The use of an offshore trust can produce many substantial benefits. As always, proper professional advice needs to be taken in one’s country of citizenship, residence and domicile before implementation. The major advantages of an offshore trust include:

Asset protection: An increasing purpose for using offshore trusts is to protect property from attachment by creditors. Certain professionals, such as medical practitioners, company directors, accountants and lawyers may be particularly vulnerable to unexpected and costly litigation. The consequences of divorce in many countries may also be severe. Please refer to the Zetland Guide to Asset Protection for more details.

Intergenerational planning: The use of an offshore trust is an ideal tool for ensuring that property can be allocated in a manner that suits the settlor’s wishes and avoids the consequences of forced heirship or inheritance laws. Family succession planning: A trust provides great flexibility in providing for long term succession. For example, the education and maintenance of grand children or the exclusion of bankrupt or spendthrift relatives.

Privacy: A trust is a private agreement between the settlor and trustee. By establishing a trust in an offshore jurisdiction, privacy is greatly enhanced. Most offshore jurisdictions have strong privacy protection legislation and few of them have tax treaties permitting the exchange of information between governments.

Better environment: By moving offshore, one may take advantage of a less regulated environment with many opportunities. There may also be other international business benefits such as including the use of offshore companies owned by the trust.

Tax planning: An offshore trust may allow the reduction of liability to property, wealth or inheritance taxes in many countries and is a powerful tax planning tool for high net worth individuals. This largely depends on the nationalities of the settlor and/or beneficiaries. Tax savings: An offshore trust set up in a tax haven or low tax jurisdiction will suffer no local taxes on income or capital gains, thus maximising the productivity of capital owned.

In general, the cost of setting up an offshore trust is not high although as mentioned above proper advice should be taken in the settlor’s own domicile and this may incur initial expenses.

Offshore trusts are particularly useful as holding structures for the ownership of offshore companies, investment portfolios and offshore insurance policies. The use of an offshore trust should also be considered carefully before major lifestyle changes, for example, retirement or moving residence to a new country.