U.S. Citizens and Offshore Asset Protection Trust

Overview

United States citizens can utilize offshore trusts and banks, because each citizen must report foreign income. Taxable foreign income includes interest, dividends, and capital gains earned or accrued offshore and domestically. The U.S. government allows its citizens to transfer funds to offshore accounts, but it requires full disclosure of the type of asset and how much a citizen is transferring offshore. The U.S. also employs special task forces and government agencies that are committed to preventing money laundering and tax evasion. The government makes it clear that U.S. citizens must comply with all taxation and reporting requirements.

Common Myth

There are many companies that claim to be able to offer offshore solutions to U.S. citizens, but this claim is not true. The U.S. taxes foreign income. Therefore, it is unlikely that the service a company advertises applies to a U.S. citizen. Even worse, the company contributes to the U.S. citizen breaking their home country’s law.

Benefits

Offshore trusts offer an individual a fair degree of personal confidentiality, financial privacy, and asset protection from lawsuits and creditor claims. Some claims may be due to a spouse filing a divorce suit or a business client attaching a lien against real property.

When properly structured, offshore asset protection trusts offer degrees of financial protection from current and potential claims. There are additional benefits to U.S. citizens forming an offshore asset protection trust. The following represent some common benefits:

  • Personal Protection: Customers can use any form of asset protection trust, whether employed domestically or abroad, to protect their assets from personal and/or professional litigation. They may also use a trust to protect assets from creditor liens.
  • Home-Country Advantage: A U.S. citizen can use an offshore trust to protect their assets whether they form the trust in their home country or offshore. The added benefit is that the trust can remain with the individual in the U.S. In other words, the assets of an offshore trust usually remain under the indirect control of the settler.
  • Fixed Term: Offshore trusts are usually “irrevocable” for a set term. During that period, the settler can not be a direct beneficiary of the trust.

These are just three of the most common benefits to forming an offshore trust.

 

Tips to Remember

Many U.S. experts on this topic advocate structuring foreign trusts, so the trust can be taxed domestically as a grantor trust.

When a legal expert structures an offshore trust correctly, creditors, or anyone suing the settler, will be powerless to attach a claim to the assets of the trust.

If a legal expert has structured the offshore asset protection trust to end by a certain period the assets can be returned to the control and direct ownership of the settler. This can only happen provided there is no current or ongoing threat.

When it comes to employing offshore solutions, such as an offshore trust, there are many opportunities for U.S. citizens to benefit from asset protection planning.

 

Harbor Financial Services (HFS)

Harbor Financial Services is a professional company that provides offshore financial advice and investment services to its clients. HFS recommends offshore products and services to suit any personal and/or business need. The company has helped clients find solutions to meet their long-term financial needs. HFS has the experience and the expertise to create the best offshore package for you. Visit http://www.hfsoffshore.com for more information about the company’s products and services.

 

Disclaimer: Many countries have laws regarding offshore entities and accounts. For example, citizens that form offshore entities, (for example an offshore corporation, offshore trust, offshore partnership, offshore limited liability company, etc.) own stock in offshore entities or hold positions within offshore entities may need to file a tax return. Citizens that form an offshore trust, move assets into an offshore trust or are the beneficiary of an offshore trust may need to file a tax return. Citizens that sign on offshore bank accounts or offshore investment accounts may need to disclose this fact to their government and pay taxes on any interest or capital gains. We strongly recommend consulting with a local, licensed professional to obtain tax and legal advice in order to understand the law and to fully comply with all applicable laws and reporting requirements regarding offshore companies, offshore trusts, offshore bank accounts and offshore investments.