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What about Trusts?

GrumpyMess

Entrepreneur
Are the trusts a good solution right now for the asset protection? Do they perform better than a simple offshore company with nominees?

For example I setup a trust being a single beneficiary. Then a trust earns some income, which I don't receive yet. Can the state make some legal claims or seize these trust assets?
 

Sols

Entrepreneur
With companies, there are fairly well defined legal standards. It's relatively easy to speak about what will and won't, and can and can't, happen with a company. Trusts are fundamentally different. They are tailor-made to your situation. Often re-using a previous baseline, but the idea of a trust is to make it fit your situation, requirements, and expectations.

In general terms, trusts work fine. But it has to be set up correctly, compliant with all applicable laws.

Speak with a lawyer.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
This would require a very long answer as there are many factors in play namely your jurisdiction and local laws towards trusts, the trusts jurisdiction and the assets held etc to name just a few. It requires as said a specialist trust lawyer. You may find in the end that a trust is not useful in your jurisdiction and a Foundation may be more suitable.
 

GrumpyMess

Entrepreneur
namely your jurisdiction and local laws towards trusts
The question is whether trusts or foundations will be able to protect my assets regardless of my current or future jurisdictions.

Let's imagine the following situation. I create a trust(foundation) in Guernsey with a bank account in the same place or in Switzerland, then a trust earns some income, which I don't receive. After 5 years country A, B or any other, wants to seize some of my assets. They know I have a trust. As far as I understand, whatever laws are in these countries decision will be made by Switzerland and Guernsey, right? So these countries will refuse any orders since I am just a potential beneficial owner but don't own these assets, right?

Is the same with an offshore corp with nominees? As far as I understand, no, since there are CFC rules.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
The question is whether trusts or foundations will be able to protect my assets regardless of my current or future jurisdictions.
You need a crystal ball then not a trust.

They know I have a trust. As far as I understand, whatever laws are in these countries decision will be made by Switzerland and Guernsey, right?
You abide by law of jurisdiction you are resident in period. If the government knows about trust and assets via CRS or other means and they want to seize those assets then Switzerland and Guernsey can play dumb all they like. Government will simply put a lien on you, confiscate other assets, litigate with Trustees and in worse case, bar your movement, financial access, jail or detain you until you hand over assets

So these countries will refuse any orders since I am just a potential beneficial owner but don't own these assets, right?
They can refuse and enter litigation with tax authority. However the country you are resident in will make life interesting for you.

So these countries will refuse any orders since I am just a potential beneficial owner but don't own these assets, right?
You need to examine which international cooperation agreements they are part of and have signed with your resident country outside CRS firstly.

No trustee gives a damn about a client any more when personal liability and their own personal freedom of movement could be at stake if things turn really sour. Furthermore Trustees in most cases insist that the trust is in compliance with local laws of beneficiary and settlor and in the trust deed can have it so that the trust is dissolved or deemed no longer valid to protect their own necks.
 

GrumpyMess

Entrepreneur
You abide by law of jurisdiction you are resident in period. If the government knows about trust and assets via CRS or other means and they want to seize those assets then Switzerland and Guernsey can play dumb all they like.
As far as I understand a trust or a foundation has a substance separated from the beneficiary and settlor with a few exceptions. It makes no sense using them otherwise. The task is precisely to protect myself from any dumb laws present in the jurisdiction I am or will be resident.

Government will simply put a lien on you, confiscate other assets, litigate with Trustees and in worse case, bar your movement, financial access, jail or detain you until you hand over assets
You are the same skeptic as me, and that’s why I am looking for a bulletproof solution for the future. The governments have too much power nowadays and the only way to protect from the state lawlessness is to use the more powerfull state.

No trustee gives a damn about a client any more when personal liability and their own personal freedom of movement could be at stake if things turn really sour
Why a trustee in Guernsey has to worry about laws of another country if he is acting under the Guernsey laws? It's exactly what he receives the money for.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Why a trustee in Guernsey has to worry about laws of another country if he is acting under the Guernsey laws? It's exactly what he receives the money for.
That's what Swiss bankers thought when they acted legally under Swiss law concealing assets. Some are still wanted and refusing to leave Switzerland as they face arrest under international arrest warrants and others flew to US to face justice rather than be a fugitive for eternity. A trustee is no different. If you try and open a trust with a reputable trustee you will see the due diligence questions asked including written legal opinion from a lawyer. Times have changed they don't want to risk their freedom or tarnish their business name for a few bucks.

Also who you think pays the trusts legal fees in a legal challenge of the trust? It doesn't come out of the trustees pocket as they are not about to loose 6 figures plus in legal costs.
 

hernanday

Active Member
The question is whether trusts or foundations will be able to protect my assets regardless of my current or future jurisdictions.

Let's imagine the following situation. I create a trust(foundation) in Guernsey with a bank account in the same place or in Switzerland, then a trust earns some income, which I don't receive. After 5 years country A, B or any other, wants to seize some of my assets. They know I have a trust. As far as I understand, whatever laws are in these countries decision will be made by Switzerland and Guernsey, right? So these countries will refuse any orders since I am just a potential beneficial owner but don't own these assets, right?

Is the same with an offshore corp with nominees? As far as I understand, no, since there are CFC rules.
1. It is nearly impossible to answer because countries change the laws as they get pressured by other countries. So the other poster is right, you are asking for like a crystal ball advice.Right now trust and foundations in many nations would protect your assets for NOW! But until FACTA and CRS a foreign bank account would have protected you, who would have predicted the US government would threaten to jail all Swiss bankers and throw them in prison for not turning over their client information in 1979?
2. Trustees are not perfect, there was a big case in Liechtenstein of the trustee basically spending out $100 million on frivilous expenses of a billionaires trust from Israel and cutting off the beneficiaries (his kids). So even if the law technically protects you, it might not in practice if the country's court doesn't imprison corrupt trustees like liechetenstein. as the court refused to basically remove the corrupt trustee as Lichtenstein is a corrupt dictatorship.
3. If you are in the EU, forget that scenario, it will not work. Trust law is complex. However, what would likely occur is that once they figure out you have a trust. The person suing you goes to the judge, the judge orders you repatriate the assets of the trust and hand it over to whoever wants your money. Now, you either give them the money, or the judge throws you in prison for contempt which can last up to 10 years (or more) and is not even appealable in many countries.
4. The problem in your scenario is not the trust, even if the trustee complies fully with the your request in the trust, the problem will be by the time you are in prison for 5-7-10 years sleeping next to murderers, rapist, killers, getting beaten up and/or raped by bubba, 99% of people crack. The problem in your scenario is trying to stay in the jurisdiction that the judge can compel you to give your money away.

Lets presume you have a German fellow with a trust in Switzerland and Guernsey. He is sued for $5 million. Loses. Goes through debtors examination and discloses he has trust in those 2 locations he is a beneficiary of. The creditors demand he use the money and overturn the full disclosure of those trust. If he refuses to pay then they take him to the judge, get a court order he do it. Now he either turns it over, leave the country, or go to jail.

The whole problem begins when he told them he had a trust, because if he didn't tell them, he likely would not have been got caught. Sure they could have used forensics accounting to catch his spending patterns, but there are ways around that. Had he not lived in the country, the court couldn't do anything to him. Even the forensic accounting could not occur without full disclosure of his accounts.

What the German fellow should have done, was bought a 2nd citizenship. Lived outside the EU except for 2-3 months.
 

lionel234

New member
Wich countries would be most secure for trusts/foundation ? And how is the concrete deposit/funding of money done if the beneficar doesent want to leave traces?
i mean , sending recurring wires from your local bank account doesent seem a good option if you wish to keep it to yourself that you have a trust or foundation?
 

GiGoGo

I make things happen
Entrepreneur
Wich countries would be most secure for trusts/foundation ? And how is the concrete deposit/funding of money done if the beneficar doesent want to leave traces?
i mean , sending recurring wires from your local bank account doesent seem a good option if you wish to keep it to yourself that you have a trust or foundation?
All that ended in 2014. The only place you can hide now is crypto
 

lionel234

New member
All that ended in 2014. The only place you can hide now is crypto
think that depends who you hide from and what you hide for ? Or not?

Crypto also very volatile too unfortunately...in the good and bad.
 
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Admin

Forum Moderator
Staff member
think that depends who you hide from and what you hide for ? Or not?

Crypto also very volatile too unfortunately...in the good and bad.
I totally agree with this answer. Not all hide from the tax auth. most are looking for securing their future and even their current situation.

Crypto is volatile but not as much as it used to be in 2016 it got more stable over longer periods. Alternatives as we discuss here already is Art, precious metal i.e. Gold, Silver etc. and luxury stuff i.e. watches, handbags and finally Whisky, Champagne and Wine.
 

speedster

Active Member
I totally agree with this answer. Not all hide from the tax auth. most are looking for securing their future and even their current situation.

Crypto is volatile but not as much as it used to be in 2016 it got more stable over longer periods. Alternatives as we discuss here already is Art, precious metal i.e. Gold, Silver etc. and luxury stuff i.e. watches, handbags and finally Whisky, Champagne and Wine.
Certain classes of crypto, i.e. stablecoins, are no more volatile than traditional currencies
 

Admin

Forum Moderator
Staff member
Certain classes of crypto, i.e. stablecoins, are no more volatile than traditional currencies
That's true and would be a good altcoin.
 

lionel234

New member
Maybe im old fashion , but would never save even 50% of my assets for long-term in crypto

OT , no one here that can point out good services that creates trusts or foundations?
 

Admin

Forum Moderator
Staff member
There are lot's of services around it's not hard to find them. You can check out Fidelity or Turnerlittle - there are lot if you google and do some research. On my list in my signature you can find trusted providers, it requires mentor group access but I'm sure you will work your way around it.
 

hernanday

Active Member
Certain classes of crypto, i.e. stablecoins, are no more volatile than traditional currencies
Actually, the issue with crypto is not crypto, it is the scammers running the exchanges, even if you keep your crypto in your wallet, you will eventually want to liquidate it and these things get "hacked"and go bankrupt and get robbed by the founders like crazy.

Crypto is pretty secure, maybe even more secure than regular currencies. The problem with crypto is not crypto, it is people. Specifically, it is hard to sell a large amount of it, as the exchange founders have an incentive to "Get hacked" lose your crypto and sell it off and go bankrupt or shutdown.
 

speedster

Active Member
Actually, the issue with crypto is not crypto, it is the scammers running the exchanges, even if you keep your crypto in your wallet, you will eventually want to liquidate it and these things get "hacked"and go bankrupt and get robbed by the founders like crazy.

Crypto is pretty secure, maybe even more secure than regular currencies. The problem with crypto is not crypto, it is people. Specifically, it is hard to sell a large amount of it, as the exchange founders have an incentive to "Get hacked" lose your crypto and sell it off and go bankrupt or shutdown.
Or just use reputable exchanges?
 

hernanday

Active Member
Wich countries would be most secure for trusts/foundation ? And how is the concrete deposit/funding of money done if the beneficar doesent want to leave traces?
i mean , sending recurring wires from your local bank account doesent seem a good option if you wish to keep it to yourself that you have a trust or foundation?
Typical tax havens. But it depends what kind of security you are looking for. This is the tax planning/treaty thread. The days of hiding any kind of bank account from the tax man is basically over. Banking secrecy/privacy from the government is dead. It still exist for creditors, to some degree but not for government. If you put $1 in a bank account anywhere in the world, the reasonable presumption should be that your home government will sooner or later find out and they will catch you. You will likely go to jail, so shake that idea from your head this is not the movies, this is not 1979, you are not going to open some bank account in a tiny island, and hide money that they won't know about in a #erd account.

And guess what, even when they had numbered accounts, half the time it didn't work. You know why? The government saw idiots reporting $50k salaries, spending millions, audited them and the numberes didn't add up, searched/raided their houses and typically either found the numbered accounts, packages to overseas banks, or info that lead them to the numbered account from the sloppy mugs who kept the #s in their high tax home nation. Now the gov't knew you had the account. Guess what they did? Give us the password for your # account or repatriate the funds of your # account or else 10 years in prison for contempt. Having your money overseas is worthless if you are not overseas, the government doesn't need to chase down your money, when they can just throw you ass in prison because if your money is offshore, but you are onshore, they can throw you ass in prison until you get them their money.

The irony in all this, is that if people simply left their high tax nations for a few years, they'd legally pay no taxes. It is really unclear to me why so many seeming millionaires want to stay in high tax nations.

If you want financial secrecy, you need to basically not deal in bank accounts. So you could set up an offshore foundation where you are a manager but not on the board, with nominee directors. You would then buy a house in the foundations name. Fill that house with cash, gold, metals, diamonds, art, persian rugs, buy parts of other successful businesses, and assets that tend to keep their value like movie props, artifacts, etc. You could even store your money in some of those overseas vaults like in Switzerland. The vaults won't report you, your money will be safe, and you will avoid crs, facta, etc. You could also make registry purchases. Super rich people buy assets on registries. They don't even keep or store the assets, they actually don't leave the vault, but you buy and sell them on these registries and they basically don't enter the financial system that the government can see. You buy a diamond for $100 million on the registry, you sell it 10 years later for $200 million, in the name of the foundation which is based in Bermuda or something and the government is never even aware of this so long as you never allow your money to touch a bank. You could ask the fund from registry be sent to your vault in switzerland in the form of gold bars or large denomination bills. Since this all occurs under the foundations name, you are not responsible for it tax wise.

I suspect you are mixing terms.
Settlor= person who makes the trust (ie the giver of the money)
Trustee = person who manages the trust
beneficiary = person getting the money from the trust

The beneficiary doesn't have to worry about leaving traces of putting money into the trust. The beneficiary has to try to ensure that they don't receive money that is taxable in a high tax state.

The settlor has to be careful that the government doesn't get the idea you have a self settled trust. You can legitimately donate millions to any foundation of your choosing, no law stops you from this. You just send one big fat wire. The government can't stop you from giving your money away, it is not a taxable event. The government may be suspicious of you though and will monitor you to see if you ever bring that money back in.

Which is why you need tax planning and offshore. You need to plan your affairs so that when you are ready to recover your millions overseas, you are a total non-tax resident of the high tax nation (for US citizens you will have to give up citizenship and then try to get it back later, for the rest of us just acquire new residency). Then when you are in your tax haven as a resident, you can transfer your foundation money to you personally. Obviously you need to pick a nation that permits this, which is not hard to find but requires some looking on your part. You now have recovered your money tax free. Now the final step in this might be returning home to high tax nation after 1-3+ years as a non-resident, or you may choose to never go back. Either way, you have made your money, and pay no taxes.

Trust are good for protecting from creditors. Won't save you from government. Your best bet to get around taxes is to actually follow the laws. There are legal strategies like the one I described that permit you to complete pay zero taxes legally. Where most offshore people get in trouble is thinking they can stay in Canada, australia, USA, Germany whatever, and never leave AND pay zero taxes. That is impossible. You will get caught.

When you look at the people paying zero taxes who aren't in prison and rich, you realize they are all leaving at least temporarily for tax havens. And when you see someone getting caught and going to jail, they are inevitably trying to STAY in the high tax states. You had soccer stars, music/movie stars getting caught up in tax problems and getting huge fines/prison because they didn't attempt to leave their high tax countries. So the ball is in your court.
 
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