By Walter H. and Dorothy B. DiamondAn offshore book review by Matt Blackman
"International trusts have been a popular mechanism in estate planning since the early Roman days when emperors hoped to retain plundered treasures for their descendants. (Trusts) were later refined by the Crusaders when they left their homes for foreign ventures. However, it is only in the last decade that trusts have leaped to the forefront as a prime avenue in offshore financial planning." Thus begins the foreword in the first volume of the only publication that provides the complete text of all foreign trust laws entitled International Trust Laws and Analysis.
Like a number of other works by the Diamonds (Tax Havens of the World, International Withholding Tax Treaty Guide, Capital Formation and Investment Incentives Around the World, and Tax-Free Trade Zones of the World ), International Trust Laws and Analysis is not a 'light read.' It is thorough, up-to-date, and chock-full of detail for the serious offshore investor or professional advisor interested in researching the best home for a trust for any given situation.
The foreword is an excellent introduction to the offshore financial world, detailing the background on movement of more than $5 trillion US offshore, more than $3.5 trillion since 1989, and the growth of the popular Asset Protection Trust (APT). It then covers major considerations when creating foreign trusts, US taxation issues and trust changes including the surreptitious addition of legislation to the 1996 Small Business Job Protection Act that effectively removed virtually all tax (and some other) benefits to offshore trusts for US persons. The foreword also covers:
- An explanation of common law trusts
- Civil law trusts
- The Hague convention
- Trust substitutes
- Selecting a jurisdiction and trustee
- Highlights of countries with foreign trusts dividing common law and civil law nations
The introduction is made up of three essays taking different views on the use of trusts. The first entitled Asset Protection Planning through the Foreign Situs Asset Protection Trust - The Case for is by Barry Engel. Joseph Field takes the opposite side of the argument in his Asset Protection Planning - A Look at Some of the Drawbacks. Then Foreign Trusts: Their Uses and Taxes looks at the fundamentals and tax implications of trusts from a US perspective. All three essays provide the reader a thorough understanding of the pros and cons of utilizing trusts, especially when it comes to asset protection. I found them all interesting and thoroughly informative.
The two volumes, consisting of more than 4,800 pages, offer a complete dissertation of trust legislation and incentives offered by various international jurisdictions complete with analysis of each, literally covering the globe. Fifty jurisdictions are discussed in detail; well known tax havens such as Andorra, Antigua, the Bahamas, B.V.I., the Caymans, Cook Islands, Ireland, Jersey, the Netherlands Antilles, Switzerland as well as high tax countries such as Australia, the US, the UK, and New Zealand. The Hague Convention on trusts is well covered and includes nations such as the Netherlands, Portugal, Italy, France, and Luxembourg.
It is interesting that the authors only touched on Canada (although not surprising due to its extremely high tax rates) by mentioning trust formation in the tiniest Canadian province of Prince Edward Island. While unable to offer investors any tax advantages due to Canadian law (trusts are taxed at the highest rate of taxation which can be higher than 50%), PEI is a safe haven for trusts in that only conservative trusts under traditional English property laws may be formed and resident there. The authors believe that there are few advantages to non-residents due to tax rates but that Canadian residents may avoid capital tax levied by the federal government and four provinces on trust assets.
A number of less well known trust jurisdictions were covered including the Russian Federation, Montserrat, Nevis, Dominica, Niue and Vanuatu. These nations have created legislation designed to attract international trust investment and thereby compete against well-known, established jurisdictions.
The discussion for each jurisdiction is broken down into the following categories:
- Analysis of trust laws - including legislative background, formation of trusts, tax treatment, minimum assets, residency requirements, beneficiaries, trustees, and a total of 22 other fundamental issues.
- Trust Statutes - A complete explanation and discussion of the legislation.
The 29 points are covered for each country at the front of volume one in an easy-to-read chart that makes comparison of the advantages and disadvantages of various jurisdictions a much less daunting task. According to the author, surveys reveal that this part of the book is a favourite with lawyers
A person having no knowledge of trusts and their uses when they began Trust Laws would certainly be an expert upon competion of the two volumes. They are written in layman's language so that one does not require a legal dictionary or attorney to interpret the terms and discussions.
International Trust Laws and Analysis is not for the casual observer interested in setting up a simple trust offshore in one country. It is written for the practitioner and investor who have a keen interest in the evolution and use of trusts worldwide and who are interested in keeping current on legislative changes in the world of trusts.
It is published by Warren, Gorham and Lamont and is available for $395 US which is quite reasonable when you consider that that wouldn't even cover the first hour with an attorney who is expert in the offshore trust field! It is updated three times per year for an annual subscription cost of $250.
*RATING 9/10* Reading level - Advanced to Expert (Professional)
Disclaimer: The views expressed are independent and the sole opinion of Matt Blackman who has not and will not receive financial remuneration from the publisher or author for this review. Although great care was taken in writing this review, the author cannot and does not gaurantee the accuracy of information contained herein due to its complex nature. Readers are advised to obtain legal councel before making any investment or estate planning decision. Review copy of this publication was supplied by publisher.
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