Establishing Offshore Trusts to Protect Your Assets
International and offshore trusts provide a variety of benefits to investors. Most noticeably, these trusts allow investors to transfer the ownership of certain assets in order to remove them from their gross estate, possibly avoiding estate taxes in the process if all other assets equal less than $5 million.
While these trusts allow individuals to remove assets from the United States, some investors may not initially feel comfortable with placing their money or assets in another country. However, there are several steps that they can take to increase their comfort level with using international trusts.
Visit the Offshore Trust Company
When a client has not personally seen the operations of a trust company, he or she may not feel comfortable with using an international trust for his or her asset protection. Visiting the trust company personally can allow clients to see for themselves the operations that are involved with these trusts.
Understand the Legal Implications
Each jurisdiction is different and has its own laws regarding the creation and retention of offshore trusts. Local counsel can explain the laws pertaining to these trusts. They may also be able to explain the regulations and compliance standards expected in the country that ensure the integrity of financial institutions and comply with anti-money laundering provisions.
As with all types of investments, individuals should have a diversified portfolio. They can begin using offshore trusts by transferring only a smaller portion of their assets into these accounts.
Retain Control of an Offshore Account
Retaining control of an offshore account is a difficult test in balancing. Retaining too much control of a trust can create implications with the Internal Revenue Service that can actually be brought back in the gross estate. Not enough control can leave investors susceptible.
However, investors can still make several provisions in the trust instrument that allow them to retain some control while still retaining the benefits of having a trust. Investors can decide who the beneficiaries of the trust will be.
They can also set up some parameters regarding the investment options of the trust and control the contributions and timing of the contributions to the trust.
Help from a Legal Adviser
Nagel & Associates, LLC is a law firm that specializes in asset protection for successful investors. An experienced attorney can discuss the options that are available to investors, including utilizing offshore trusts to protect their assets and to potentially avoid estate taxes. Click here to learn about the 15 Global Strategies to Protect Your Wealth.