Any trust involves three participants or groups of participants.
- The Grantor (also known as the settler) transfers legal ownership of money, investments or other property to the Trustee.
- The Trustee accepts legal ownership of the property and takes on an obligation to hold and use the property for the benefit of the Beneficiaries.
- The Beneficiaries are the individuals or organizations that have been designated by the Grantor.
An offshore (or international) trust designed for long-term asset protection and tax advantages needs certain additional features:
- The offshore trust must be irrevocable. The Grantor can’t simply demand that the Trustee return the Trust Fund to the Grantor.
- The offshore trust must be discretionary. No Beneficiary is entitled to a fixed share of the trust fund. Instead, the Trustee has discretionary authority – and responsibility – to determine which Beneficiary gets what, when he gets it and how he gets it.
- Protector. The offshore trust has a fourth participant – the Protector, who assures that the Trustee exercises its discretion intelligently and never loses sight of the Grantor’s purposes.The Protector advises the Trustee and monitor’s its performance. The Protector has a power to move the trust to a new Trustee, i.e., a power to fire the Trustee. And the Protector names his own successor(s). In most cases, the trust’s initial Protector is the same person as the Grantor.
- Location. The offshore trust is located in a jurisdiction (a) whose laws protect trust assets from all creditors of the Beneficiaries and from all future creditors of the Grantor and (b) whose laws respect a trust even if the Grantor is one of the Beneficiaries.
The trust works to protect the transferred property because it is legally owned by a Trustee that is located in a different country from the Grantor and the Beneficiaries.
The trust works to frustrate lawsuit predators because it is located in a country whose laws are designed to repel them.
The trust works to protect the Beneficiaries, because no Beneficiary owns a percentage interest he can be forced to assign to someone else.
The trust works to frustrate tax collectors because there is no way to allocate any of its income or assets to any Beneficiary.
The easiest and least expensive way to gain the safety of a lawful offshore trust is with the Passport Financial Offshore Trust Kit.
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