July 30, 2019 Marcos Almeida

OFFSHORE TRUSTS – MORE BENEFITS THAN YOU MAY EXPECT

BY MARCOS ALMEIDA

Offshore trusts are widely used throughout the world to guarantee asset protection and succession of wealth. Cook Islands and Nevis offshore trusts are recognised as the best asset protection structures in the world. However, there is more to offshore trusts than to protect assets from creditors or to provide a smooth and successful succession of assets.

One of the not-so-obvious benefits of having an offshore trust is to ensure privacy over inheritance distributions after the death of the settlor. In different countries, a Will may be available for public consultation in case probate is required. Heirs may be informed of uneven distributions between them, of unknown beneficiaries of a person’s wealth or the name of a charity that may be receiving funds. In a trust, however, assets being distributed after the death of a settlor may be kept in privacy, if the settlor wishes to do so. This could avoid future confrontation between beneficiaries and guarantee that the assets of a deceased person are distributed according to their desires and wish for privacy.

Forced heirship is applicable to several countries; however, these rules do not apply to offshore trusts and after-death distributions will be made according to the terms of the trust agreement. This would guarantee that distributions are made according to the settlor’s wish, without the influence of laws and regulations of foreign jurisdictions.

Another common unknown benefit is the Spendthrift Clause. A Spendthrift Clause allows the offshore trustee to hold assets in the trust and avoid them to be distributed to beneficiaries that are currently under duress from a creditor so that the distribution does not get blocked and seized by this creditor. This clause can also be used for a beneficiary that is suffering from substance abuse and would use the distributions to fuel their addiction. The offshore trustee could hold the distribution until such beneficiary overcomes this problem or make discretionary distributions for the living expenses of this beneficiary if the trust deed allows to do so. The same caution on distributions could be applied to a beneficiary that is currently going through divorce, making sure that the distribution would go to the beneficiary’s children and not to the divorcee — avoiding funds to move away from the family of the deceased.

For business owners, an offshore trust can be of benefit not only to guarantee the protection of a person’s wealth but also to guarantee asset protection for their business. By creating an offshore Limited Liability Company with Southpac, in the Cook Islands or Nevis, a business person can transfer the membership interest of this LLC to the offshore trust. The LLC, as part of the assets of the trust, would be under its protection and the settlor, being nominated as the manager of the LLC, may transact with clients from all over the world with benefits provided by Nevis or Cook Islands such as low registration fees. The LLC can also open an offshore bank account with several different banks that have premium relationships with Southpac.

An offshore trust can be a useful tool not only to protect assets but also to guarantee that such assets are distributed for the benefit of its beneficiaries, considering the circumstances involving them. However, such a trust needs to be administered by an offshore trustee with enough knowledge and expertise so that all of its benefits are used and empowered. Southpac, with more than 35 years’ experience acting as an offshore trustee, is the perfect party to ensure the success and the use of all benefits that an offshore trust can provide.

If you have any questions please contact us at enquiries@southpacgroup.com.

Marcos Almeida

Marcos Almeida is a qualified Brazilian attorney who has more than seven years of experience in the insurance industry. In his native country, he received recognition from one of the largest private insurance company’s in Brazil as being one of the most productive team leaders. Prior to his migration to New Zealand Marcos was a partner in a law firm in Brazil. Marcos moved to New Zealand to undertake postgraduate studies in business management and obtained a Post Graduate Diploma in Applied Business prior to joining Southpac. He works as a Legal Executive at Southpac at its head office in New Zealand and has particular expertise in the LATAM market.
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