February 26, 2021 Connor Steens

ESTATE PLANNING WITH AN OFFSHORE TRUST

BY CONNOR STEENS

 

Offshore trusts are often regarded as the finest asset protection strategy for efficient tax and estate planning, especially for high net worth individuals. With opportunities to diversify portfolios, efficiently administer assets, and ensure an abundance of security benefits, the offshore trust is an incredibly valuable addition to your estate plan.

Estate tax laws are set to change once again this year. With the inauguration of Joe Biden, further changes proposed by the Democrats could mean that 2021 has the potential to be another abnormal year. Considering this, there is no time like the present to evaluate and act upon your estate planning goals. If you are considering making an offshore trust part of your plan, read more about the benefits below.

Asset Protection & Security

A trust is a legal instrument used to hold assets on behalf of a contributing person (known as the Settlor, or sometimes Grantor), which are then held and administered by another person (the Trustee) for the benefit of other persons (the Beneficiaries). Once a Settlor places assets into a trust, they no longer have legal ownership of those assets: that vests in the Trustee, who must then manage and apply those assets, not for its own benefit, but that of the Beneficiaries. Assets are also protected from future creditors under purpose-built legislation in jurisdictions such as the Cook Islands and Nevis which provides that assets placed into the trust by a Settlor are unavailable to any future creditor provided that creditor’s cause of action accrues after the assets are settled. This feature makes it possible to securely maintain and preserve your wealth for future generations and protect it from unforeseen creditor claims.

An offshore trust also allows you to place your assets into jurisdictions outside of your own, mitigating the potential risks associated with holding your wealth in a single jurisdiction. The Cook Islands and Nevis are both well isolated from the political, economic, and social issues around the world. This is an important factor to consider, especially during times of uncertainty.

Privacy

Another favorable aspect of an offshore trust in the Cook Islands or Nevis is the anonymity that is enforced under strict privacy laws. These laws prevent the disclosure of client information, except under very limited circumstances or as required by law. The high degree of confidentiality that a Cook Islands or Nevis trust can provide makes the offshore trust an invaluable addition to any future estate plans, even more so for high net worth individuals who wish to maintain their privacy.

Tax

A trust established in either the Cook Islands or Nevis is not burdened by any local taxes of either jurisdiction. However, any income generated by the trust may be taxable in other jurisdictions and must be reported to respective tax authorities. Tax advantages of an offshore trust can vary based on several variables, depending on where you reside, and it is vital to obtain cross-border tax advice before establishing an offshore trust.

Diversification

An offshore trust can also introduce you to superior financial services around the world. International bank accounts and investment opportunities ensure that your wealth is maintained efficiently. Upon establishment of your entity, Southpac can offer bank accounts in a number of jurisdictions each with their own benefits, including offshore accounts which can be managed by SEC-registered investment managers.

A Cook Islands or Nevis trust can be a useful tool to protect your assets and help eliminate the many risks that wealth can bring. 2020 came forth with an abundance of uncertainty but with careful planning, the potential worries of 2021 can be mitigated by ensuring your estate plan matters are in order. Act now and safeguard your legacy.

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Connor Steens

Connor Steens works as an Analyst at Southpac Group. Connor has worked closely with Guy on investment an banking relationships. Connor currently oversees and monitors current marketing analytics, exposure and direction, content creation and market presence.
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