What is an offshore trust?
A trust is an equitable obligation, owed by a Trustee to the Beneficiaries of a Trust. It obliges the Trustee to hold and deal with trust property, given to the Trustee by the Settlor, in the manner recorded in a trust agreement.
An offshore trust simply refers to a trust subject to the laws of an offshore jurisdiction (outside of the Settlor’s country of residence).
Once a trust has been created, the Trustee becomes the legal owner of the trust assets and must hold and deal with them in accordance with the terms of the trust instrument and must act in the best interests of the Beneficiaries.
Trust property must be lawfully transferred to the Trustee in order to constitute a valid trust otherwise the assets remain in the beneficial ownership of the Settlor.
The three parties to a trust
There are typically three main parties to a trust: Settlor, Trustee, Beneficiaries and optionally a Protector.
A Settlor is the person that creates the trust. The Settlor will decide on the terms that will be drafted into the trust agreement including who the beneficiaries will be and appoints the rights and duties of the Trustee.
A Trustee is responsible for holding, managing and protecting the trust property and accepts the obligation to abide by the terms of the trust. The Trustee must administer the trust for the benefit of the Beneficiaries.
The Beneficiaries are identified by the Settlor in the trust agreement. They benefit from the trust and have the right to enforce the terms of the trust.
The Protector is an individual or company who is usually appointed to ensure that the offshore trust is managed properly in accordance with the trust agreement. The duties and powers of the Protector vary and are found in the express terms of the trust instrument and can include the power to appoint or remove Trustees if needed.
Key Benefits of an Anguilla Offshore Trust
Trusts are an excellent means of passing along wealth and assets to loved ones after your death, as well as protecting your estate from outside threats during your lifetime. Anguilla is an ideal setting for wealth management through a trust and some of the key benefits include:
- Regulated by the English Common Law System: The Anguilla government is stable and it is a British overseas territory, so it is well governed and secure.
- Asset protection: Upon creating a trust, the offshore Trustee receives title to the Settlor’s assets which protects them from risk of attachment by creditors of the Settlor.
- Confidentiality and Discretion: Anguilla offers a level of discretion which is rarely found elsewhere. There is also no requirement to register your trust.
- Tax benefits: There are considerable tax planning opportunities by creating your trust in a tax-free jurisdiction such as Anguilla. Provided the Trustees are resident for tax purposes in Anguilla, the trust income and gains are not subject to tax and there will be no inheritance tax payable on the trust assets upon the death of the Settlor.
- No probate: Trusts are not subject to probate because the wealth and assets held in trust no longer belong to the Settlor. Instead, the trust owns them until such time as they are passed along to the Beneficiaries. Avoiding probate can save a lot of time and effort and reduce costs.