Offshore Trusts: Understanding The Basics
Posted on: 24 October 2018
Obviously, financial advisors and attorneys who specialize in finance give people financial and legal advice on how to best manage and grow their financial resources. For most people, this includes several financial vehicles, such as retirement funds, mutual funds, a stock portfolio, perhaps real estate investments, certificates of deposit, precious metal accumulation, and more. One option many people aren't aware of is offshore trusts. Here is a look at what an offshore trust is and the benefits of having one.
What Is An Offshore Trust?
An offshore trust is a way of managing and protecting your assets in a country other than the country of which you are a resident. An offshore trust can be advantageous in certain legal and financial situations, but it must be set by a professional to make sure you don't inadvertently break any laws.
An Offshore Trust Can Protect Your Assets
A trust is its own independent entity. Your assets can be transferred to this trust. Assets don't need to be just money; they can be anything you own. Jewelry, art, gold and silver coins, real estate, and vehicles can all be transferred to a trust. Just as a business owner has an attorney form a corporation to protect the business's assets, a trust can do similar.
An Offshore Trust Can Help You Save Money On Your Taxes
Just as a corporation is taxed differently than an individual, so is an offshore trust account. This is a complicated procedure that if not done correctly could cause issues with the Internal Revenue Service. However, when an offshore trust is set up according to the guidelines by a professional trust administrator with the legalities in mind, you could see considerable savings to your personal income taxes.
An Offshore Trust Can Help Protect Your Privacy
Wealthy people, public figures, and celebrities are often times reluctant to make out a will. This is because the process of making a will requires filing it with the proper authorities to make sure the estate taxes can be computed and paid. With a trust, the trust technically "owns" the assets that have been transferred. Because this is a different type of legal entity, the contents of the trust don't need to be disclosed.
An Offshore Trust Can Provide Greater Flexibility
In many states as well as many countries, laws govern who can inherit what upon your death. For example, in many states, assets are a part of the marital property. If you have children from a previous marriage, you likely want to provide for them when you are gone. Without setting up a trust with the assets you brought into a subsequent marriage, everything you own will go to the surviving spouse. An offshore trust account will prevent this situation.
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