A lawful offshore trust (also called an international trust) is, by a big margin, the most powerful arrangement for protecting family wealth from taxes, litigation and regulation. It takes you far beyond the safety you can achieve with a stand-alone limited liability company. It puts just the right amount of legal distance between you and the wealth you want to protect.
Legal distance prevents any future creditor (such as the winner of a lawsuit) or any government agency from compelling you to break into your own trust. It also protects your heirs from being taxed on the trust’s income — an enormous advantage for family wealth accumulation.
“Legal distance” doesn’t mean that you simply hand your assets over to a trustee and hope for the best. On the contrary, you can continue to personally manage all trust assets. You also can retain strong influence — but not outright control — over when the beneficiaries you’ve included receive money or other benefits from the trust. The trustee’s job is to work for your purposes.
A lawful international trust is a complete solution because no one can force you to undo it. It is a permanent solution because there’s no built-in termination date and because, after your lifetime, it completely disconnects from the U.S. tax system.
The Safest Place You Can Be
Here’s what you can achieve by placing your assets under the umbrella of an offshore trust:
- Put assets far beyond the reach of any future creditor, including the winner of a lawsuit. This greatly reduces the risk that someone will invent a reason to sue you.
- Protect wealth from future exchange controls, capital controls or other desperate government measures, such as forced sales of privately owned gold. Your trust will be living in a different legal environment than the one you live in at home.
- Reduce the tax on your own estate to zero. Depending on the size of your estate, reaching that goal may take a number of years, but it is entirely achievable, even for the largest estate. Your offshore trust is the ideal environment for getting the job done, a better environment than any domestic trust.
- Protect future generations from estate tax. After your lifetime, your trust detaches from the U.S. tax system. You could be the last person in your family who needs a plan for avoiding estate tax.
- Enable future generations to accumulate and compound investment returns free of current tax, for faster build-up of value. Tax-deferred compounding increases the amount of after-tax, spendable cash available to future generations.
- Retain as much control over investment management as you want. There is no need to turn the investment management function over to someone else.
- Operate with tight financial controls, so that money in your trust fund never moves without your say-so and so that you always know where every penny of it is.
- Exercise strong influence over how the trust is administered, so that the trustee never loses sight of your purposes and intentions. Hold enough influence so that you are confident the trustee will excise its powers thoughtfully – but avoid keeping any powers that you someday might be forced to use against your will.
- Gain access to financial institutions that routinely turn away business from U.S. investors. You personally are no longer welcome at most non-U.S. banks and brokerage firms, because those institutions dread getting entangled in U.S. tax and securities laws. Your trust is another matter. It can invest where you can’t.
- Avoid problems with the IRS. The recipe is ridiculously simple. The tax rules tell you clearly what taxes to pay and what reports to file. Follow the rules and live without problems. (It’s disregarding the rules that invites trouble.)
Offshore trusts are a big topic because they provide big, permanent advantages. A trust completes and perfects what a foreign LLC only starts. Invest a few minutes to learn how to achieve those advantages for yourself and your family by reading Your Own International Trust. Then, for even more information, see Model Offshore Trust
or… Return to Home Page