Benefits of Storing Assets in an Offshore Trust



Benefits of Storing Assets in an Offshore Trust

Benefits of Storing Assets in an Offshore Trust

Private individuals are increasingly choosing to hold their artwork, precious metals, property and yachts in offshore trusts in the Cayman Islands. Here’s why.

With some of the most sophisticated trust structures available in the Cayman Islands, combined with the island’s politically stable environment, it’s no wonder that so many individuals choose the Cayman Islands as a jurisdiction to set up their trust. The Cayman Islands are an internationally recognised forum for resolving trust disputes and has stringent money laundering controls in place. It has also developed regulatory framework and some of the best trust professionals in the world live and work here.

The Cayman Islands is:

  • A politically stable, first-world financial centre
  • Home to quality professionals, leading law firms and financial services providers
  • Stringent regulatory controls and framework
  • Large body of case law
  • Internationally recognised forum for resolving trust disputes

How Does it Work

When an individual sets up a trust and transfers assets into that trust, the individual becomes the “settlor” and is transferring the legal title of those assets to the “trustees”. For example, an investment portfolio is no longer held in the name of the settlor, it is transferred into a new account opened by the trustees and held in the name of trustees and the trust. With a property; commercial, personal or land, again legal title is changed to reflect the new owners. Anyone carrying out a search at a land registry will see the name of the trustees as the legal owners and not the individual. There may be an underlying company under the trust which instead holds the assets, but again, the legal title will be in the name of the company which is ultimately owned by the trust.

This vesting of title is one of the key benefits a trust provides the settlor. Anything can happen during the lifetime of the settlor and it will have no impact on the trust. If the settlor dies, divorces or becomes bankrupt, the assets are still held in the trust by the trustees.

Two Scenarios to Consider

Scenario #1 - A wealthy man dies and leaves his estate to his wife through the terms of his Will. The wife inherits the estate and subsequently remarries. As the wife has inherited ownership of the assets she can determine through her own Will who benefits upon her death. Her Will will dictate what happens to those assets. She may choose to leave those assets to her children or to her new spouse. If the man had set up a trust and had himself, his wife and his children listed as beneficiaries, the trust could provide benefit to them after his death, but since none of them would take ownership of the assets until and unless they were distributed from the trust, their deaths would have no impact on those assets.

Scenario #2 - A wealthy man leaves his estate to his three sons, one of whom has a rocky marriage, one is a spendthrift and one lives in a country that has a severe estate tax. Upon the man’s death, the three sons inherit their respective one-third of his assets. One goes through a divorce and the assets are divided up and his ex-wife receives 50%. Half of the inheritance has now been passed out of the family. The second son has free reign to spend as he likes after inheriting his father’s wealth and the third son dies suddenly. The third son happens to live in a country where upon death, a large tax is levied on the assets, say 40%. Suddenly 40% of their assets are paid to that government.

The bottom line - much of the man’s wealth could have been protected if the he had set up a trust.

Also, individuals owning assets in multiple countries can create a centralised trust in one jurisdiction which ‘ring fences’ the assets. The control of the assets is centralised. This brings many benefits such as centralised accounting, centralised strategic planning and providing for suitable holistic management while at the same time avoiding multiple probate applications on the death of the settlor.

Precious metals, as well as other alternative assets, such as boats, property and artwork can be transferred and settled into trusts, providing additional security.

If you would like further information regarding the different trust options, please contact Holdun Trust (Cayman) Limited. We are perfectly positioned to work with you and your family.

Zoe Day zday@holdun.com / 1 (345) 623-7203 or
Philip Stewart pstewart@holdun.com / (345) 623-7201

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Zoe Day is the Trust Director of Holdun Trust (Cayman) Trust Limited, a boutique trust company in the Cayman Islands which offers personalized service for private clients. Zoe qualified as an English Solicitor in 2007 and specialized in wills, trusts and estate planning before moving to Grand Cayman in 2010.



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