Offshore Trusts: Preserving family wealth and building a family legacy
In an era of global connectivity and expanding investment opportunities, high net-worth families are increasingly considering offshore trusts to preserve their wealth and ensure a legacy for their future generations, writes Standard Bank International Fiduciary Services’ Nitrisha Doorasamy.
Understanding Trusts
A trust is a legal arrangement whereby a settlor transfers asset to a trustee for the benefit of beneficiaries.
An offshore trust can be established and managed in a jurisdiction such as Jersey or Mauritius, usually selected for its economic and political stability, established legislation and judicial certainty, strong governance, and neutral tax treatment.
Benefits of an Offshore Trust
- Preserving Family Wealth: An offshore trust allows its beneficiaries to enjoy a family’s wealth without the need to divide assets or transfer ownership to different branches of the family, thereby preserving the wealth and ensuring asset classes remain intact. This is especially helpful where the type of asset is not easily divided or loses value if divided, such as property or a family business.
In addition, many families find the consolidation of their various international assets into a single structure, managed and administered by a professional trustee with extensive experience and knowledge on the different jurisdictions involved, particularly valuable. - Asset Protection: One of the most valued benefits of an offshore trust is asset protection (provided the trust is structured and administered properly). Trusts are often used to protect assets against the risk of economic and financial instability and may also provide protection from future creditors.
- Succession planning: Trusts are an invaluable and very flexible succession planning tool which are widely used both onshore and offshore . A trust can adapt to the uncertainty of the future, because of the trustee’s discretion in exercising its powers and duties which means that a trust can evolve over time with a family’s changing circumstances and needs. This ensures a timelessness to a family’s estate and succession plan and means that wealth is passed between generations in a controlled and well thought through manner.
- Philanthropy: Offshore trusts can be a very effective vehicle for philanthropic purposes, bringing a family together over shared values and vision, and building a meaningful legacy for the family beyond the first generation’s lifetime.
It is imperative to engage the right professional trustee, with the necessary strength and depth, quality of staff, reputation and experience. The trustee needs to understand that each family’s needs and circumstances are unique. With careful planning and execution, offshore trusts can be a powerful tool for preserving family wealth and providing for future generations.
Standard Bank has been providing fiduciary services for over 100 years. Operating as an independently minded business, but with the backing of Africa’s largest bank by assets. Standard Bank’s international fiduciary services business understands the importance of preserving family wealth and helping families build a legacy for future generations.
Read more about our International Fiduciary Services here.
A version of this article first appeared in the online magazine, Joburg Life and Travel.