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Offshore trust

From Wikipedia, the free encyclopedia

An offshore trust is a conventional trust that is formed under the laws of an offshore jurisdiction.

Generally offshore trusts are similar in nature and effect to their onshore counterparts; they involve a settlor transferring (or 'settling') assets (the 'trust property') on the trustees to manage for the benefit of a person, class or persons (the 'beneficiaries') or, occasionally, an abstract purpose. However, a number of offshore jurisdictions have modified their laws to make their jurisdictions more attractive to settlors forming offshore structures as trusts. Liechtenstein, a civil jurisdiction which is sometimes considered to be offshore, has artificially imported the trust concept from common law jurisdictions by statute.

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Transcription

Video three: How APT works, proof that APT works. Hello, Rob Lambert here and I'm glad you're back with me again. This is the third video in my series of video trainings. If you missed any of the previous videos, you can click the tabs above me to watch them and catch up. Remember, just for watching I'm going to put your email address in a drawing to win a complete, iron-clad asset protection plan that I will personally create for you. Okay, to quickly recap what we covered so far, I've show you how complexity and high cost have historically been the biggest obstacles to anyone, except the ultra-wealthy, in setting up solid, asset protection. I've shown you how scam artists and opportunists have made millions... maybe even billions, selling people on structures and products they "label" as asset protection, but which are really useless in providing anything other than the a false sense of security...a warm fuzzy feeling that you are protected but in reality are not. I have shared with you some horror stories where asset protection has failed and how it has succeeded. I shared how I have been working on something big for the last 4 years, something that is going to change the playing field in asset protection...this is the hardest I've worked, probably in my entire life, coming up with this solution and I can barely restrain myself from revealing it to you. I told you in the previous video that I would explain it all to you and it would knock your socks off, but when I sat down and looked at everything I had to share with you, I realized there was one other piece I needed to reveal to you first. One crucial piece of the puzzle that you need to know is how asset protection works, what is really required for you to effectively, ethically and legally be protected...and that is what I'm going to show you right now. Now if you feel you already understand how asset protection works, I want you to set that aside for a minute and watch anyway. You just might see something that you didn't know. And if you are watching this video and have no knowledge of how asset protection works or have been the victim of a faulty asset protection plan or you are someone who is sitting there, with full knowledge that you need to protect what you own but don't know the facts of how to do it, today you are going to see beyond a shadow of a doubt what to do to protect your money, your investments and your solvency. What I'd like to do is illustrate for you how asset protection works. I'm going to make it simple and crystal clear...and you don't have to take notes... because when this video is finished, I'm going to give you another gift, a free download of the important points from our time together today, so sit back, relax, watch and listen as I demonstrate the what how and why of authentic asset protection. What I hope to do over the next couple of minutes is show you what a perfect Asset protection system looks like, and reveal how this process combines rock solid law with strictures that I've learned to use over 30 years in my career of protecting people from financial attack. I'm going to give you the characteristics of a typical plan, what you always need to consider no matter who does it and I'm going to do it quickly and in a way that you can take with you and remember for the rest of your life. As I've said before, there are hundreds of different kinds of products being touted as asset protection tools. The lawyers and the capitalists that are making a killing each year off of the countless other strategies will probably want to hunt me down and eliminate me for revealing this information, because when enough people know about it, the folks getting rich selling overpriced and/or ineffective protection strategies) will suffer the impact on their wallets -- but here goes. What I'm going to share with you right now is the blueprint, so you can be protected for life. And isn't that what we all want, to be free from worry that someone or some organization can come in at any moment and rob us of our livelihood? So, what does the perfect plan look like? Well a perfect asset protection plan has four characteristics. I want you to think of this acronym 'STOP' - because asset protection is designed to stop would be creditors. Almost every solid plan will have these characteristics. I'll give you a brief overview and then get into more detail, so if anything seems confusing at first, do not get hung up on it because I will bring it all together for you in a very clear and concise way. Alright, starting with the "S" in STOP, the first characteristic of a perfect asset protection plan is that it allows you to stay in control. You should do your plan when you're not in trouble; normally when you're not under the gun you will always be in a 100% control. The only time when you might have to share control is if you're really in trouble, and that sharing is done with a protector or an off shore lawyer who is on accounts with you. Again, I'll explain this completely in a few moments. The second characteristic is the "T"...you should trust nobody, assume every single person you deal with is a crook; don't wait for them to prove it. The world is filled with unscrupulous people who want to steal money. Obviously, you're going to do your best to avoid them if you can but even the savviest person can be duped from time to time. So, never construct a plan where you're forced to trust somebody UNLESS YOU CHOOSE TO TRUST THEM. That's one of my rules and if you follow it you will not get hurt. The third letter is "O" and that stands for the characteristic "off balance sheet." That's another way of saying own nothing. The first rule of asset protection is what you do not own cannot be taken from you. Almost all asset protection functions by taking protected assets of your balance sheet. John D. Rockefeller said: "Own Nothing, Control Everything" If you don't own anything, or it "appears" that you do not own anything, no lawyer will sue you unless someone is willing to pay his outrageous hourly fees. If, on the other hand, the lawyer sees substantial assets, he may very well take the case against you on a contingency basis. And the final letter is "P" and that characteristic is Protective Legislation. This is achieved by using a country with laws in place that provide you with protection. Now, you don't always start in places that have protective legislation. Reasons for this would be to save money or keep your asset protection structures very simple. But when you are in trouble you will always want to be in one of the several jurisdictions that offer protective legislation. Okay so now that you know the STOP acronym, the next piece is to understand the four components of a perfect asset protection plan. The first one is an asset protection trust. Trusts are a key element and they are a business entity that takes assets off of your balance sheet. Now a trust is a complex entity, like a person, but a very easy way to understand a trust is to think of it as a magic bucket. Picture a bucket into which you put assets. The bucket expands to accommodate whatever you fill it with. Once your assets are in that bucket, it becomes the new owner. But, because it is a bucket, it can't make decisions for you, it's a bucket after all. So you still control everything it holds, but technically you don't own them anymore. The next step is to take your bucket and put it in a country where you do not reside. Let's call this "going offshore." This is where the real magic of that bucket comes in. Once that bucket is placed "offshore" in a different country, it can be protected by rules that cannot be broken. Much like force field or the law of gravity, even if you leave that bucket in the care of someone else, no one can reach into it and remove anything without some very specific things happening. A. You removing the force field to allow them to reach into the bucket. B. You being attacked and having them move the entire bucket for you The second component of most asset protection plans is an LLC; it's not always necessary but it's the easiest way to stay in control when you have an offshore trust (bucket) sitting in the care of an off shore location. I'll soon show you why in a moment. The third component will be an offshore account... The fourth component in some cases will be a domestic family loaded partnership. This is only necessary for US citizens. If you are not a US Citizen, you will just do the first three. Now what do they look like? Let's start with the bucket, the "TRUST." This is a typical trust: it has a settlor, that's you. You will almost always have an offshore trust company; the location of this trust company will determine the laws that will apply to you. You'll almost always have a protector, that can be you or an offshore lawyer or an offshore protector. There are companies that specialize in this and I'm going to tell you who the best ones are very soon. There will be beneficiaries, and even classes of beneficiaries. This will always include you and any other people that you want to benefit. But there is a variable in this arrangement. This trust company is not perfect. Although they are there to protect and guard your bucket, they can be like the Character Anakin Skywalker in George Lucas' famous series Star Wars. He started out good, pure and noble. With only the best intentions, but something happened and he was influenced by the dark side. Then he became the villainous Darth Vader. If the trust company is influenced, they have the ability to break through the magic of your bucket and steal these assets. But the good news is, you don't have to trust, the trust company. There is a fix. You simply put an offshore LLC in place. The offshore LLC can either be in the same jurisdiction as the trust or any place that has offshore LLCs or IBCs function as LLCs. Every jurisdiction is different, this entity can be passed through, it's normally a disregarded entity when it's a single person but; you can also have it treated as a corporation. You can opt to have it treated as a partnership, you have great deal of flexibility, and indeed under this LLC you can put hundreds of other entities. You can have corporations, which might be controlled for in corporations, you can have partnerships; you can have any offshore entity that you want all owned under this offshore LLC or under this trust. It's a great way to keep you, in control of the assets because when you put the LLC in place you no longer use the asset protection trust to protect these assets. Assets are held down here, owned by the APT but where are the asset's controls? Control happens to be with this little guy who happens to be you. You are in effect the manager of the offshore LLC. And this is the best way to keep you completely in control of an offshore investment; Now, what you normally do with this offshore LLC is simple. You add and offshore bank account. It does not have to be in the jurisdiction of the APT or the LLC. And as many of you know, or those of you who have been listening to me have had it drummed into your head. Most banks are stopping accepting accounts from US citizens. There are many banks: Barkley's... just almost any bank you name is no longer wanting US citizens and it's in large part because of the legislation that becomes effective in 2013 forcing these banks to be transparent to the IRS and basically account to the IRS for your deposits and if the bank is not transparent there is a 30% tax, that may be challenged and that may be thrown out. But by putting this LLC in place you overcome those objections. You'll find that the same banks who won't take you when you're trying to go there as an individual or as a trustee of your own trust, somehow seem to be able to be comfortable that, that's enough removal that they will accept the account; at least right now, it's working well. With an LLC, you have control; you've reestablished yourself as control. Not by virtue of your status as settlor; but by virtue of your status as being the manager of this LLC and when this LLC goes and opens bank accounts etcetera, or engages in investments or buys stocks and bonds in any currency it wants, the management and controls of those assets is with this person; the offshore manager of the LLC. Now that's all most people will ever need. The only other thing you could ever need is... BOOM! A domestic family limited partnership. Notice this partnership is right here in the United States. This little line is the line between safe, which is offshore and dangerous which is on shore; the US is less protected then anything offshore. Why? Because no country in the world recognizes US judgments and anything over here is virtually impossible for a US creditor to without spending a huge amount of money and even then it's doubtful that they could be successful. This is a typical situation and note with the assets held in the domestic family limited partnership we still keep you the settlor over here in control of this, you're just functioning as the general partner. The general partner has 100% control over this partnership The asset protection trust has 99% to 100% ownership with zero control. So what does this partnership really do? It separates ownership which is in the trust and control which is with you the general partner. This structure really holds up, it is tax neutral; it won't increase your taxes, it won't decrease your taxes. You have all the flexibility and freedom as a normal human being investing offshore; you can do insurance type investing you can even form an insurance company and eliminate tax on your interest and dividends and capital gains. All legally and with full disclosure of the government, all that can be done in a simple little structure and this little structure will work for 95 to 98% of all people who need asset protection. Now, you can see the four parts of a perfect asset protection plan; remember this and just remember it doesn't have to be complicated, it doesn't have to be a life changing event. This is a process and a choice for you to sleep well at night and no longer be vulnerable to people who want to take you apart. Remember the four STOP characteristics. Stay in control, trust no one, off your balance sheet, so you no longer own it and make sure that if you're really getting in trouble that you're availing yourself of with numerous countries that have protective legislation. These are key elements for anybody that wants to protect themselves in the long run. If you do this you can sleep well at night, you will no longer be vulnerable, you can take control of your own life and you can stop the professional takers from being able to abuse you. You never have to live in fear anymore and that's what I'm trying to give you; is the tools to stop risk being beat up and to take control of your own destiny. It is time for every person who's part of my site to take control of their life and to stop these people and to know that they can fight. You never ever have to be vulnerable again; don't let them get away with beating you up and I'm here to help you make sure that you can stand on your own two feet, hold your head up high and stop these guys from hurting you. The ultimate protection provided by your plan depends greatly on the degree to which you give up control. The more control you maintain, the greater the chance creditors can reach the assets you transferred to the trust. Equally, less control means less chance that your creditors can successfully attack the trust assets. Now let me share with you two quick stories to prove how this structure works. One last thing I want to mention is your asset plan should be transparent to you A properly done asset protection plan should not change the way you live your life or what you do with your day. You should not be spending your time secretly hiding things, or have the feeling that you must lie to benefit from your asset protection. It should be simple and easy. Also, your asset protection plan should also integrate seamlessly with your estate planning choices. The goal is to remove the fear of financial attack and to "sleep better" once you have your asset protection plan in place, not engage in a moral dilemma or struggle with a guilty conscious and constant monitoring. So we covered a very complex subject in a relatively quick time. Don't forget that I have the download of the structure below this video, just click on the link and save or print out a copy for your reference. Now speaking of downloads. I hope you took the time to download the 7 levels deep exercise that I gave you in video #2. If you did that simple exercise, you already know why protecting your assets is an absolute necessity. If you did not download the exercise, please click on the video 2 tab above, and download the exercise and complete it. It is a simple, one page document with 7 questions. It will only take you a few minutes to complete. Now I'm almost done for today, but before I end I want you to know I'm not just going to lay all this out on you and leave you on your own to put it in place. In the very first video, I promised you I was going to reveal a revolutionary new way for you to put an iron-clad asset protection plan in place and do it without the ridiculous fees that have been charged for decades. In the next video I'm going to show you exactly how to do it and when you see how simple it is, you are going to be tripping over yourself to get it done. You'll see the results of thousands of hours of work and literally four years plus, of hard work on my part to make this possible for you. I'm also going to take you on a tour of a very special South American country and introduce you to some people that just might become your new best friends. The next video will bring it all together for you; you will get to go from concept to instant implementation. You are going to walk away with not only the wisdom and information to get the protection you want...I'm going to hand you your own, complete asset protection plan on a silver platter -- a plan that will work seamlessly for you with almost NO effort on your part. This is going to be the video that changes everything for you...it's not being revealed to the general public and the only place you can find out about it and take advantage of it is right here. So whatever you do, do not miss my 4th and final video. It will be up and ready to view very soon. Until then, this is Rob Lambert saying thank you for your attention and for allowing me to help keep you off the financial predators hit list. I'll see you again very soon.

Uses of offshore trusts

Official statistics on trusts are difficult to come by as in most offshore jurisdictions (and in most onshore jurisdictions), trusts are not required to be registered, however, it is thought that the most common use of offshore trusts is as part of the tax and financial planning of wealthy individuals and their families. For instance, the founder of Wonga.com, Errol Damelin holds his shares through Castle Bridge Ventures, a trust based in the British Virgin Islands.[1] While the family behind the Nando's restaurant chain, the Enthovens, reportedly use trusts in the Channel Islands as part of their financial planning.[2] Other users of offshore trusts include Sir Ken Morrison, the British supermarket magnate, the Rothermere family who own the Daily Mail group and the late Bruce Gyngell who founded TV-am.[3]

However, offshore trusts have other uses too:

Types of offshore trusts

Below are the most common types of trusts:

A Revocable Offshore Trust is a trust which can be liquidated or altered by the settlor according to the terms, that are set out in the Trust Deed.

In an Irrevocable Offshore Trust may not be changed or liquidated by the settlor.

A Discretionary Offshore Trust enables the trustee to decide on the distribution of profits for different classes of beneficiaries.

In a Fixed trust, the distribution of income to the beneficiaries is fixed and can not be changed by trustee.

A Hybrid Trust includes elements of discretionary and fixed trust.

The benefits of an offshore trust[4]

  • Confidentiality and anonymity: Despite the fact that an offshore trust is officially registered in the government, the parties of the trust, assets, and the conditions of the trust are not recorded in the register .
  • Tax-exempt status: Assets that are transferred to an offshore trust (in a tax-exempt offshore zone) are not taxed either when transferred to the trust, or when transferred or redistributed to the beneficiaries.
  • The ability to transfer assets in a short time and without high costs: The transfer of property inherited through an offshore trust does not require the approval of a judge or the high cost of a lawyer.
  • Asset protection: The Trust protects assets from forced transfer by inheritance, from seizure in divorce and bankruptcy.
  • Accumulation of capital: The trust can own commercial enterprises, open bank accounts, participate in international investment projects, and its revenues will accumulate in one of the tax-free offshore zones.
  • Reliability: The capital will be safe from a financially, politically and economically unstable world.
  • Versatility: In the trust, you can transfer any assets - cash, real estate, business, stocks, intellectual property rights, etc.

Rule against perpetuities

Trusts in general are subject to the rule against perpetuities which, in practical terms, puts limits on the length of time within which all trust property must be distributed. Because of the strictures of the rule, a number of trusts have been struck down in wildly hypothetical circumstances because of possible infringement of the rule (e.g., the fertile octogenarian).

Most offshore jurisdictions which have sophisticated trust laws have modified their laws relating to perpetuity to allow settlor to select lengthy, fixed, perpetuity periods, to avoid the use of "Royal lives" clauses. Many have also adopted "wait and see" laws, which mean that trusts which might potentially infringe the rule against perpetuities are no longer automatically invalid, but instead the trust remains valid unless and until the perpetuity period is breached.

In Jersey, the rule against perpetual trusts has actually been abolished entirely. This has also been done in a number of U.S. states.

Management of underlying companies

Trusts in general are subject to the rule in Bartlett v Barclays Bank which provides (briefly) that where trust property includes the shares of a company, then the trustees must take a positive role in the affairs on the company. The rule has been criticised, but remains part of trust law in many common law jurisdictions.

A number of offshore jurisdictions (notably the Cayman Islands, with STAR trusts, and the British Virgin Islands, with VISTA trusts) have created special forms of trust that may be expressly settled without imposing an obligation of the trustees to interfere in management in this way.

Paradoxically, these specialised forms of trusts seem to infrequently be used in relation to their original intended uses. STAR trusts seem to be used more frequently by hedge funds forming mutual funds as unit trusts (where the fund managers wish to eliminate any obligation to attend meetings of the companies in whose securities they invest) and VISTA trusts are frequently used as a part of orphan structures in bond issues where the trustees wish to divorce themselves from supervising the issuing vehicle.

Critics in onshore jurisdictions have suggested that these specialised trusts have provisions that so fundamentally undermine the nature of a trust that they should not be recognised in an onshore jurisdiction, but whatever the view of onshore tax authorities and regulators, it seems unlikely that the courts in onshore jurisdictions would be prepared to derogate from the Hague Convention on the Law Applicable to Trusts and on their Recognition.

Asset protection

Certain jurisdictions (notably the Cook Islands, but the Bahamas also has a species of asset protection trust) have provided special trusts which are styled as asset protection trusts. While all trusts have an asset protection element, some jurisdictions have enacted laws trying to make life difficult for creditors to press claims against the trust (for example, by providing for particularly short limitation periods). In practice, the effectiveness of such trusts is limited as the bankruptcy and/or divorce laws in the settlor's home jurisdiction will usually operate to set aside transfers to the trusts, and most jurisdictions (including offshore jurisdictions) set aside transactions entered into defraud creditors.

Powers of investment

Most traditional jurisdictions only permit trustees to make very conservative financial investments. Most offshore jurisdictions give trustees flexibility and permit (or allow the settlor to specify in the trust instrument that they are permitted) a wider range of investments, including higher risk investments such as derivatives and futures contracts and specific investments, such as an investment into a small private company, in any area of the world.

Purpose trusts

Whilst in most common law jurisdictions, trusts must either be formed for the benefit of persons, or charitable purposes, many offshore jurisdictions have also amended their laws to permit trusts to be formed for non-charitable purposes. Such trusts need to enforce a "protector" to be able to enforce the terms of the trust, but doubt remains as to who should be treated as the beneficial owner of the trust funds for tax purposes prior to its distribution.

No offshore jurisdiction yet appears to have made a serious effort to expand upon the flexibility of discretionary trusts in relation to certainty of objects, as expounded in McPhail v Doulton. This may be because the common law rules are now considered to be sufficiently flexible to make no widening necessary to attract trust business.

Anachronistic common law rules

Many offshore jurisdictions have also legislated to abolish certain anachronistic common law rules which sometimes cause difficulty for trust planning. These include:

See also

References

  1. ^ "Wonga sets £1.2bn target" by Simon Duke in The Sunday Times, Business section, 10 November 2013, p. 2.
  2. ^ Nando's using secretive tax haven trust to avoid inheritance tax bills by David Leigh, James Ball and Leila Haddou, theguardian.com, 10 July 2014. Retrieved 15 July 2014.
  3. ^ A who's who of Britain's legal offshore tax avoidance by David Leigh, theguardian.com, 10 July 2014. Retrieved 15 July 2014.
  4. ^ Gorbunov A.R. Offshornyy biznes i sozdanie kompaniy za rubezhom. 2-e izd., pererab. i dop. M.:Ankil: INFRA-M, 1995. 160 s.
This page was last edited on 21 August 2020, at 14:55
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