Offshore trusts are superb legal instruments for financial and estate planning with the strongest asset protection available. Preferred trust jurisdictions offer the most flexible, modernized and protective legal framework in the world.
An offshore trust is no different than a domestic trust in that it is comprised of a trust settlor, beneficiaries, a protector and a trustee. A trust deed is the actual legal document that outlines the trust roles, power and control, responsibilities and details of distributions and management. Custom provisions are specific legal instructions on how certain aspects of the trust are managed, carried out or declared.
Trusts are settled by an individual that transfers assets to the trust for the benefit of other individuals or legal persons. This is the person who is funding or setting aside assets for the future benefit of trust beneficiaries. In special cases a trust settlor can be a beneficiary, specifically in what are called self-settled spendthrift trusts.
A trust beneficiary is the person or persons who can benefit from trust assets. Beneficiaries have no management responsibility or power or control over trust assets, however are the only recipients of distributions or who can benefit from trust assets.
Distributions to trust beneficiaries are protected because the assets are in the name of the trust and set aside for the benefit of the individual(s) and cannot be seized or used to satisfy a beneficiary’s debts or a judgment.
The protector role is an additional management and oversight position that can be given veto powers on trustee decisions and to some degree control over trust management and distributions. A protector can also remove and reappoint trustees. The protector cannot be the settlor, the trustee or a beneficiary of the trust.
Trustees are licensed and bonded third parties that are professional trust administrators, usually an employee of a trust management company. Trustees are duty bound to carry out the wishes of the trust settlor set out in the trust deed. A trustee cannot benefit from trust assets, however can distribute trustee service fees at a rate established when the trust is created. Trustees have limited powers over the assets encumbered in the trust, the control instrument is the trust deed and management provisions.
Isle of Man Trust
Offshore Trusts have one defining characteristic to it’s domestic counterpart, that being the jurisdiction in which it is established – an offshore trustee does not have to comply with foreign court orders. Even if a creditor has a judgment against a member of an offshore trust, the assets are completely protected from that court ruling by jurisdiction.
The top offshore trust jurisdictions have created debtor-friendly laws that create a favorable legal framework for foreign investors wishing to protect their assets. The most advanced trust legislation in the world offers immediate protection where as others have a vesting period where the transfer of assets can be challenged by a foreign creditor, in these cases the period is six to twelve months depending on teh jurisdiction and establishment of the trust.
Offshore trusts are the strongest protective vehicle that can be implemented to protect one’s assets. Special asset protection trusts are instruments that are self-settled where the settlor and beneficiary are the same person. These legal vehicles offer the most protection from future creditors, divorce and judgments.