A Basic Trust

In order for you to have full advantage of your Trust in terms of asset protection, you need your Trust established as a "Discretionary, Irrevocable, Pure Trust", domiciled in an adequate and reliable country that will grant your Trust freedom from any financial reporting of its activities.

Most of the small countries who do this, also put in a clause that neither you nor your Trustee can reside in the country. You can still visit the country, but don't pick a country in which you plan to retire... It does make sense: if this clause wasn't in place, the country's own citizens would be able to avoid income taxation.

The other part of this is often ignored. You will find many offers from Trustees who want to have you establish a Trust in their own country! DON'T! The reason is that such a Trustee would be subject to legislation in that country - and such legislation could change very quickly - which would bring your Trust in jeopardy, if, for instance, this government suddenly decided that it wanted access to the files of your Trustee! With your Trustee residing in a different country, any such breach of your privacy would take the agreement of two governments - out of which only one would have a vested interest in doing it and the other most certainly would not. Chances of this happening are zero.

Next, you want to pick a Trustee that really is doing nothing else than taking care of people's Trusts. You do not want a Trustee who can afford to neglect your interests - you want this Trustee to put his/her entire future existence at stake for your Trust! With such a Trustee, you will know that your Trust will be taken as good care of as possible because you have a "win-win" or a "lose-lose", never a possible "win-lose" where your Trustee could have advantages from your loss....

You should, of course, make sure that you can actually check out who your Trustee company is and what kind of reputation it has. You do not want to do this kind of business with a "fly-by-night" kind of company and you for sure don't want to do it with an individual person...

The set-up process takes place in accordance with a "Deed" for the Trust - which really is an agreement between you (the Settlor) and the Trust, outlining the rules for the Trust's operation and its purpose. This Deed makes you the Settlor (or Grantor) of the Trust, and you also become the Beneficiary of the Trust, unless you have a specific different purpose in mind.

You can deposit funds on the Trust's account, and you can have the Trustee write and send checks from the account to payees of your choice, except yourself! (If you do, the money will be considered "taxable income" for you unless you can prove otherwise to your taxman).

You communicate with your Trustee per phone or fax or e-mail or mail as you want. In order for you to have the Trustee take any action on behalf of the Trust, however, you must submit a written "Letter of Wish" to express your desire. It is highly recommended to do this through encrypted e-mail, or by registered mail or courier.

Expect to pay $1,500-$2,000 in fees for setting up your Offshore Trust. Those fees will cover both the government filing fees, the Trustee's fee, and the company's marketing costs and overhead. For your Trust to be operational, you may need a bank account for it. Just a simple account. All banks will require an opening deposit on such an account - typically $200-500. This money is really not part of the "cost" of your Trust, but it is, of course, an extra personal expense you need to be prepared for.

You must also expect a yearly maintenance fee for your Trust, typically in the range of $200-500.