A Trust is a legally acknowledged
and binding arrangement whereby a person (or a number of people), known
as the Trustee or Trustees become the legal owner(s) of assets transferred
to them by a Settlor or Settlors but only in as much as they are holding
these assets for the benefit of another person or persons, known as the
Beneficiary or Beneficiaries.
The assets which are placed info a trust are called
Trust Properties and can include anything which can be legally transferred
such as: Cash, Stocks and Shares, Property, Boats, Cars, Antiques, Copyrights,
Land, Pension Funds, Complete Trading Companies. In our experience cash
(bank accounts), property and trading companies are the three most common
assets to be placed in offshore trusts, for obvious reasons. Although
a trust can be a verbal agreement and implied by law, i.e., your words
and actions are legally acknowledged by previous, similar precedents,
it is far mare common for a trust to be established by way of a written
document called either a Deed of Trust or Declaration of Trust. This document
describes the trust and details how it is to be administered and for whose
The person giving assets to a trust is known as the
Settlor and is commonly named in the Trust Deed, but, depending upon the
jurisdiction where the trust was established, not necessarily so. It is
therefore quite possible to give assets to a trust anonymously (in the
sense that you donât want to be linked as having given your assets
to "your" trust). This feature of certain trusts is regarded
by many as one of the most valuable, for implemented correctly it can
enable someone to appear to be of only modest means yet live a luxurious
lifestyle, the "trappings of wealth" all belonging (ultimately)
to a trust with no legal connection to that person. When either periodic
or terminal payments are made from a trust to either a person or people
named in the Trust Deed, the recipient(s) are known as Beneficiaries,
i.e., they benefit from the trust.
Types Of Trusts
Offshore countries, with their liberal taxation laws and strict non-disclosure
arrangements (usually by way of not even knowing) are ideal bases for
trusts of all kinds. Some offshore jurisdictions will allow nominee Trustees,
will allow assets to be settled into a trust after it is formed
to protect the identity of the Settlor and the type and value of the assets
placed in trust, will allow trusts to have an indefinite life (most jurisdictions
insist on a specific life span for a trust) and will allow Beneficiaries
to be un-named and left to the discretion of the Trustees (see next section).
Indeed it is not unknown for some enlightened jurisdictions to ensure
that their laws over-ride the laws of the Settlor's and/or Beneficiaries'
country in any trust matters.
A Beneficial Trust is one in which the Beneficiaries are specifically
named in the trust document, i.e., "John Smith will receive the sum
of US $100.000 on his 25th birthday." Whilst beneficial trusts can
be of value for asset protection and perhaps inheritance tax purposes,
because there is a specifically named beneficiary (or several), they are
all but useless for tax planning and privacy purposes, the Revenue Authorities
in the country of residence of the beneficiary will soon become aware
of the "inheritance."
Asset Protection Trusts
Just as their name says, asset protection trusts are designed to protect
assets of all kinds from claims made against them. They form no part in
tax avoidance but are ideal for people whose lifestyle or profession may
leave them open to either legal or civil claims. For example they are
widely used to avoid malpractice suits against doctors and surgeons (especially
in the USA), to protect personal and family assets against claims made
by wives/partners in divorce cases or to protect businesses against the
financial consequences of legal claims.
If a beneficiary is named in a trust document, or if the beneficiary is
clearly also the settlor, Revenue Authorities tend to "look through"
such trust arrangements and regard the beneficiaries as the owners of
the trust assets and income. Thus it is quite feasible that beneficiaries
can be taxed on assets or income which they never own or receive, simply
on the basis that they could be the owner(s)! To get round this problem,
what are called Discretionary Trusts were established. These are arrangements
where the actual beneficiaries of the trust are at the absolute description
of the trustees. Since no specific beneficiaries are named in the trust
document, revenue authorities cannot tax any potential beneficiaries since
there is no way of knowing when, or even if, they will benefit from the
trust, although tax is (in theory) payable on the receipt of the proceeds
of the trust by a specific beneficiary. But you wouldn't be so foolish
as to have any distributions from the trust made over directly to you
anyway would you? Do so via an offshore account or via an offshore company
linked to the trust. OFFSHORE DISCRETIONARY TRUSTS
ARE, IN OUR OPINION, ONE OF THE MOST VALUABLE TAX AVOIDANCE VEHICLES AVAILABLE.
Setting Up Your Trusts
As with Offshore Companies and Offshore Foundations, we employ the Republic
of Panama for the majority of our Trust work, the legislation there being
amongst the most comprehensive in the world. Panamanian Trusts are totally
private, there is no taxation of Trust income, assets can be settled AFTER
a Trust is formed and Trusts established within the Panama jurisdiction
are governed by Panamanian secrecy/confidentiality laws, one of which
is that it can over-ride that of other countries, i.e. a "foreign"
court order that a Trust (or Trustee) should be liable for payment of
damages will be overturned by a Panamanian Court.
What do we need from you?
In order to establish your Discretionary
Trust in Panama, please submit the following:
name of your Trust (Please indicate three choices in case name is not
(Please indicate Beneficiary/ Beneficiaries or if you would like your
Beneficiary to be the BEARER or an offshore corporation.)
Thanks and best regards,