Offshore Trust Account

Offshore trust accounts are accounts held in the name of an offshore trust. Offshore trust accounts are used mainly for depositing the funds held within an offshore trust or the gains made from trust activities.

Offshore trusts are subject to the offshore trust laws of the jurisdiction in which they are created and are managed by a trustee who is appointed to administer the assets held within the offshore trust account in accordance to the rules established in the trust deed. The clauses contained in the trust deed of an offshore trust account are dictated by the settlor or grantor who may or may not be a beneficiary to the offshore trust account and offshore trust laws generally provide for the beneficiaries of an offshore trust account to be individually named, grouped or made reference to based on the relationship held.

The assets placed in an offshore trust account can include cash, real estate, investments, boats and valuable possessions that the person (s) forming the trust may want to have managed on behalf of a child, for instance, who is underage or handicapped and is incapable of managing the assets. The offshore trust account ensures that the assets to be inherited by the child are protected and handed over at a specified date. Setting up an offshore trust account is one of the ways in which many people have sought to secure college funds for their children or close relatives because it provides security and can only be administered according to the founder’s wishes.

Since offshore trusts are generally exempt from a number of taxes by their jurisdiction of incorporation, such as inheritance, estate, capital gains and wealth taxes, transferring property with the use of an offshore trust account is made simpler as a result of the reduced tax burden that the beneficiaries and the settlors would have gone through under normal circumstances with the use of a regular trust or by simple transfer. The assets placed in an offshore trust account can also be protected with a carefully written trust deed that dictate the conditions under which property held in an offshore trust account are to be transferred in order to ensure that it remains within a family for several generations.

Moreover, an offshore trust account is a valuable tool in that it allows persons to effectively plan their retirement in a way that will enable them to secure a steady source of income during retirement as funds held in an offshore trust can be set to be disbursed at that time.

Offshore trust services are widely provided by law firms that specialize in providing offshore services, including several offshore banks that offer offshore trust formation services that will feature offshore trust accounts. When forming an offshore trust or opening an offshore trust account for an already existent trust, it is important to find out the juridical requirements of one’s country residence for offshore trust account holding to ensure that all the right steps are taken to avoid difficulties with any tax authority.

Back to top