A Guide to How Much it Costs to Setup an Offshore Trust
Typically, when clients approach us for advice one of the first questions the ask is how much it costs to setup an offshore trust. Pricing is, absolutely, a critical concern but it shouldn’t be the primary factor in deciding whether to move ahead with forming an asset protection structure. This guide will dig into the actual costs involved in establishing and maintaining a trust.
Choosing the Right Jurisdiction
There is a huge range of countries available to form an offshore trust within and they all have different pricing and fee structures. Therefore, I will highlight costs for the two most popular asset protection countries, Nevis and the Cook Islands.
Both island nations provide strong levels of protection and have an active record of successes against any attempts to breach the trust.
How Much it Costs to Setup an Offshore Trust – Formation and Maintenance Costs
The first step in forming an asset protection entity is selecting a professional trust company to assist you. In most cases, you are required to have a local trust company act as the formation agent and, potentially, one of the trustees.
Some of the typical formation and administration fees you can expect to pay are:
- Preparation and Deed Drafting Fees
- Filing Fees
- Trustee Fees
- FATCA Compliance Fee (It you are a U.S citizen)
In the case of Nevis, you can expect to pay approximately US$2,000 for a basic trust registration and anywhere up to $6,000 if it is a highly complex setup with an LLC as a protector. These fees are fixed and normally cover the full drafting and all filing and professional fees required to get your trust established.
The Cook Islands Asset Protection trust is typically more expensive than Nevis but brings with it superior levels of protection to form a Cook Islands APT you can expect to pay somewhere in the realm of US$10,000 and approximately $6,000 per year to maintain it.
How Much it Costs to Setup an Offshore Trust – Professional and Legal Advice Costs
In complex cases where there are multiple jurisdictions involved you may choose to also obtain legal advice regarding your position. If this is a requirement then you can expect to be charged somewhere between US$2k and US$5k for the advice.
Obviously, this depends on the scope of the required work, but these prices represent the mid-point for the figures we were quoted from most attorneys.
Professional Trustee Costs
One of the other charges that you will need to factor in is the ongoing administrative fees and charges. Typically, trustees charge for executing contracts and forms and making disbursements to beneficiaries. Many of the agreements have typical charges of US$50 per signature/form executed.
The Importance of Complete Trust Deeds and Contracts
This is why it is critical to have everything down on paper as to how much your trustee can charge you for any given task. It needs to be covered in either the original trust deed or a separate declaration of trust between yourself and the trustee. Otherwise, you could be in for a rude surprise as the trust administration fees start to stack up with little ability to dispute them.
The Importance of Having a Protector
This is why filing the role of ‘Protector’ for your offshore trust is critical. The Protector is a specialist position that effectively exercises control and oversight over your selected trustees and, in many cases, can dismiss or replace them in the event of disagreement.
Subsequently, you should appoint a highly trusted professional or family member whose reputation and conduct is above reproach. It would also be advantageous if they are in a different jurisdiction to yourself which adds additional complexity to any potential enforcement or legal issue.
Final Words on How Much it Costs to Setup an Offshore Trust
It’s important to understand that a trust is not a simple cookie cutter entity that can be applied to every person’s unique circumstances. The reality is that the trust deed needs to be tailored to fit the specific legal threats which your assets could face. So, it’s a good idea to plan ahead and make a list of any future pitfalls you might see on the horizon.
Subsequently, pricing for most of these offshore trusts will depend on the customization that you are asking for. The prices I’ve quoted within this article are the standard ones we typically charge for offshore trust establishment and find that it fits most clients’ needs well.
However, if you have complicated affairs, or want unusual items added to your deed, then you might find your potential outlays may double. Regardless, the overall cost of forming a trust should be the least of your worries as it is asset protection, in the face of litigation, that really matters.
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