There has always been a general belief that offshore trusts are used by the wealthy to hide their wealth and avoid tax. But this is a misconception as both the British Virgin Islands and Cayman Islands has embraced effective, measured anti-money laundering regulation that reflects some of the highest standards in the world.
Firstly, let’s understand what a trust is – it is a legal relationship created when a person (the settlor) places assets under the control of another person (the trustee) for the benefit of specified persons (the beneficiaries) or for specified purposes.
The trustee is the legal owner of the assets put into the trust and is required to manage those assets for the benefit of the beneficiaries or to further the specific purposes set out in the trust deed.
Setting up a foreign trust is a sound asset protection strategy to add a layer of protection to your assets. By using an offshore trust rather than a domestic trust, you can enjoy additional protections not available in your home country.
Here are 5 key reasons why people set up an offshore trust: