A trust is a legal arrangement where you transfer control of assets to a trustee who then holds them for the benefit of a third party, the beneficiary. Trusts are normally written arrangements, and are usually created for a specific purpose, often to avoid certain taxes.
Trusts can also be used to avoid expensive and complicated probate procedures relating to the disposal of assets after the owner dies, as a safeguard against financial or political instability.
In creating the trust, these assets are legally transferred to the trust fund and cannot be reclaimed by the person transferring the assets.
Offshore trusts are much the same as normal trusts, however they are generally set up in association and under the control of trustees outside your country, usually in a tax haven such as certain Caribbean nations, the Bahamas, Jersey or the Channel Islands.
Offshore Trust Types
There are typically four types of trust that are employed in offshore asset protection.
Collection Trust
This type of trust is usually set up with very limited authority for the trustees, the people charged with looking after the trust. Generally in this form of trust the assets and any income generated is held in the trust, and then payments are made to the trust beneficiaries at set times.
Holding Trust
A Hold Trust is generally set up to hold certain assets, most commonly shares in another company. As with all trusts, the way the trust is managed is to the benefit of the beneficiaries, and so if a Holding Trust is holding shares, the trustees are charged with voting those shares to the maximum benefit of the trust holder.
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