Offshore and Estate Planning – like Peas in a Pod

When it comes to estate planning, if you want to achieve the best results for you and your family and to avoid unnecessarily squandering large slices of your fortune and their inheritance – then you probably need to go offshore.

That doesn’t mean you have to live offshore – although relocating to an international finance centre like the Isle of Man would certainly help.

But if you are happier staying where you are, presumably living in an onshore environment, then it’s still entirely feasible to reap the benefits from parking your chattels in just such a jurisdiction. Stay-at-home onshore solutions really don’t compare. Instead, talking to an experienced offshore based trust and corporate services provider (CSP) who can coordinate and administer what’s best for you, could reap dividends.

Benjamin Franklin once famously said the only things certain in life are death and taxes – and his words still resonate, centuries on from when they were first uttered. The reason is all too clear to see. Most westernized countries and, guess what, certainly those where the majority of people live, have complicated and onerous estate taxes – sometimes referred to as “death taxes.” This is no throw-away expression. In many places they come with a real bite – a hefty price tag. If you are both unfortunate and likely to live in one of these aforementioned territories, when you or a loved one passes away, there’s an odds on chance the government of the day will come after the estate, looking for a sizeable chunk of any inheritance. Dying isn’t a cheap business, unfortunately.

In many countries, estate taxes can approach 50 percent. In Japan, for instance, it actually reaches 55 percent. In the UK, it’s “only” 40%! To be more precise, when you die, your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold. That’s reduced to a mere 36% if you leave at least 10% to a charity. No wonder people are up in arms about it.
Such a huge tax burden can be hard for any family to endure and, understandably, one that many would rather avoid. The good news is that just like in the world of Thunderbirds, there is a form of international rescue at your disposal. In a nutshell, the solution is to take your money offshore, which can provide a whole range of financial planning options to help dramatically reduce your tax obligations.

This is where a savvy CSP really comes into its own. They’ll act as your “at distance” manager – your “away from home” eyes and ears. They’ll point you in the direction of and work alongside the best tax advisors and, crucially, set up and administer the necessary offshore structure or structures to keep everything in order – so that your family’s estate is not only safeguarded but nurtured.
When handled correctly, and there’s no reason why it shouldn’t be, this type of arrangement is perfectly legal and straightforward.

Typically, the most appropriate structure would take the form of a Trust that is administered for you from the offshore jurisdiction. A professionally administered, properly regulated, at distance entity that can benefit all the family – and one that could save a tidy fortune from falling into the clutches of a faceless revenue collector.
In fact, an effectively run offshore trust brings a whole range of benefits. For a start, it could rid you of any inheritance tax bill whatsoever. Wealth within the trust permanently stays out of reach of any creditors, litigants or tax collectors. And then there’s the accrued benefit of tax-free compounding on any investment returns, so that the family’s wealth increases at the fastest possible rate – as well as providing ready-made access to any financial markets and institutions around the world.

Yet taxes and wealth management aren’t the only reason a family can benefit from seeking offshore shelter. Additionally, many countries require extensive public disclosure when wills are executed. This means families can be forced to reveal to the authorities the full extent of their wealth and who owns what, where and why. For many who have worked hard for decades quietly building a nest egg, this can be very intrusive and thoroughly undesirable.

To prevent privacy being stripped away, offshore trusts and foundations are designed to provide greater confidentiality and to help protect your wealth from prying eyes.
Foundations can also be efficient wealth planning vehicles in their own right. More typically used for charities, they can be also created with very specific stipulations determining how wealth is distributed among family members and other beneficiaries. Like trusts, they act as bastions of privacy – which cannot be said with any degree of confidence as far as a traditional will is concerned.
As you can see, by going offshore, there are a range of options that can keep your estate planning totally private – and permanent.

So how do you select a jurisdiction to take care of business? It’s true, that there are a number of tax neutral, offshore centres around the globe eager to assist.
Arguably, few can rival the appeal of the Isle of Man, however. With a reputation for delivering high quality trust and corporate services, this scenic Island, located in the middle of the Irish Sea, has attributes galore to attract anyone seriously concerned about protecting their prized assets.

The place symbolizes political and economic stability. It’s actually a UK Crown dependency, but has the world’s longest continuously running independent Government, stretching back a 1000 years – the sort of historical fact that has many a visitor going “wow”. The economy has also just recorded its 31st consecutive year of growth. Not a lot of countries can say that!
And it’s that very independence in matters of direct taxation and fiscal policy which determines that the Island has no obligation to bring its tax system into line with the UK or any other nation for that matter – even more so now that Britain is exiting the EU.

Furthermore, offshore investments in the Isle of Man are not subject to taxes on investment income or capital gains. So whether you’re seeking pure capital growth, pension planning for retirement or discreet but professional portfolio management, the jurisdiction offers highly attractive company structures and wealth protection solutions in a secure environment – far away from the greedy claws of punitive onshore tax regimes.

So there you have it.

If you are serious about protecting your estate now and long into the future, then the signpost is suggesting you travel in an offshore direction. Safe to say, that the onshore route will forever be riddled with road works and road closures.
We aren’t suggesting that Benjamin Franklin’s old adage can be wiped from the slate. None of us can avoid dying, after all. But tax needn’t be foisted upon you with quite the same inevitability.