In the past, foreign trusts used to be considered as a tool used by people with high purchasing power to hide their assets abroad. However, foreign trust represents a legal and intelligent way to protect your assets, diversify your holdings and secure the future of new generations.
See the characteristics of an offshore trust and the six specific benefits at offShoreCitizen.net for more information.
What is an offshore trust?
A trust is a structure to which assets are transferred. The party responsible for placing the assets in a trust is known as a “trustee”, and the party responsible for administering those assets is known as a “trustee”. A “beneficiary” is the third party that will receive the financial assets or benefits in the future.
A foreign trust works in exactly the same way as a domestic trust, except that it is located in another country. This means that the assets, in addition to being separated from the trustor, are located in a foreign location.
- Take the distance from your specific assets
One of the reasons for establishing a foreign trust is to transfer some or all of your assets. There are several reasons why many people do not want to be legally linked to their assets.
Instead of trying to sell those assets, they can be transferred directly to a foreign trust. Once sent to the trust, those assets no longer belong to the trustor nor are they under its control. However, you can establish a foreign trust with specific intention guidelines to ensure that the assets are managed in the manner you consider most appropriate in the future.
- Protect your assets against possible bankruptcy
In the United States alone, there are more than one million bankruptcy cases formally declared every year. Bankruptcies can be for individuals or for entire corporations. Many people fear them, but bankruptcy does not necessarily imply a failure. Instead, it can be an opportunity to restructure, pay off debts or explore new possibilities for growth.
However, many people and businesses want to protect certain assets in case of possible bankruptcy. Once the assets are in foreign trust, they will no longer be in your name. Therefore, they can be exempt from any bankruptcy proceedings.
- Remove assets from the domestic legal jurisdiction
Risk management should be the central axis of any financial strategy. Although no one wants to contemplate the possibility of assets being frozen or having to deal with a divorce, those events can happen.
As long as the assets are in your name and are maintained in domestic investment structures, they run the risk of being confiscated or penalized. To prevent this from happening, a foreign trust can be beneficial. As their assets are not in their name or controlled by a domestic jurisdiction, they are also far from the reach of those who want to confiscate them.