Asset Protection is a term used to secure one’s property. In simple terms this could mean that a property owner installs an alarm system to their home to stop and deter burglars or unwanted criminal damage happening. It may mean that you have the latest immobiliser system fitted to your dream car to stop thieves.
If we start to focus on the term ‘asset protection’ within the content of international business, we can then bring up the legal use of an entity called a Trust. These unique entities date back hundreds of years and can be an essential tool in protecting one’s hard-earned physical assets that an individual, or company has built up over time due to their hard work. There are many forms of a Trust that can be created, and unlike Companies, they are not a legal entity. A trust is simply a relationship, or an arrangement whereby property or assets are transferred from one person to another for the benefit of individuals or Companies. These are called the Beneficiary’s of the Trust. Sounds complex? It doesn’t have to be, however Trusts can be used in all sorts of asset protection situations. One example of a Trust is to hold a property portfolio which will eventually pass to the beneficiaries of the Trust for inheritance tax planning purposes.
Placing assets at arm’s length can also benefit individuals in business. Many people choose to purchase or hold property in the name of a Company. This Company can retain even further protection when the company itself is registered and domiciled offshore. It is perfectly legal to form a Company to hold a property, and if structured correctly, it can remain difficult for the outside world to find out the individual who is the ultimate beneficiary of the Asset. A Trust can be used to hold the shares in the Company that owns the property keeping the actual legal ownership away from an individual. This could bring peace of mind for many international entrepreneurs and thus keeping their individual privacy arrangements secure.
A simple offshore company formation remains the perfect solution in asset protection. Structured with either an offshore corporate shareholder or an asset protection trust can create a solid ‘ring fence’ around the property protecting it from attacks on the beneficiary’s assets. Many lawyers and solicitors’ practice this ‘private client’ service and we work alongside this industry providing a confidential incorporation service of both offshore companies, and onshore and offshore trust formation.
One benefit of holding a property through an offshore company is that Instead of going through the hassle of conveyancing, a simple way of disposing the asset may be to arrange the sale of the shares in the Company that owns the property.
There are many other uses and benefits of using a Trust or an offshore company in which to hold or deal in assets, so we recommend sourcing any advice from a reputable professional at all time.