trust/foundation setup

[mrhertman]

Hey guys,
could you give advice and best setups on how to structure for wealth protection?
I think it would be like that - company with bank account, where the shareholder of that company is foundation/trust.
Please advice best jurisdictions to incorporate the foundation and the company. Also where to open bank accounts for them. Beneficiary owners of the foundation would be EU citizens.
Also recommend some reputable providers who can do that service.
Thanks.

 

[Sols]

You're coming at this from the same perspective as incorporation, opening bank account, or going on vacation. Where is the best place to incorporate? Where can I open a personal bank account? Where are the best beaches in the southern hemisphere?

Asset protection is different. Asset protection isn't a service: it's the result of a carefully arranged structure.

The first is to identify the assets. Is it money? How much? Hundreds of thousands? Millions? Tens of millions?
Is it a movable property? Immovable property? Intellectual property?
Is it a company? In what sense is the company an asset to you? All the shares or part of it?

The second is identify the threat. From whom are you protecting the assets? Who do you know or suspect will be coming for you? How capable and motivated are they? What happens if they can claim your assets?

In many cases, people think of hiding money from the tax authority as asset protection. The easiest solution to that is to relocate to a low-tax jurisdiction ASAP. No further complications needed.

When setting up asset protection structures, there some frequently recurring factors that are worth pointing out.

Jurisdictions:

• USA: South Dakota, Nevada, Wyoming, more and more states are rushing to enact laws for ironclad asset protection.
• Cook Islands: tried and tested jurisdiction.
• Samoa: interesting laws to pre-empt seizures and hostile takeovers.
• Isle of Man, Jersey, Guernsey: classic UK territories with generally good protection.
• Liechtenstein: popular for a good reason.
• Cayman Islands and BVI: classic non-European UK territories, very popular. Anguilla and TCI are less popular options, but with similar laws available.
• Nevis: known for having courts that are hostile to creditors and foreign intervention.
• Mauritius: a more reputable option than for example Seychelles and Belize, with many of the same benefits.
• Switzerland: stable banking and a strong culture of handling assets.

Service providers:

• Vistra: good if your overall risk profile is low, very broad coverage, a little corporate/stiff: Corporate Business Service Provider
• Asiaciti: wealth and asset protection focused service provider. Asiaciti Trust -
• Dixcart: corporate service provider with good experience in wealth and asset protection. Dixcart provides effective solutions for protecting wealth
• Southpac: reputable service provider based in Cook Islands. Southpac Trust - Premier Offshore Trustee Company
• South Dakota Trust Company: one of the OGs in US-based asset protection. South Dakota Trust Company
• Sovereign Group: like Vistra except more expensive, higher risk appetite, and more creative. The Sovereign Group - Services to Companies, Trusts & Individuals
• Trident Trust: https://www.tridenttrust.com/
• Appleby: one of the best in the offshore magic circle. https://www.applebyglobal.com/
• Conyers: offshore magic circle. https://www.conyers.com/
• Carey Olsen: offshore magic circle. https://www.careyolsen.com/

Banking: mostly depends on size of wealth and on the service provider. If your asset protection structure has multiple entities, the entities may have different bank accounts in different locations.

But before all that, the very first thing you need to consider is timing. Asset protection needs to be set up at least one or a couple of years before there is a credible threat. Otherwise, the creditor or threat actor might be able to evaporate the whole structure under fraudulent conveyance regulations or similar laws.

I.e., if you're going through a divorce, the time to place your assets in protection was 1-2 years before the threat of divorce was real.

Then, speak with a local lawyer to understand your obligations under local law. Putting your wealth in a Cook Islands trust might not matter if a local court can send you to jail because of non-compliance of x, y, and/or z local regulations.

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This is the probably the answer to your question.

 

[mrhertman]

Sols said:
You're coming at this from the same perspective as incorporation, opening bank account, or going on vacation. Where is the best place to incorporate? Where can I open a personal bank account? Where are the best beaches in the southern hemisphere?

Asset protection is different. Asset protection isn't a service: it's the result of a carefully arranged structure.

The first is to identify the assets. Is it money? How much? Hundreds of thousands? Millions? Tens of millions?
Is it a movable property? Immovable property? Intellectual property?
Is it a company? In what sense is the company an asset to you? All the shares or part of it?

The second is identify the threat. From whom are you protecting the assets? Who do you know or suspect will be coming for you? How capable and motivated are they? What happens if they can claim your assets?

In many cases, people think of hiding money from the tax authority as asset protection. The easiest solution to that is to relocate to a low-tax jurisdiction ASAP. No further complications needed.

When setting up asset protection structures, there some frequently recurring factors that are worth pointing out.

Jurisdictions:

• USA: South Dakota, Nevada, Wyoming, more and more states are rushing to enact laws for ironclad asset protection.
• Cook Islands: tried and tested jurisdiction.
• Samoa: interesting laws to pre-empt seizures and hostile takeovers.
• Isle of Man, Jersey, Guernsey: classic UK territories with generally good protection.
• Liechtenstein: popular for a good reason.
• Cayman Islands and BVI: classic non-European UK territories, very popular. Anguilla and TCI are less popular options, but with similar laws available.
• Nevis: known for having courts that are hostile to creditors and foreign intervention.
• Mauritius: a more reputable option than for example Seychelles and Belize, with many of the same benefits.
• Switzerland: stable banking and a strong culture of handling assets.

Service providers:

• Vistra: good if your overall risk profile is low, very broad coverage, a little corporate/stiff: Corporate Business Service Provider
• Asiaciti: wealth and asset protection focused service provider. Asiaciti Trust -
• Dixcart: corporate service provider with good experience in wealth and asset protection. Dixcart provides effective solutions for protecting wealth
• Southpac: reputable service provider based in Cook Islands. Southpac Trust - Premier Offshore Trustee Company
• South Dakota Trust Company: one of the OGs in US-based asset protection. South Dakota Trust Company
• Sovereign Group: like Vistra except more expensive, higher risk appetite, and more creative. The Sovereign Group - Services to Companies, Trusts & Individuals
• Trident Trust: Trident Trust - Trust and Fund Administration Services
• Appleby: one of the best in the offshore magic circle. Appleby: Intelligent And Insightful Offshore Legal Advice And Services
• Conyers: offshore magic circle. Home
• Carey Olsen: offshore magic circle. Home page

Banking: mostly depends on size of wealth and on the service provider. If your asset protection structure has multiple entities, the entities may have different bank accounts in different locations.

But before all that, the very first thing you need to consider is timing. Asset protection needs to be set up at least one or a couple of years before there is a credible threat. Otherwise, the creditor or threat actor might be able to evaporate the whole structure under fraudulent conveyance regulations or similar laws.

I.e., if you're going through a divorce, the time to place your assets in protection was 1-2 years before the threat of divorce was real.

Then, speak with a local lawyer to understand your obligations under local law. Putting your wealth in a Cook Islands trust might not matter if a local court can send you to jail because of non-compliance of x, y, and/or z local regulations.
Click to expand...

Thank you for your reply.
Let me ask about the threats.

Usually people forming foundations are trying to protect from the government in 2 cases:
1. There is risk the government to accuse you that you owe much more taxes for past periods. And you were not aware of that, there might be some random mistake or the business is complicated and some rules are violated unintentionally.
2. The government might accuse you for some shady things you did in past.

Do you think foundation would protect real estate/bank balances in these 2 cases?

 

[JohnnyDoe]

If you already know the threat, it is probably too late for an effective protection strategy.

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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[Sols]

mrhertman said:
Usually people forming foundations are trying to protect from the government in 2 cases:
1. There is risk the government to accuse you that you owe much more taxes for past periods. And you were not aware of that, there might be some random mistake or the business is complicated and some rules are violated unintentionally.
Click to expand...

Asset protection might not work in the case of tax crime, especially if it can be proven that the tax crime happened before the asset protection was set up.

If it's a small debt or something that can be reasonably explained as a genuine human error, most tax authorities are willing to negotiate and work out a deal. You might be surprised how reasonable tax authorities can be in such cases.They benefit more from getting tax payments than from throwing you in jail. But work with a lawyer so they don't screw you over (at least not more than the law permits).

If you owe a million in taxes and you then deposit a million into a foundation, the foundation risks being completely undermined under fraudulent conveyance laws. This can play out in many different ways, none of which are pleasant.

If you owe a million in taxes and you deposited a million into a foundation years before the tax crime took place, it's probably safe there. A court can try to force you get the money out of the foundation, which a good service provider will have ensured is not possible. The court might still be able to throw you in jail, take your unprotected assets, and/or garnish your future income until the debt is repaid, but the assets in the foundation would be out of their reach.

mrhertman said:
2. The government might accuse you for some shady things you did in past.
Click to expand...

Did you do said shady things and is there evidence? Have you been convicted?

mrhertman said:
Do you think foundation would protect real estate/bank balances in these 2 cases?
Click to expand...

Not all foundations are equal. Not all jurisdictions and governments are equal.

It depends on your exact situation.

JohnnyDoe said:
If you already know the threat, it is probably too late for an effective protection strategy.
Click to expand...

All too often the truth. Asset protection isn't a bandaid.

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This is the probably the answer to your question.

 

[mrhertman]

Sols said:
Did you do said shady things and is there evidence? Have you been convicted?
Click to expand...

LOL no. Just trying to figure out the scope of the foundation and what is capable of.

 

[CyprusLawyer101]

If your problem is with the taxman or authorities, a different approach should be undertaken. Consult a professional.

Last edited: Jan 8, 2023

 

[Sols]

mrhertman said:
LOL no. Just trying to figure out the scope of the foundation and what is capable of.
Click to expand...

Then the foundation should hold, but it's impossible to say for sure without knowing all the details. And even with all the details, still wouldn't know for sure until the threat has been carried out.

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This is the probably the answer to your question.

 

[mrhertman]

How much net worth is like minimum to pay for all expenses and take all legal complications? What do you guys think? Just as a starting point, of course it would increase from there with time.

 

[Sols]

It's a little hard to answer because the costs are dependent on the assets being protected and threats being protected from, as well as how worried you are. It's hard to put a price tag on something with unknowns and personal feelings involved.

There's nothing preventing you from doing it with a modest wealth of a few hundred thousand EUR/equivalent. But the cost of setting things up may eat up a significant part of that wealth. Depending on type of protection used, you may be giving up daily access to the assets for a period (years).

Expect total costs of a foundation or similar entity being in the 10”“20,000 EUR/equivalent range, and a similar figure in annual upkeep. Of course, you can find both cheaper (usually at a loss of quality/reputability) and more expensive. If your assets and threats are such that multiple entities are necessary, costs go up.

From what I've seen, asset protection is generally associated with people with wealths of at least a few million. There is a tipping point where the costs and inconvenience of a reduction in accessibility of funds are outweighed by the likelihood and consequence of threats being carried out.

Toggle signature
This is the probably the answer to your question.