Creating an offshore trust offered by wealth solutions firms like Ora Partners is a complex process with financial and legal implications that should be carefully considered before making any decisions. The suitability of setting up an entirely separate set of financial arrangements in another country depends on individual preferences and specific needs, with some considering the benefits outweighing the risks or expenses.
Setting up an offshore trust can be expensive and may not be worth the hassle for some people. In addition, deferring your tax payments is not always favorable based on U.S. tax laws. However, many individuals might find good reasons to set up a trust in a foreign country.
For starters, removing your assets fromU.S. soil addsa layer of protection from entities trying to come after your wealth. It gives you more investment freedom. Because an offshore trust is generally not considered a non-U.S. entity, this could open upmore financial opportunities. It could include opening up a savings account in a foreign bank, as well as exploring foreign investments.
Are Offshore Trusts Safe?
The safety of an offshore trust depends on how it is organized and the number of precautions that trustees and estate managers take. It is true even for a trust established in the U.S.
First, it’s strongly recommended that you set up your offshore trust in a country with a stable government. Political instability may lead to regime changes and, thus, swift changes to currency exchanges, tax policies, and the nation’s economy. Unstable regimes are generally associated with corruption. Common offshore trust jurisdictions include the Nevis, the West Indies, the Cook Islands, and Hungary.
Next, carefully selecting roles involved in the trust can help increase its safety. For example, the trustee is typically a foreign trust institution or company. A non-U.S. citizen, such as a close friend or advisor, can also serve as the trust protector. One must appoint entities and individuals who are trustworthy to help minimize the risk of embezzlement.
Lastly, it’s generally safer when the asset held in your offshore trust is the ownership of a foreign Limited Liability Company (LLC). A debtor can control this type of entity, and personal assets can be insulated from lawsuits and claims.
How Do You Set Up an Offshore Trust?
Below are five steps to setting up an offshore trust. It may be beneficial to work with an experienced trust attorney who can help you with each of the steps:
- Research and select a foreign country in which to establish your offshore trust.
- Hire a foreign entity. A viable option would be an offshore trust based in the country in which the trust will be established. You can also work with an asset protection attorney or U.S. trust company to help you find an offshore trust company and location.
- Determine your non-U.S. jurisdiction, offshore trust structure, and trustee. Working with a domestic estate planning attorney can be beneficial during the planning stages.
- Cooperate with your offshore trust company’s procedures, such as conducting a background check.
- Draft your offshore trust agreement.
