When relocating, wealthy individuals may settle assets into a trust based in a low-tax jurisdiction prior to taking up residence in a higher-tax location. They may procure the settlement of shares with long-term growth potential at a time when they have a low value and may allow for capital growth in a tax-free structure.

Expatriates may also remove assets from an estate to avoid wealth or inheritance taxes and seek to reduce the tax costs of providing remuneration for expatriate executives.

Asset Protection

Having worked so hard to build a valuable business or asset base, it is everyone’s right to try to preserve that wealth for themselves and their family. A trustee resident in another jurisdiction may act as a guardian of a family’s wealth, thus offering a greater level of protection over those assets. This may be of particular interest to settlors living in politically sensitive areas where their wealth could be at risk. Assets in a trust may be protected from the imposition of exchange controls or other government regulations, and once removed from an estate, free the settlor from the threat of confiscation or devaluation.

By passing legal ownership of trust property to trustees, the name of the settlor is removed from title deeds and other documents of ownership and thus from the unwanted attention of third parties.

Put simply, a trust offers settlors the opportunity of divesting their assets so that in the event of business or personal disaster, the financial security of the family can be protected. However, a trust cannot be established to defeat or defraud creditors, but provided the settlor is solvent and expects to remain so, it is perfectly reasonable for a wealthy individual to protect against the unexpected by establishing a trust.