For those with large estates or sizable accounts, normal inheritance transfers without any special treatment can result in significant taxes being applied, better known as inheritance tax.
In addition, the recipients often realize a double hit as the new funds or assets then represent income, boosting their income taxes in the year of receipt.
It’s not surprising then for a normal transfer to see anywhere from 50 to 80 percent of the asset value being lost to taxation.
For an offshore savings or asset protection vehicle, a Belizean offshore trust can be very effective. The basic nature of a trust legally separates the trust holdings from the personal assets of the individual.
It essentially places them in another legal entity. However, the individual still directs the trust while he is alive or the trust is functioning.
Further, the contents of the trust remain confidential, keeping assets out of public eye, whereas they may not be on regular individual records. This can be particularly helpful when protecting assets from unscrupulous creditors.
Even if a trust is offshore in Belize, it will still require certain elements in place. First, there needs to be a trust document. This can be a deed or declaration, depending on the local legal jargon used.
Whichever the case, the document spells out who the trustee is, the beneficiaries and who the trustor is as well as the assets included.
The trustor can also be known as the settler, administrator, or grantor. That entity is responsible for managing the trust when the trustee dies. In some cases, a protector third party is involved to make sure the trustor follows the rules and administers the trust correctly.
Trusts are frequently used as a method of estate protection by those who are financially well off. However, an offshore trust may be a different idea entirely. Fortunately, offshore trusts in Belize can be very beneficial. They help with reducing tax exposure on assets, they can maintain value of assets when transferred to beneficiaries, and they stay protected from liabilities or creditors chasing after the individual versus the trust.
Most importantly, trusts are private agreements, rarely opened or questioned by courts, thereby maintaining confidentiality as well as avoiding costly probate procedures for an estate.
A Belizean offshore trust can be established either as a fixed agreement or a discretionary one. A fixed trust means the trust will work exactly how it is written, with specific terms on who gets what. The terms can’t be changed after the fact.
A discretionary trust means the trustor controls the distribution of assets consistent with the intent of the trust. Most trusts tend to be a hybrid of the two types, depending on which trust term is involved.
With an offshore trust in place in Belize, the trustee can then go about operating with assets in the trust, including a business, asset titles, managing expenses, using the assets for financial support in retirement, and so on as if life was the same.
However, when the trustee passes away, the trust itself then automatically kicks in and transfers the assets to the beneficiaries as described.
The actual financial assets can be placed in a Belizean bank account as well to make the offshore approach easier. Both work together seamlessly to enhance the protection of monetary assets of the trustee.