The Myth about Offshore Trusts and Private Interest Foundations
Offshore trusts and private interest foundations are often thought to be the playground of the super-rich and often represented in the media as nothing more than a tool for criminals to hide their wealth in some unknown island bank to avoid legal responsibilities.
The reality is that both are wrong. A trust is simply a contract between you as settlor (or grantor) and trustee that determines how the trustee will manage your assets for your beneficiaries. The trustee is obligated by contract and by statute in the jurisdiction where they operate to manage those assets as a fiduciary on your behalf.
By establishing a trust in an offshore jurisdiction like Anguilla, you get the multi-jurisdictional benefit of having the trustee outside your home jurisdiction, as well as strong asset protection laws in countries and territories that rely heavily on their expertise in financial services.
Establishing an offshore trust or private interest foundation in a jurisdiction is the perfect tool for asset protection and estate planning to ensure you and your family are protected from frivolous lawsuits and unnecessary estate tax for your family and heirs. If you are serious about asset protection and estate planning, an offshore trust or private interest foundation should be the cornerstone of your financial planning.
Why Offshore Is Safer Than Onshore
Certain states have passed self-settled trust legislation, however it is not very effective. The reason is quite simple: Article 4 section 1 of the US constitution states
“Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”
This is known as the full faith and credit clause, and means simply that judicial rulings in one state are valid in every other state. Of course, this means that all your creditors need to do is to find a justification for suing you in a state that does not recognize your trust structure and suddenly your assets are at risk.
In Anguilla, however, US court rulings hold no bearing whatsoever. Moreover, there is literally no standing whatsoever for a creditor to challenge your Anguilla unless a creditor can prove that the assets were fraudulently conveyed. Even then they only have two years from the date the trust was settled to make this hard-to-prove claim.
Where Do My Assets Go?
When you settle an offshore trust your assets go wherever you want them to go. We advise having a completely offshore structure.
That is, we advise using one of our many offshore banking partners to store the Trust cash, and one of our offshore brokerage partners for your investments. Land and other investments in the US can be re-titled to an anonymous Wyoming LLC (of which you are the manager), which is then owned by the offshore trust. Of course, you don’t have to move your cash or investments offshore at all.
All of this can be accomplished through the use of an onshore Limited Partnership structure that you control, but provides asset protection through an arrangement where the offshore trust is the 99% limited partner in the onshore structure with provisions that allow the distribution of partnership assets to the limited partners in the even of a legal attack on the structure.
Who Controls My Assets?
You do – if you want to.
Under our most common and recommended structure after you settle the Trust the Trust forms and offshore company that you are named the manager of to hold all of the Trust assets. With this company you can operate the assets you settled the same way that you do now.
A similar structure can also be created in the US. Agora Trust, Ltd. is also a full service trust company and we are capable of managing your assets for you if that fits your needs.
What Are My Rights In This Structure?
As the manager of the company(ies) that controls the Trust assets and the beneficiary of the assets you have the right to do with the assets as you please.
The Trust is the legal owner of the assets and Agora Trust, Ltd is the trustee. However, you also get to name a protector of the trust.
Should Agora Trust, Ltd. begin to do anything against your wishes, the protector has the power to immediately fire Agora as Trustee and replace us with something else. This effectively prevents us from exerting any control over your assets unless you want us to.
Ease Of Step-Up And Operation
Setting up and managing and offshore trust structure is easier than it ever has been before.
Traditionally one of the downsides of an offshore trust was dealing with the offshore trust company. Let’s face it: ideas of customer service just aren’t the same outside of the US, and particularly not in many of the countries with solid trust legislation.
Furthermore, when it comes to tax compliance and reporting most offshore trust providers have no concept of how income taxes work (as they don’t have any in their own lives) and have a difficult to supplying information to you or your accountant.
It was to fill this gap that our sister company, Agora Trust Ltd. was created. Our two founding directors are both Americans with extensive experience between the two of them in all manners of trust and asset management work, with our managing director having previously served as the Chief Investment Officer of a $2 billion trust company in the United States.
We know the levels of services our clients demand, and we are fully prepared to meet them.
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