Georgetown Trust Blog

Integrating an Asset Protection Trust into Your Offshore Protection Plan

Posted by Georgetown Trust on Feb 5, 2015 1:00:00 PM

asset-preservationProtecting the wealth generated from your offshore investing efforts is something that every investor should think about very carefully. Your ultimate goal is to utilize a combination of financial strategies that help to ensure that those assets are managed carefully and continue to add to your financial security.

At the same time, the vehicles that you use as part of the protection strategy must pave the way for achieving specified goals related to caring for you and your loved ones over the long term.

Chances are that you have already looked into offshore life insurance as a way of protecting some of your assets. Along with term and whole life options, the establishment of a variable universal life insurance plan that allows you to wrap some of your assets for safe keeping is a great place to start.

If you’ve already taken that first important step, you are ready to move on to the creation of an asset protection trust or two.

Trusts and the Asset Protection Effort

The underlying purpose of an asset protection trust is to ensure that resources are set aside for purposes that are in line with your financial goals. In essence, trusts allow investors to allocate specific assets to the care of the trust and a fund administrator.

Depending on the type of trust you establish, it is possible to ensure that the resources devoted to the fund cannot be diverted for use to any other purpose. Even if you undergo some sort of financial reversal, your creditors would not be able to seize those assets in order to settle any judgement against you.

What this means is that any individual or legally recognized entity that you choose to name as the beneficiary will receive the proceeds from the trust in accordance with your wishes. This arrangement can be used to create living trusts that help children and grandchildren with educational costs, living expenses or any other designated purpose that you include in the fund’s terms and conditions.

What Type of Asset Protection Trust is Right for Me?

With so many different ways to arrange an asset protection trust, it is important to determine why you want to establish a trust and what you hope to accomplish with the assets placed in that fund. Identifying the purpose in as much detail as possible will make it easier to spell out how those assets should be used.

From there, it is much easier to work with a financial professional to determine which types of trust funds would accomplish what you have in mind.

After establishing a clear idea of what you want to accomplish with the trust, there is the matter of deciding where to locate the fund. Just as with investment laws, the laws and regulations regarding trusts and the management of the assets entrusted to the funds will vary from one country to the next.

Ideally, you want to set up the trust in a nation where those regulations are decidedly in your favor. The regulations should allow for the maximum benefits to be disbursed to the beneficiary. In the interim, those same regulations should allow you to take advantage of laws that keep your tax obligation to a minimum.

Assessing Your Options for Asset Protection

Don’t get in a big hurry to set up an asset protection trust. With so many options in an offshore environment, it is important to weigh the pros and cons with offers based in a number of countries. Take the time to project the outcome of each trust, based on the type of assets pledged to the fund and the potential for shifts in financial and tax related laws over the next decade or so.

With this type of data on hand, it will be much easier to determine whether you want to add a single trust to your asset protection strategy or possibly create several different trusts that ultimately benefit several people or organizations that are close to your heart.

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Topics: Asset Protection