+1 216 206 8966
info@gbsoffshores.com
+1 216 206 8966
info@gbsoffshores.com

Trust Formation & Asset Protection

GBS Offshores > All Services > Trust Formation & Asset Protection

TRUST, FOUNDATION AND ASSET PROTECTION

Updated time: Jul 30, 2018 , 17:48 (UTC+08:00)

1. Foundations overview

Foundations are an integral component when structuring the ownership of family and corporate assets. Foundations have been in existence for over 100 years. A foundation is similar to a corporate entity in so much as it is a separate legal entity in its own right, yet offers protection and continuity derived from the use of trusts.

A private investment foundation does not normally engage in commercial transactions, but simply “holds” assets. As a legal entity in its own right, without members, directors or shareholders, a foundation is established to reflect the wishes of the founder, who can be either a natural person or corporate entity. The founder’s wishes are contained in the foundation’s charter and regulations. Foundations can be of more benefit than trusts to residents in common-law jurisdictions. Foundations are recognised in all common- and civil-law jurisdictions.

A foundation is more robust to challenge than a trust. If a judgment creditor attacks the assets of a foundation, the law of limitation applies.
The founder appoints a “protector”, known as the supervisory body, which can be a natural person or body corporate. The responsibilities of the protector are specified in the foundation’s charter, and include, but are not limited to, the supervision of the foundation council.

1. 1 Assets typically held by a private-interest foundation

  • Shares
  • Investments
  • Life-insurance policies
  • Property and real estate
  • Intellectual property

1.2 Advantages of a private-interest foundation

  • Confidentiality of founder’s wishes
  • Asset protection
  • Wealth protection
  • Provision for beneficiaries
  • Recognized in all common- and civil-law jurisdictions
  • Avoidance of forced-heirship rules
  • International tax planning
  • Inheritance and estate planning
  • Protection against third-party litigation

1.3 A private-investment foundation is a benefit for:

  • successful international tax planning;
  • preservation of wealth against political, family or economic uncertainty;
  • consolidation of ownership of assets;
  • maximising benefits of assets for beneficiaries; and
  • inheritance- and estate-tax planning.

2. Trust overview

Contrary to what many people think, estate-planning trusts are not necessarily reserved for just the wealthy. Even if you’re not among the 
top-100 moneymakers in the country, you may be able to benefit from the tax-saving benefits of certain trusts.

What is a trust? Trusts defined and categorised

A trust is a three-party agreement in which the owner of an estate (the “grantor”) transfers the legal title to assets to somebody else (the trustee) for the purpose of benefiting one or more third parties (the beneficiaries). Trusts may be revocable or irrevocable, and may be included in a will to take effect at death.

Revocable trusts can be changed or revoked at any time

For this reason, the government considers the specified assets to still be included in the grantor’s taxable estate. Therefore, you may possibly have to pay estate taxes on those assets remaining after your death. In addition, you may have to pay income taxes on revenue generated by the trust during your lifetime.

Irrevocable trusts cannot be changed once they are set up

In general, the assets placed into an irrevocable trust are permanently removed from a grantor’s estate and transferred to the trust. Income tax and capital gains tax on assets in the trust can be paid by the trustee on behalf of the trust or the grantor, depending on the type of trust. Upon a grantor’s death, the assets in the trust generally are not considered part of the estate and are therefore not subject to estate taxes.
Most revocable trusts become irrevocable at the death or disability of the grantor.

The trustee plays an important role

The trust’s grantor names a trustee to handle investments and manage the portfolio. In some cases, the grantor can work with the trustee on major decisions, or the trustee can be assigned full authority to act on the grantor’s behalf.
A trustee may be an individual such as a relative, friend, an attorney or accountant, or it may be an entity that offers experience in areas such as taxation, estate law and money management.

Trust terms

  • Grantor (or trustor): The owner of the assets that are transferred to the trust.
  • Trustee: The person or entity that oversees management of the trust according to the grantor’s specifications in the trust.
  • Beneficiaries: The persons or entities that receive benefits from the trust.

2.1 Assets typically held by an offshore discretionary trust

  • Shares
  • Investments
  • Life-assurance policies issued on the life of the grantor
  • Property and real estate
  • Intellectual property

2.2 Advantages of an offshore discretionary trust

  • Confidentiality
  • Asset and wealth protection
  • Provision for beneficiaries
  • Recognised in law
  • International tax planning
  • Inheritance- and estate-tax planning

2.3 An offshore discretionary trust is a benefit for:

  • successful international tax planning;
  • preservation of wealth against political, family or economic uncertainty;
  • consolidation of the ownership of assets; and
  • maximising benefits of assets for beneficiaries.

TRUST FORMATION & ASSET PROTECTION COMPARISON

Updated time: Jul 30, 2018 , 17:56 (UTC+08:00)
CIVIL LAW TRUST FOUNDATION
Original source law Common law  
Registration with Registrar of Companies No Yes
Separate legal personality No Yes
Confidentiality Records not available for public inspection Records not available for public inspection except when authorised by Secretary of Foundation or 
FSC (Financial services Commission)
Constitutive document Trust deed Charter and articles (if any)
Secretary No Yes
Protector Yes, may be designated Yes, may be designated in the charter
Tax status Tax exempt if non-resident Tax exempt if non-resident
Redomiciliation Allowed by change of trustee and proper law Allowed
Asset ownership Vested in trustee Owns assets directly
Management of assets By trustee By council and officers
Duration Up to 99 years for discretionary trust purpose. Trusts may have a perpetual duration. Perpetual unless otherwise provided in the charter
Termination Maybe revocable or irrevocable  

FSC*: Financial Services Commission.

Applicable by comparison for Mauritius, Seychelles, Belize and BVI.

TRUST FORMATION & ASSET PROTECTION PROCESSING

Updated time: Jul 31, 2018 , 12:09 (UTC+08:00)

Give us your requirement for trust or foundations in each relevant jurisdiction. If you need any advice to select the right solution, feel free to contact our team.
Depending on your solution, provide us with the required information as below.

For a trust

  1. Proposed trust name
  2. Beneficiaries list
  3. Trustee and protector names
  4. Successor trustee and protector names
  5. Proof of identification for trust grantor, beneficiaries, trustee and protector (scan of passport and proof of address)
  6. List of assets and related documentation

For foundations

  1. Founder’s name
  2. Beneficiaries list
  3. Settlor’s name
  4. Protector’s  name
  5. Council members’ names

Based on that information, we/GBS Offshores will help you fill in the application form and then submit it to the government.
After 5 working days, we will return the full trust/foundations kit you ordered, and you are ready to use it.

TRUST FORMATION & ASSET PROTECTION FEE SCHEDULE

Updated time: Jul 31, 2018 , 12:16 (UTC+08:00)
Country/jurisdiction Time frame Services fee
British Virgin Islands Trust 9 working days USD 4,900
Belize Trust 7 working days USD 4,800
Seychelles Trust 7 working days USD 4,500
Hong Kong Trust 14 working days USD 8,900
Mauritius Trust 14 working days USD 4,900

Services included

  • Establishment of the trust
  • Annual fee for the provision of a trustee
  • Government fee for registration of a Belize international trust
  • Annual fee for provision of trust agent
  • Copy of the original document of the trust registration, notarised and legalised by apostille
  • File the director’s data to the Registrar of Companies related to the trust

HOW CAN WE HELP

All information entered on this form will be kept strictly confidential and subject to our privacy policy once received by us. Your transaction will be secured using SSL/TLS encryption.

Offshore Company Formation & Licensing Solutions

GBS OFFSHORES PROVIDES SPECIALIZED SERVICES FOR OFFSHORE COMPANY INCORPORATION & SUPPORT SERVICES
About the author