Offshore Asset Protection Trust Taxation – The Importance Of Tax Planning

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Whenever the word ‘offshore’ is mentioned, a lot of people immediately start to think about grand schemes designed to hide away money, and evade taxes. That is of course something you can’t do, I would never recommend it. The main reason a lot of the public associate the offshore industry with those practices, is because of a few people that have misused completely legitimate financial services.

An offshore asset protection trust is not intended to either decrease, or increase your taxes. For the most part it’s tax neutral. The good thing about a properly structured trust, is that it works as a solid foundation for your finances. Once you have that foundation in place, you can build whatever you want on it. You can form companies, and do advanced tax planning on top of the asset protection you’ve already done.

Offshore Asset Protection Trust Taxation - Infographic

Forming a trust is a recommended first step to keep your assets safe, in case something unexpected were to happen.

Even though your asset protection trust alone won’t decrease your taxes (even though you can do tax planning after the trust is in place), it’s still important with some degree of tax planning. Here’s where reputation is important. In order to make the whole process easier for you, it’s always a good idea to choose a top tier jurisdiction. Meaning a country to host your trust, which has a good reputation.

The benefits of using reputable trust jurisdictions, is that governments and banks will see you in a different light. If you place your trust in Cook Islands right away, it might look a bit odd. Because that country has a somewhat tainted reputation, after a lot of people having missuses the local trust laws, which are very strong.

On the other hand, Jersey in the English channel is a trust location with a top tier reputation. To keep such good reputability, they require written tax advice, before creating any structure. Something that is usually not the case in a lot of other places, where you can form a trust.

Doing some tax planning while creating an asset protection trust can be important, but it’s first after the trust is ready it’s a good time to really take advantage of tax saving strategies, after you now have learnt more about offshore asset protection trust taxation.

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Fredrik helps high net worth individuals with creating international asset protection strategies. To keep anything from currency, real estate, precious metals and any other kind of investment protected from an unexpected lawsuit.