This relinquishes a lot of authority over the offshore trust to a trustee, however, and highlights the importance of the careful selection of a competent, well-reputed trustee or offshore trust holding company with good references, a worthy reputation, and the experience necessary to successfully and faithfully fulfil and honour the terms of the trust.


Offshore Trust Benefits

Quite simply, offshore trusts provide complete and absolute confidentiality. Assets and title to property, for example, are put into the trust for the trustee to manage. This gives absolute protection from liability. This is how offshore asset protection can be cast in stone. Whilst the legal title passes to the trustee, the intent of the trust is to provide for the beneficiaries. These beneficiaries, hold very strong rights with respect to the interests in the trust and most jurisdictions recognise that the intent is to provide the defined benefits for the these beneficiaries and, in court cases, rule favourably in their direction when questions as to the management of the trust arise.

Because these offshore trusts are almost always found in offshore tax havens or in low-regulation offshore jurisdictions with reputations for offshore asset protection and superb confidentiality, the offshore trust also benefits from these features. Assets managed by overseas trusts are, in the main, free from tax which is applicable in a settlor’s home country or jurisdiction, such as the UK. If the trust is formed to provide for the benefit of the children or heirs of the settlor, for instance, the offshore trust may provide a vehicle to protect against intense inheritance scrutiny and taxation. Moreover, offshore trusts offer unparalleled confidentiality when formed in low regulation offshore financial centres plus increased protection from the threats of civil litigation and liability, and even from divorce or business dissolutions. It is extremely difficult, except in situations of accusations of a severe criminal offence, for an outside entity to pierce the confidentiality shield surrounding an offshore trust in most offshore jurisdictions.


Where to form an Offshore Trust

Offshore trusts are often formed in offshore financial centres or tax havens which have minimal regulation and low taxes and which have a proven reputation for successful management and execution of offshore asset protection trusts and offshore trust funds. KHCS specialises particularly in the BVI. However, it is not absolutely necessary for the offshore location to be a tax haven. There are many successful offshore trust formation jurisdictions and countries which are not tax havens and yet have superb confidentiality and substantial asset protection shields. One common denominator is that these jurisdictions base their trust regulations and statutes on English law. Other European jurisdictions such as Luxembourg, Malta, Switzerland, offer successful trust administration and have adapted their statutes in order to conform with the proper trust administration models based upon English legislation.


Other Offshore Trust Considerations

Before forming an Offshore Asset Protection Trust, it is essential to realistically assess the goals and intent of a potential settlor. Hence, research and advice from experienced and knowledgeable offshore trust agents is vital.

Forming an offshore trust ensures substantial protection for assets from scrutiny, tax and civil legislation. It should be apparent that while the cost of forming and maintaining an offshore trust may be considered substantial, the establishment of such an asset protection entity will provide for peace of mind for those looking to protect their substantial assets or provide for their heirs / offspring in the longer term.


Tax Planning

We can set up trusts, foundations and managed companies as tax effective planning solutions for estate duties, inheritance tax, capital gains tax deferral and income tax.


Cross Border Activity

Our extensive worldwide network enables us to provide a full range of services in the main markets you choose, while simultaneously keeping you informed of opportunities and changes in legislation, taxation and compliance regimes which may affect and/ or benefit you.


Philanthropy

We can create structures which facilitate the donation of money or goods to support a charitable cause or maintain philanthropic purposes over the longer term.