One way to protect the assets you intend to leave your heirs after you pass is to establish trusts for them. However, with inheritance and capital gains taxes, the value of the money you intend to leave them can be eroded. Fortunately, you can help protect those assets by establishing offshore trusts for your beneficiaries.
What Is an Offshore Trust?
An offshore trust is simply a trust that is established in another country or jurisdiction. There are several places that allow residents of the United Kingdom to open trusts in their jurisdictions and help provide tax protections from them. Some of these places include Gibraltar, the Channel Islands and Malta, among many others.
Opening an Offshore Trust
If you are considering an offshore trust, you should contact a trust company in the jurisdiction you are considering to help you set one up. Unlike a trust that is established where you live, the trustee of an offshore trust is usually someone who is a professional. It is important that you select someone whom you can work with and trust to be responsible as a fiduciary in Gibraltar.
To get the capital gains and income tax benefits of an offshore trust, it is important that the trustee is a non-UK resident. So, if you want to establish a trust in Gibraltar, you need to select a trustee who is a Gibraltar resident, such as someone with the trust company with which you’re working. You will also want to select the jurisdiction of the trust where it is more advantageous for your tax purposes.
Benefits of a Gibraltar Trust
There are several benefits to establishing a trust in Gibraltar if you are a UK resident. The trust will not be subjected to Gibraltar income taxes if the beneficiaries of the trust are not residents of Gibraltar. This prevents the assets you are leaving to your heirs from being eroded before your beneficiaries receive their money.
When the settlor of the trust dies, there is no need for their will go to into probate because legally, there is no change of ownership after he or she dies. The assets have already been passed legally from the settlor to the fiduciary, so the assets can be dispersed as the settlor intended without the necessity of probate. This prevents a beneficiary, such as a spouse, from having to wait to get the money they need to pay bills or live on while everything is legally settled.
A trust that has been established in Gibraltar also provides flexibility for distributing the assets upon the settlor’s death. If the beneficiaries are minors or if they have declared bankruptcy, the trustee can hold onto the assets for those beneficiaries to help protect them. The trust can also keep the ownership of property confidential, which can prevent taxation of the property when the settlor dies. Establishing a Gibraltar trust can help protect your assets so your heirs receive more of the money you intended for them.