International Law

New Offshore "Asset Protection" Devices To Know

By Eric Rein

Despite the impact of money laundering laws and the focus recently on pressuring tax havens to loosen their laws to reach violators, countries are still enacting legislation to encourage the use of their jurisdictions to transfer wealth into trusts as a means of protection.

In Mauritius, trust legislation was unified under the Trust Act 2001. The act provides for a single law for trusts for non-residents and incorporates the latest trends in international trust legislation. The advantage of setting up an offshore trust for non-residents in Mauritius is the following:

1. exemption from taxes where the settlor and all beneficiaries are non-residents
2. the settlor can be a beneficiary, but not the sole beneficiary
3. the settlor can also be a trustee, but there must be one trustee that is a resident of Mauritius
4. the trust can do business in the name(s) of the trustee(s) or in the name of a Category 2 Business License Mauritius company, which is simple to create
5. the trust property can be shares of stock, bank accounts, insurance policies or most other assets protector is authorized
6. protectors are authorized to cater to clients in Civil law countries who want to protect against "giving away" ownership rights over property; and
7. the trust can exist for at least 99 years

In Gibraltar, the Asset Protection and Probate Avoidance (APPA) plan is designed to attract people who want to transfer wealth, maintain financial privacy and be able to get the wealth back. Instead of utilizing a trust, the wealth is put in the name of a company and one retains the same rights over the wealth as if it was in their name. The advantages of using the APPA is:

1. a Gibraltar Investment company that is cheap and simple to create
2. one nominee shareholder is required such that the identity of the true owner is not publicized
3. shares are held in trust in the form of a nominee shareholders agreement or trust deed that  serves to protect the identity of the beneficial owner(s); and
4. one corporate director is required who is not the corporate secretary and only the name of the corporate director is public. It is common that an undated letter of resignation signed by the director(s) is provided to the true owner so that the nominee can be replaced whenever it is in the true owner's interests to do so

Full post as published by International Asset Recovery Law Blog on March 21, 2008 (boomark / email).