This year (2022) has really been all about capital preservation and asset protection in light of the pandemic and the associated economic slumps. Subsequently, the ubiquitous offshore trust has become the topic of discussion with many of my consulting clients. Inevitably, I’m initially asked How Much Does it Cost to Set Up an Offshore Trust.
This article will answer the cost question for you (make sure you read until the end) but will also highlight why that might not be the most important factor in your asset protection formation.
Is the Cost of Setting Up an Offshore Trust Relevant?
Hopefully, the answer to this question should be a resounding negative given what asset protection trusts are designed to do. The quality of the advice that you receive, and the contents of your trust deed, are significantly more important than the price that you pay for the service. Sure, we all want to save a few bucks but a costly mistake from a cheap provider could see the legal structure not stand up to legal challenge entirely, or worse be ruled invalid thereby placing your assets in jeopardy.
The legal piercing and invalidation of a trust arrangement is probably the single worst thing that could ever happen to your asset protection trust. This is exactly why it pays not to trust Lionel Hutz Attorney at law with the advising and drafting of your trust deed.
In short, don’t cheap out on the process!
Why the Offshore Jurisdiction is Important
There are literally hundreds of offshore jurisdictions offering trust and foundation services for those looking to protect assets from risk. The reality is that most countries largely offer the same service and product but the legal distinctions between each can be quite wide.
In an example, New Zealand treats all trust assets as part of the community property for settlement during divorce proceedings. Therefore, these trusts provide little in the way of protection during any form of marriage or relationship breakdown. Subsequently, if that could possibly be on your radar then avoid a New Zealand trust.
In comparison, the Cook Islands trust, which is the global gold standard, does not recognize foreign judgments. This includes divorce settlements, and their trustees will typically ignore all requests for access to the settled assets regardless of the court of record.
Subsequently, it pays to be aware of the differences in law between the various jurisdictions. This is why it pays to have an actual expert working for you that has set up these structures in the past and understands how and when they work for specific circumstances. Most lawyers, including your family or business attorney, are unlikely to be aware of the practicalities and case law around offshore trusts.
Simply Put…don’t use your local attorney to form something like this. Use a dedicated expert!
Which Country Should I Execute my Offshore Trust in and How Much Does it Cost to Set Up an Offshore Trust ?
As mentioned before, they all have major differences in how they operate. Additionally, what is “onshore” for you could be “offshore” for another client. However, here are a few major trust locations and their relative benefits:
How Much Does it Cost to Set Up an Offshore Trust
|Bahamas||Trust||Settlor can be a beneficiaryNo forced heirshipHague Convention no applicableFull creditor protection2-yr statutory limitExclusion of foreign laws||US$2,500 and 0.5% of assets annually.|
|Belize||Trust||Settlor can be a beneficiaryRetention of controlNo forced heirshipLaw choice is binding||US$1,890 and associated disbursements|
|Cayman Islands||Trust||No forced heirshipFull creditor protection6-yr statutory limitNo foreign judgments||Approx. US$3,000 – $5,000 depending on trustee requirements|
|Cook Islands||Trust||Too many benefits to list. The most complete creditor and foreign judgment provisions of any jurisdiction.||US$10,000 depending on trustee requirements and including professional fees|
|Jersey||Trust||Settlor can be beneficiaryChoice of law is bindingSpendthrift beneficiary provisions||US$2,200 + trustee ancillaries|
|Gibraltar||Trust||Protection from subsequent bankruptcyExclusion of status of Elizabeth lawsSeparation of creditor claims||Approx. US$2,000 depending on trustee requirements|
|Panama||Foundation||Similar in the scope of protection to Cook Islands Trust. However, is a non-profit organization and is complicated by the foundation council.||US$2,000 + disbursements|
As you can see there is a vast range in pricing for the execution of trusts across the offshore world. However, the reality is that for a few thousand dollars extra you can secure strong asset protection from places like the Cook Islands. Additionally, these locations allow you to include important positions such as a protector.
Subsequently, I always advise clients with significant assets to settle to seriously consider a Cook Islands asset protection trust. These legal entities are a time-tested solution to the litigiousness of the current world. Previous legal challenges to Cook Island’s trusts have largely proved ineffective at disgorging any assets even when there have been cases of fraud after the waiting period (normally 2 years) has expired.
Additionally, the Cook’s Trusts are relatively easy to form remotely, and banking can be secured either locally or offshore globally in different banks. For circa US$10,000 you can have a fully formed and executed trust up and running in around 2 weeks. This is why this sort of structure remains the primary choice for U.S.-based professionals and entrepreneurs.
If you are seeking any help with executing an offshore trust our consulting arm would be happy to provide you with a confidential discussion on your specific needs. Please visit us at:
Other Offshore Articles That May Interest You:
Offshore Trust Inheritance Tax