Offshore trust, also known as foreign or overseas trust, is a relative concept. It generally refers to a trust established overseas or offshore that the legally effective arrangement allows the settlor to legally transfer the rights of assets to the trustee.
Compared with domestic trusts, offshore trust has the following differences:
1. The difference between the types of trust property
At present, the type of property that can be loaded into domestic family trusts is relatively single, mainly cash and financial assets, while the types of property that can be loaded into overseas family trusts are very abundant. In theory, any property within the scope permitted by law can be loaded, such as real estate, equity, private jets, yachts, etc.
2. Differences in the actual performance of family trust
The domestic trust is represented as a special trust account opened by a trust company for a family trust in bank where the property would be carried out custody operation and independent accounting. An offshore trust is similar to a corporate entity. This entity holds various assets such as financial assets, equity, and real estate, and is operated and managed by a dedicated personnel.
By comparing these two trusts, offshore trust has its own unique advantages:
1. Absolutely confidential
Many offshore jurisdictions are highly independent. Some areas do not require property registration for the establishment of trusts. They only need to specify the fiduciary relationship. The trust deed does not need to be registered with any government department and open to the public for inquiries. The privacy protection is excellent.
2. Asset overall management
Assets all over the world can be integrated under the same structure, and asset management is more convenient. The tax-free environment in many offshore areas makes assets have a better rate of return.
3. Succession arrangement
In countries with inheritance restrictions, offshore trust can fully realize the will of the trustor, avoid complicated wealth inheritance certification procedures, and enable designated beneficiaries to inherit the property as soon as possible.
4. Tax planning
It can provide effective taxation plans that are different from the country where it belongs. The plans can reduce or even exempt domestic income tax, capital gains tax, gift tax, property tax, inheritance tax, etc.
5. Asset protection
Protecting the entrusted property from the political and economic turbulences of the country where the settlor belongs can provide long-term protection of the assets.