Foreign Trust: Offshore Asset Security
joey on Mar 10th 2012
Setting up a foreign trust is a good asset protection strategy that will add a strong layer of protection between your assets and any third party trying to get to your wealth. Its main difference, compared to a conventional trust, is that the foreign trust is often established in offshore jurisdictions which will offer additional benefits and protection.
Why establish a trust?
If you are storing all of your assets in your home country, any bureaucrat can freeze your assets with the click of a mouse. Your wealth is at risk no matter how honest and law abiding you are as a citizen. Having an offshore trust overseas is very much like storing all of your assets in a safely locked vault that is not owned by you. If someone goes after your assets and you have correctly set up a trust it doesnt matter if they try breaking down the vault door, because legally the assets inside dont belong to you anymore.
Setting Up A Trust
Establishing a foreign trust can be very complicated and expensive if you dont know what youre doing. But you need to not be scared away by the paperwork involved. This can be a large step towards developing your independence and resilience. Any paperwork is worth the extra protection you will get from getting your personal trust. To setup a trust, you’ll need capital. And whilst it is totally feasible to begin your trust with as little as $5000 the yearly costs are prohibitive with such a small amount. So if you dont have a fair amount of capital already, truth to be told a trust may not be for you.
A point worth mentioning is that setting up an offshore trust is not about hiding your money from the tax man. It is about diversifying your sovereign risk, i.e. not betting all your money on one horse – your home country.
The first and most important step for establishing a foreign trust is to choose a jurisdiction. Youll often find many trust companies based in Panama, Seychelles, Switzerland, and the Cayman Islands. Which one to choose? That depends.
IRS Form 3520: Dont Forget!
If you intend to create an offshore trust as a US citizen its very important that you get familiar with IRS Form 3520, which is required annually to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.
Who must file Form 3520?
If youre a US Citizen and fulfill one of the below circumstances you need to file Form 3520:
Create or transfer money or property to a foreign trust
Receive (straight or indirectly) any distributions from a foreign trust
Obtain particular gifts or bequests from foreign entities
In the event you do not wish to wind up in jail with heavy fines, it is extremely important that you follow all reporting requirements of the IRS. Details about offshore assets.
Filed in Lapband Surgeon | No responses yet