Finding the Best Offshore Trust Jurisdiction in 2024
Asset protection continues to be a hot-button topic as we near the end of the first quarter of the year. Many entrepreneurs are seeking to implement a protective structure for their assets given that litigation is on the increase. Subsequently, this article will take a serious look at what are the best offshore trust jurisdictions in 2024.
In Today’s World Asset Protection is Mission Critical
Deciding What You Want from an Asset Protection Trust
The first step in building your own, personal, fortress is deciding upon what you want from an asset protection trust. Setting up an offshore trust can provide different benefits depending on whether you are looking for privacy, asset protection, credit, and heirship protection.
However, many of these benefits vary between jurisdictions which is why it pays to understand the major points of difference.
Major Jurisdictions for Asset Protection
In the offshore trust world, there are three key jurisdictions that are often seen as the gold standard of protection. Our experience is that most clients will choose formation services in either the Cook Islands, Nevis, or Belize.
The reality is that all three jurisdictions provide superior protection and are exceedingly difficult for creditors and litigants to invalidate. However, they do differ slightly in their relevant laws and the asset protection case law history supporting the validity of their trusts.
The Cook Islands Asset Protection Trust
When you look around the world, at offshore common law structures, the Cook Islands Offshore Asset Protection Trust (APT) continues to be seen as the gold standard. The reality is that the International Trusts Act of 1984 was written by industry specialists with the sole goal of protecting the interest of settlors.
Subsequently, it is practically impossible to sue a trust established in the Islands. Legal action requires you to commence your lawsuit locally as the Cooks do not recognize any form of foreign judgment.
Additionally, the islands have legal duress clauses contained within their laws which means that, any time a trustee comes under legal threat or duress, the local trustee will ignore all and any orders to disgorge assets. This means that foreign court orders will be ignored and your assets will remain safe within he structure.
Common Components of a Cook Islands Trust:
- Settlor and Beneficiaries have complete anonymity.
- No forced Heirship.
- No recognition of foreign judgments
- Fraudulent conveyance provision only extends 1-year
- The APT is tax neutral
- No legitimately formed trust has ever been ruled invalid
- Use of a controlling LLC can give you complete control over the trust assets
When clients ask for heavy levels of protection, I normally advise the use of a Cook Islands Trust paired with an offshore LLC.
Expect to pay approximately US$10k in setup and establishment fees depending on the level of services and advice required.
The Nevis Trust Solution
Nevis also appears high on our list of smart countries to establish a common law trust within. The reason is that for years the nation has sought to block almost all creditor attempts at accessing local assets. It is similar in scope to the Cook Islands APT but has some differences, namely:
- Trusts can be split or combined and pour over provisions added.
- The Nevis trust will last in perpetuity and will not cease when beneficiaries or key trustees/protectors expire.
- Creditors must post a US$100,000 bond to commence any form of local legal action.
In short, Nevis provides excellent levels of protection for those looking to use an offshore trust and a controlling LLC. Typical costs for the establishment of a Nevis Trust are around the US$4k mark.
Belize as an Option
Belize limits the length of their trusts to 120 years (unlimited for charitable purposes) but they have retained many of the same protections as the prior two jurisdictions. Their biggest benefit is likely the fact that their overall costs are significantly lower but you may find banking facilities difficult to source.
Belize’s main benefits are:
- Tax neutral entity.
- All trust details are private and held from the public.
- No foreign judgments and no reciprocal judgments.
- No forced heirship and strong succession planning aspects.
Ultimately, Belize provides adequate levels of protection without the significant costs involved in the Cooks or Nevis. However, the island nation brings with it some negatives in the form of difficulty securing banking and financial services.
You can expect to pay, approximately, US$1,300 for the full establishment of a trust in Belize which is significantly cheaper than the prior two options.
Should you consider a foundation?
As a side note, you might also want to consider a private interest foundation in a location such as Panama or Liechtenstein. They operate similarly to a trust but are an incorporated body with a specific purpose. Instead of trustees, you have a council that acts similarly to a board. They can be very effective ways to divorce yourself from your assets.
However, they lack the body of concrete case law confirming their validity, and common law trusts have much greater levels of acceptance around the world.
Final Words on the Best Offshore Trust Jurisdiction in 2024
Ultimately, you establish your trust based on your budget and legal risks. If you expect legal issues, it’s best to protect your assets with a Cook Islands Trust. However, there is significant cost involved that is likely to see you spending, in excess of US$6k a year, to maintain the structure.
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