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Offshore Asset Protection

There is no better way to protect your affairs and privacy from potential adversaries than Offshore Asset Protection through the creation of a well constructed offshore structure. As many countries become increasingly more litigious, governments continue to encroach on civil liberties and privacy and technology continues to make it easier for hungry lawyers to search for assets while making the decision whether or not you are "sue worthy", many would benefit from establishing an offshore presence to protect at least a portion of their assets.

Offshore Asset Protection Structures

A variety of offshore components may be utilised in an offshore asset protection structure including private foundations, offshore trusts, offshore companies, offshore bank accounts and/or an offshore brokerage account. It may even be possible to maintain assets in their current location while merely transferring ownership of the assets into an offshore asset protection structure as well.

Offshore asset protection structures generally involve at least one offshore trust or offshore private foundation perhaps coupled with an underlying offshore company. Utilizing multiple jurisdictions is often desirable making it more difficult to locate and win judgements against any assets.

Clients are advised that in order to set up a proper asset proctection structure, the client must be willing to give up "ownership" of the actual assets being placed into it. Not to worry though, as many legal and contractual safeguards are put into place. Additionally, it is possibile to appoint protectors or guardians as well as several other roles within the structure to provide a further comfort level for the client.

While both offshore trusts and private foundations are useful in setting up asset protection structures, a fair amount of offshore trusts established are invalid and would be labeled "sham" trusts if ever challenged in a court. In fact, a leading international trust expert conducting a very informal poll of the trust practitioners in a popular offshore jurisdiction asked the practitioners how many of the offshore trusts established by them would likely be considered "sham" trusts by the courts if challenged. The answer was shocking: "75-80%..... but that is what the clients wanted" was the general response. Clients establish the trusts but the settlor remains very much in control of the administration of the trust in some cases. Often times, assets are never actually placed into the trust which means they obviously cannot be under the protection of the trust. These are common occurrences which can lead to adverse court decisions.

Offshore Foundation

Due to the issues above and the fact that courts are able to "interpret" the legality of trusts at all, Sterling Offshore prefers the use of the offshore private foundation for most asset protection structures. Offshore foundations are much more versatile than the offshore trust; are based in civil law meaning they are not up for "interpretation" by the courts; and offer a great deal of protection to the participants in the structure. The fact that the offshore foundation is also legally separate from the Founder and beneficiaries and has no legal "beneficial owner" makes it an invaluable tool in offshore asset protection. The foundation itself is the "owner" of all assets (which may include shares of a company) placed into it. This may be beneficial in countries with strict reporting requirements and tax consequences regarding "controlled foreign corporations" (see your tax advisor as this varies among countries).

Offshore Bearer Share Company

One of the best privacy tools still available today is the offshore bearer share company. While the availability of jurisdictions offering bearer share companies is decreasing and restrictions are generally increasing, Sterling Offshore still offers services in several jurisdictions that offer allow shares to be issue to "bearer". We offer a Seychelles bearer share company, Panama bearer share company, Belize bearer share company and BVI bearer share company. Panama and Seychelles offer the best terms regarding government fees and restrictions.

Opening bank accounts for bearer share companies is generally a bit more difficult; however, Sterling Offshore has banking options with reputable banks with whom we can open bank accounts for a bearer share company. The bearer shares must generally be immobilised by the bank or the registered agent however. For this reason and due to the fact that bearer share companies are becoming increasingly scrutinised, we generally do not recommend their use in asset protection structures.

Instead, we recommend that the shares of any underlying offshore companies be issued in the name of the offshore private foundation from the beginning. The main reason for this is so that the client can truthfully say that they have never owned the underlying company at any time. This could become important should any future adversaries ever challenge the client's "ownership" of the company.

Offshore Bank Account

The last but probably most important component of a offshore asset protection structure is the offshore bank account. Unfortunately, this is probably also the weakest point of any structure and the likely target of any queries into your affairs. Especially considering the increasing disregard of legal structures and focus on the "beneficial owner" in some countries, it is critical to both create the right structure and partner with a solid offshore bank for your offshore asset protection structure.

Sterling Offshore is able to provide introductions for the purpose of establishing an offshore bank account. The applications and requirements vary depending on the institution.