You may want to consider establishing an offshore trust as part of a comprehensive risk management strategy. An offshore trust is a trust created in a foreign country that has
a well-established asset protection statute. In addition to providing protection for your assets, an offshore trust may also be the right vehicle to use to diversify your portfolio
by investing in international.
You should be aware that your ability to control and manage your assets in an offshore trust correlates inversely with the amount of protection you receive. Generally speaking,
the more control you give up, the more protection your assets receive.
It is also important to remember that an offshore trust may not be used to protect your personal assets against any pre-existing or potential liabilities or claims from creditors.
Any attempt to do so could be overturned under laws prohibiting fraudulent transfers and could result in both civil and criminal action.
How to Set Up an Offshore Trust
You create an offshore trust by executing a trust agreement, delivering the trust agreement to your foreign trustee for signature, and registering the trust in the foreign jurisdiction.
In your trust agreement you will identify and appoint your own "trust protector." This protector is typically a close personal advisor or friend. During the term of the trust,
the trustee administers your trust in accordance with your initial instructions and subject to the scrutiny of the trust protector, who has the power to replace the trustee.
As the creator of the trust, and possibly as one of a number of named income beneficiaries, you are referred to as the "settlor." In the event of your death, the assets of the
offshore trust are incorporated into your overall estate plan and held for the benefit of your spouse, children, or other heirs.
An offshore trust is funded by transferring various types of assets either directly to the trust or through a separate entity. Typically, the actual assets of the trust are held
by a custodian bank or investment house in Europe and are invested according to your wishes by a money manager in foreign investments. You may also secure additional risk management
and income tax benefits by integrating insurance within the investment portfolio.
Compared with other types of risk management structures, an offshore trust offers a high level of protection for your assets, including:
limited statute of limitations for challenging the effectiveness
of the offshore trust
higher burden of proof with respect to fraudulent transfers
of foreign judgments, meaning that all lawsuits must
be litigated within the foreign jurisdiction
confidentiality of your affairs
disallowance of contingency fees for lawsuits
elimination of full faith and credit clause concerns
applicable to domestic asset protection trusts
from forced heirship laws
Possible drawbacks include:
control over one's own assets
of familiarity and comfort with foreign trusts, foreign laws, and legal environment
and the political stability of foreign jurisdictions
to possible civil and criminal contempt action
For more information:
If you'd like more information about how diversified investment advisors can help you achieve your financial objectives through personalized wealth or retirement and risk management strategies, please contact us. We welcome the opportunity to discuss your unique needs and how we may best meet them.
This page (formatted for versions 10.0 and higher
of Internet Explorer) is updated regularly so check in
from time-to-time to see new articles and updates.
You can click on any underlined words on each
page to see a specific wealth management topic in the
left margin of each page.
Charles M. Bloom, Registered Principal offers securities
and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.
The information contained in this web site is neither an offer nor solicitation of any security or service.