Taxation and Offshore Asset Protection Planning by The Marvont Group

Introduction to Taxation Issues with Offshore Asset Protection Planning

An asset protection trust with a U.S. citizen or resident as the settlor is normally structured to become tax neutral. In particular, as a result of the settlement of an asset protection trust, no further income, estate, gift or excise tax should be due. Likewise, the trust shouldn’t be expected to save taxes. It should also be pointed out that a foreign trust, despite the almost complete confidentiality it offers, can’t be legally (or safety) utilized to hide income from the long arm of the United States Department of the Treasury.

The U.S. Department of the Treasury has committed substantial personnel (often ex-CIA) and computer capacity to fight money laundering and abusive uses of offshore trusts, particularly through its new interagency task force known as FinCen, or the Financial Crimes Enforcement Network.

In addition, effective January 1, 1997, substantial and complex amendments were made to the Internal Revenue Code which can result in the imposition of large and unnecessary taxes and penalties on people utilizing foreign trusts. Considering this new legislation, The Marvont Group always strive to structure offshore asset protection trusts so that they are “domestic” for the purposes of U.S. taxation. This avoids a lot of reporting requirements.

If you’re a citizen or resident of the United States and considering an asset protection trust, The Marvont Group suggests that have it implemented by a real tax expert with extensive experience.

Please bear in mind that if you’re ever told that an asset protection trust, or any foreign trust, will save you income taxes, then you’re getting a bad advice and perhaps being asked to commit a crime along the way.

You can always visit our website for further updates regarding taxation issues.