Gift & Estate Tax Treatment
Of a Model Offshore Trust

A Model Offshore Trust is the ideal tool for international estate planning.

Unless and until you make it otherwise, the Trust is gift and estate tax neutral. That allows you to fund your Trust for immediate asset protection and then turn to the task of avoiding estate tax as a separate project. Whenever you’re ready, the Trust has built-in “switches” that you can flip to efficiently move wealth out of your taxable estate. This and the pages that follow explain how it works.

Your transfer of property to your Model Offshore Trust is an “incomplete gift” for tax purposes. No gift tax is due.

Instead, the value of the Trust Fund remains in your taxable estate, just as though the Trust had never been created. Thus the Trust by itself is estate-tax neutral. Transfers to it neither increase nor decrease your family’s potential liability for gift and estate tax.

Nonetheless, as part of an overall estate plan, the Trust can be a strong positive factor for reducing tax. It can be used to carry out all the conventional estate planning strategies. And it can provide…

Advantages Conventional Strategies Miss

First, the safety and protection afforded by a Model Offshore Trust allow you to pursue lifetime giving more aggressively. You know that the funds held by the Trust will be available to satisfy your unmet financial needs regardless of any loss of assets at home to taxation or lawsuits.

Second, your Trust eliminates the constraints that often hold an individual back from effective estate planning.

  • You won’t impoverish yourself by using the Trust to transfer wealth out of your taxable estate — since you will still be a member of the Beneficiary Class and eligible to receive distributions.
  • You needn’t fear harming younger beneficiaries by giving them too much too soon, because your gifts will be tied up in the Trust.
  • And you can be confident that the wealth you transfer out of you taxable estate will be invested prudently, because of the Trustee’s legal duty to act prudently and because you can have as much control over investment policy as you wish.

NEXT:  Offshore Estate Planning — the Red and the Green

The first step is to push part of the Trust out of your taxable estate.

or… Start over with Advanced International Estate Planning

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