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The Modern world is full of litigation and it
looks like there are more chances for many people, especially
for entrepreneurs, corporate executive officers, and self-employed
professional practitioners, to be ruined by lawsuits than
to become a casualty in a car accident. A properly structured
offshore trust is a legitimate and effectual shield to protect
one's assets from this impending danger. Needless to say,
the prospective Settlor of a Trust must get a thorough advice
on its applications from his/her legal and accounting councilors
before starting to act.
The most popular applications for an offshore trust:
- To protect assets
from likely creditors' claims (never from the existing
ones!)
- To keep assets away from political or economical instability
- To optimize tax planning
- To avert dissipation of property by some relative wasters,
at the same time the Trustee could provide a steady flow
of benefits for them from the Trust assets
- To be used as an offshore investments vehicle
The elements of a typical Offshore Trust
Settlor: sets up the Trust, transfers
some assets
to the Trust, may also be the Protector and Beneficiary
Trustee: becomes the legal owner
of the assets of the Trust, is bound by strict secrecy laws.
As a rule, the Trustee received a fixed fee. In the majority
of Offshore Financial Centers
Trustees must be licensed.
Protector: holds the power to direct
the Trustee in matters relating to the Trust and to remove
and/or appoint a new or additional Trustee. The Deed of
Trust prescribes situations when the Trustee must obtain
consent of the Protector for certain operations with the
Trust assets. A Nominal
Company is often used in the capacity of the Protector.
Beneficiary: is entitled to benefit
under the Trust. The Beneficiary in a Trust may legally
enforce the Trustee to fulfill his duties.
Deed of Trust: the legal document
where all formal details of the Trust management and activities
are described, inclusive details of the Settlor, Trustee,
Protector, and Beneficiary.
Letter of Wishes: confidential instructions
of the Settlor to the Trustee on dealing with the Trust's
assets. It is a separate document in relation to the Deed
of Trust, and, therefore, may be amended.
| To sum it up:
a typical trust is a design when the Settlor transfers
the legal title to some part of his assets to the
Trustee, who disposes it within the guidelines of
the Trust Deed and the Letter of Wishes. The Protector
is a bona fide independent guardian, keeping a check
on the fulfillment by the Trustee of his applicable
duties. All property and any earnings under the trust
are distributed in due course to the Beneficiary.
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SOME TYPES OF TRUSTS
(In practice, the types may superimpose each other when
individually tailored for a particular client)
Discretionary trust. If the Settlor exposes too
much control over the day-to-day trust administration the
trust may turn into a "fake" and collapse under the creditors'
attacks easily. The discretionary trust is designed to give
as much as possible power (discretion) to the Trustee to
distribute the property and income under the Trust, and
even to choose the Beneficiary.
Asset protection trust. A trust created to protect
the Settlor and Beneficiaries from probable creditors' claims
in the future.
Resident (domestic) trust. A trust established in
the jurisdiction of the Settlor's domicile
or legal residence. The Deed of Trust must contain some
variation of the Statute of Elizabeth preventing him from
establishing a trust to keep assets away from creditors.
In most cases from the fiscal point of view, an offshore
trust automatically becomes a resident trust, and the Settlor
remains the owner of the property assigned to the Trust,
if he is a resident of US, Canada, and some other OECD
countries.
Offshore (International trust).
A trust, which has the following features:
- it is registered under the trust laws of applicable
offshore jurisdiction
- the trust may be created specifically to have protection
against creditors as
The Statute of Elizabeth is overridden in trust legislation
of actually all Offshore Financial
Centers
- at least one of the Trustees is a local licensed professional
- the Settlor and Beneficiaries are at all times non-resident
- the trust assets
often must not include any movable or immovable property
situated in the jurisdiction
The Settlor and Beneficiary
of a properly designed offshore trust may enjoy the following
advantages as opposed to its resident counterpart: when
a lawsuit is brought by a creditor before a court of the
Settlor and/or Beneficiary's jurisdiction, the
Trustees may ignore court orders, move the Trust to
some other jurisdiction, and even refuse to fulfill the
Settlor's orders enforced by the unfavorable
court rulings.
| You may find
here some specific information about sophisticated
and confidential Nevisian
Trusts. |
DISCLAIMER FOR THE ABOVE
The above information may not be interpreted
as soliciting for trust services and is given exclusively
for representational purposes.
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