A trust is more than just a legal arrangement – it’s a way for individuals to ensure their assets are protected and used following their wishes. And what’s the key to setting up a trust? According to Puai Wichman, a wealth protection and management expert, the Deed of Trust, or Declaration of Trust, is the roadmap for managing and distributing assets. Three individuals are at play with trust: the Settlor, Trustee, and Beneficiary. By entrusting assets to another person or legal entity, the Settlor says, “I trust you to manage my assets according to my wishes for the benefit of the Beneficiary.” So, if you’re considering a trust for your assets, remember that the Deed of Trust is the foundation for ensuring your assets are protected and managed responsibly.
Offshore Trust Versus Onshore Trust
An offshore trust is created under the laws of an offshore jurisdiction and operates similarly to its onshore counterpart. The Settlor transfers assets to a trustee who manages them for the designated beneficiaries or purpose. Some offshore jurisdictions have incentivized settlors by modifying their laws to provide more benefits than onshore trusts. While some consider Liechtenstein an offshore jurisdiction, this civil jurisdiction has taken an unconventional approach by introducing the trust concept by statute from common law jurisdictions. No matter the location, offshore and onshore trusts are tools to effectively manage assets and are worth considering for anyone seeking to do so.
Foreign asset protection trust, often set up in tax havens, presents a compelling option for anyone looking to shield their assets from potential legal or financial attacks. Puai Wichman mentions that, unlike onshore trusts, offshore trust arrangements are not subject to local tax compliance or court rulings, making them an attractive option for those seeking to maximize their tax benefits and asset protection. With the added benefits of stronger asset protection and greater confidentiality, offshore trusts are an enticing option for anyone looking to secure their wealth against outside threats. So, if you’re looking for a way to safeguard your hard-earned assets, offshore trusts are worth considering.
The Offshore Trust Structure
Settlors are the captains of their offshore trust ship, who can chart the course and steer its direction. These creators and owners of the assets within the trust also go by many names, depending on the legal system and convention in use. Grantors, trustors, trust-makers, and donors are all terms that can refer to the Settlor. It’s a significant role with several main responsibilities, including deciding to form the offshore trust and providing clear instructions on the transferred property, the beneficiaries’ identities, the trustees’ rights and duties, and more. In some cases, the Settlor can also act as a beneficiary (third party) and a co-trustee, further cementing their role as a key player in the trust.
A trustee is responsible for holding legal title to the assets and must act with due diligence and good faith when administering the trust. Most people choose a financial institution or a licensed trust company as trustee to fulfill their duties. However, their job is to hold and distribute the assets to the intended beneficiaries. The trustee’s power to distribute assets only to the beneficiary benefits the trust, and they cannot use trust assets for their purposes. So, when it comes to selecting a trustee for your offshore trust, it is important to choose someone who will act in the best interest of your beneficiaries and fulfill their responsibilities with due diligence.
Beneficiaries are a vital component of any trust, offering a means to ensure that the assets contained within the trust continue to be managed and distributed following the intentions of the trust’s creator. In most cases, Puai Wichman says beneficiaries are individuals or entities that can benefit from the trust’s assets, with trustees playing a critical role in managing and allocating these resources as efficiently and effectively as possible. To this end, the terms and conditions governing the distribution of these assets must be spelled out in the trust’s Deed, providing transparency and clarity for all parties involved. Ultimately, beneficiaries are granted the freedom to use trust assets as they see fit, whether selling or assigning them to others, ensuring that the value of the trust continues to grow and thrive over time.
Protectors are a crucial part of any offshore trust operation, overseeing the proper management of the trust’s assets. This important job involves supervising the trustees and stepping in to replace them under specific circumstances. But protectors are much more than just watchdogs of an offshore trust – they also function as trusted advisors to the Settlor. Whether their role is to provide guidance on future investments or to ensure compliance with regulations, these protectors are essential to the successful operation of any offshore trust.
Puai Wichman is the founder and CEO of Ora Partners, an international trust provider and wealth management firm dedicated to helping families and individuals protect personal and corporate wealth.