If you’re looking for maximum privacy and or for maximum asset protection you might want to give thought to setting up a three-layered structure ie a tax free Offshore Company plus a tax free Offshore Trust plus a tax free Private Foundation (ie the shares of the Company are held by the Trust, the sole beneficiary of the trust is the Foundation and the beneficiaries of the Foundation would be whoever you nominate eg your family members).
We are often asked (by clients committed to setting up a Company and a Foundation) what’s the advantage/s of interposing a Trust between the Company and the Foundation?
Say you have 3 structures in place ie an Offshore Company and Offshore Trust and an Offshore Foundation (ie a serious asset protection structure). Say a firm of vulturous lawyers are suing you and they suspect you have assets held by an Offshore Company (from which the Lawyers hope to extract recovery for their client + a fat fee for themselves).
The first thing that would happen is the vultures would try and find out who owns the Offshore Company. Unless you are involved in some very serious criminal activity (eg drug trafficking, money laundering, terrorist financing etc) no one should be able to find out who the owner/shareholder of that Offshore Company is (or who the beneficiaries of any Trust or Foundation beneath it are – see below).
To crack the privacy veil anyone wanting to either (a) attack/get hold of assets held by the Company/Group or (b) find out who actually owns the Offshore company would have to apply to the Supreme Court of the Country where your Offshore Company is incorporated for a disclosure order ie a court order compelling the names of the shareholders/owners of the Offshore Company to be revealed.
Before the Court will even hear the application the vultures would have to produce evidence, ie a prima facie case, proving that the Offshore Company (or persons closely connected to it) has more likely than not been involved in serious criminal activity as defined.
If they do get the order they would find that the Offshore Company is owned by an Offshore Trust in a 2nd country.
The lawyers for the vultures would then have to pack their bags go home and start all over again. That is they would then have apply to the Supreme Court of the country in which the Offshore Trust is registered for a disclosure order (ie for an order requiring that the names of the beneficiaries of the Trust be revealed). Again, usually before the Court will even hear the application, the vultures would once again have to produce evidence ie a prima facie case proving that the Trust or persons closely connected to it are more likely than not to have been involved in serious criminal activity as defined.
Say by some miracle they do get that order. All they will find out is that the sole beneficiary of the Trust is a Foundation registered in a 3rd jurisdiction.
The lawyers for the vultures would then (again) have to pack their bags go home and start over. That is they would then have apply to the Supreme Court of the country in which the Foundation is is registered for a disclosure order ie a Court order requiring that the names of the beneficiaries of the Foundation be revealed. As usual before the court will even hear the application the vultures would again have to produce evidence ie a prima facie case proving that the Foundation or persons closely connected to it are more likely than not to have been involved in serious criminal activity as defined.
And if the Company’s bank account is held in a 4th country the vultures would need to appear before a Court in a 4th country seeking an order that the Company’s Bank Account in that country be frozen (ie pending finalisation of litigation/claims against the company or its owners).
As any experienced litigation lawyer will tell you what’s described above is the lawyer’s equivalent of having to climb Mount Everest. The time it would take and the legal costs involved would be virtually inestimable.
In this scenario commonly the Trust is used to buy/hold assets/investments. Why? Because included in the laws of most serious Trust jurisdictions are non-attack clauses. That is provisions that specifically say (a) that Trust assets cannot be attacked once transferred to the trust and (b) that any foreign law or judgment purporting to grant access to Trust assets shall not be recognized.
It should come as no surprise to anyone then (given the proliferation of litigation lawyers and the advent of information exchange between OECD type jurisdictions) to hear that the use of multi-national Offshore Corporate Structures is on the rise.
Hopefully after reading the above you can well understand why…
PS OCI Offers a triple structure package. Check this link for details: http://offshoreincorporate.com/how-to-create-the-ultimate-tax-effective-offshore-corp/
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