Offshore Estate Planning June 2018 Prepared by BTG Consulting Limited
Offshore Estate Planning ▪ Onshore and Offshore Assets ▪ Heirs in different jurisdictions ▪ Matrimonial Property Regime ▪ Domestic and Foreign Succession Law ▪ Local and Foreign Taxation
Offshore Estate Planning Asset Protection Decide on Planning Tools Research Starting an Decide on the Spouse Death Foreign Law Offshore Objectives Accountant Foreign Tax Estate Plan Attorney Financial Advisor Offshore Trust/ Life Insurance Matrimonial Offshore Will Gifts Asset Disposal Foundation Property & Bequests Regime Review Annually Finish Formulate Execute the Appoint the & Plan Advisors Document
Offshore Estate Planning Heirs Extended Family Income Tax Capital Gains Tax Stamp Duty Creditors Caters for local and offshore Planner s Family assets Advisor Local Will Planner Assets Kenya & Testament USA Switzerland UK Inheritance Tax Forced Capital Gains Tax Heirship CRS Advisor Advisor Advisor Assets Assets Assets Inheritance Tax Capital Gains Tax CRS Income Tax FATCA Family Member
Foreign Inheritance United States IHT and Gift Tax 0-40% Significant exemptions apply to US citizens and residents, but are inapplicable or reduced for non-US residents. United Kingdom Unified estate and gift tax - IHT and Gift Tax 0-40% IHT applies to the value of an individual’s estate when he or she dies (in which case he or she is deemed to make a transfer of the whole estate immediately before such time) and to certain transfers or gifts made during the individual’s lifetime. Non- domiciled and resident. Switzerland IHT and Gift Tax 0-50% IHT and gift taxes are levied at the cantonal/communal level and are not harmonized. Furthermore, the tax rate generally depends on the relationship between transferor and recipient. Mauritius No IHT or Gift Tax
Offshore and Onshore Planning Offshore-Onshore Wills ▪ Last Will and Testament covers local assets, the executor may have to apply for foreign orders to recognise ▪ his right to deal with the property. Result in delays, problems with foreign language and additional administration costs. ▪ Separate foreign Will dealing with offshore assets, as this will address jurisdiction specific requirements and ▪ different legal systems and simplify the administration of the offshore estate. Offshore-Onshore Trusts/Foundations ▪ Trusts follow more or less the same principles ▪ Foundations not well known – treated as a trust or company ▪ Executors, Trustees/Council ▪ Separate from local providers ▪ Tax issues ▪ Businesses ▪ Company, partnership ▪ Pre-emptions, dissolution ▪
Offshore-Onshore Planning Family benefit as Per trust deed Local assets outside succession law Local Trust Will covers other assets Planner s Family Local Will Planner Assets & Testament Kenya International Single advisor Private Foundation Advisor No forced Family offshore benefit heirship as per the Charter Family Member UK Assets USA Assets Swiss Assets No UK IHT No US IHT
Offshore Estate Planning Tools ▪ Foreign Trusts ▪ Discretionary and testamentary ▪ Taxation ▪ Private Foundations ▪ Private and charitable ▪ Taxation ▪ Foreign Companies or Partnerships ▪ Limited liability ▪ Taxation
Parties to a Trust Beneficiaries: To benefit persons or to carry Protector: out purposes or both. Takes reasonable steps to ensure trustee carries out its functions. Benefit or purpose Settlor: Activity Instructions for formation. Enforcement Discretionary Administer Settlement Trust Operation Formation & Deed Trustee: Global To administer assets and Registrar General: Investment. Activity Notification carry out objectives. Stamping of the Deed.
Parties to a Foundation
Differences - Trust v Foundation Foundation Trust Incorporated vehicle. A foundation is brought into A trust is a legal arrangement between the parties. existence following completion of an official registration process. Legal personality . A foundation is a separate legal entity A trust is not an entity in its own right. It transacts through its which can hold assets, enter into contracts, sue and be trustees rather than in its own name. sued in its own name. Sham Principle. No sham argument principles apply to The principle of sham applies to trusts which can determine foundations. The registration of a foundation by a whether a trust relationship indeed exists. competent authority is conclusive proof that the foundation exists. Beneficiaries . A foundation does not have to have A trust needs beneficiaries in order to be valid (with the beneficiaries. It can be established for a particular purpose exception of non-charitable purpose trusts and other types or objective. of trusts that are creatures of statute). Indefinite existence . A foundation can exist for an indefinite Other than a purpose trust, a Mauritian trust is subject to a period. perpetuity period. A statutory body . A foundation is a creature of statute and A trust is historically a product of the common law and thus owes its existence to legislation passed by a equitable principles. competent body. Public record . A foundation’s existence can be determined In Mauritius there is no public record for trusts. as a matter of public record. Rights to information . Under a Mauritian foundation there A beneficiary of a Mauritian trust does not have rights to are rights to information by the beneficiaries. information unless this is provided for in the trust deed and is owned a fiduciary duty. Initial settled funds. A Foundation does not need initial A Mauritian trust needs initial settled funds in order to come settled funds to exist. into existence. Records not available for public inspection except upon Records disclosed as permitted in the Trust Deed or upon authorisation by the secretary, FSC or through Court Order. Court order.
Offshore Planning Scenarios
Offshore Planning Scenarios
Offshore Planning Scenarios
Founder Corporate Council Family Office Member Family Foundation A family-owned organization that manages ▪ Council Members private wealth and other family affairs in the most (Family) effective and efficient way. There is an alignment of family interests and ▪ wealth. Cell Shares Centralization of business services, proper ▪ management and governance structures. Investment Company It creates a family legacy for generations to ▪ Protected Cell Company, GBC1, Mauritius come. Directors Allows for growth in assets and ensures there is a ▪ Cell Cell proper distribution of wealth between the family. 1 2 It provides increased privacy and confidentiality ▪ Mauritius of financial dealings, which can help protect Africa family members from unwanted attention. Ords Ords It acts as a gatekeeper that protects family ▪ Manager Manager members from unwanted solicitations for a myriad of matters. Delivers services in coordinated and customized ▪ Family Business Family Business manner to the individual family members being (Subsidiary) (Subsidiary) served.
Other Planning Considerations FATCA/CRS and Automatic Exchange of Tax Information Amnesty
BTG Consulting Limited 1 st Floor, Bld. B, Nautica Commercial Centre Royal Road Black River Mauritius Tel +230 483 1212 Fax +230 483 1313 www.btg-mauritius.com Important Notice: This document may be subject to legal privilege and any unauthorised use of this document may be illegal. If this document is not intended for you, you may not copy, use, distribute or disclose the contents thereof to anyone without authorisation. Save for bona fide corporate structuring advice, BTG Management Services (Mauritius) Limited does not accept any responsibility for the opinions expressed in this email. Disclaimer The information contained in this report is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved and given the changing nature of laws, rules and regulations, this may lead to omissions or inaccuracies in information contained in this report. Accordingly, the information in this report is provided with the understanding that we are not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with your own professional accounting, tax, legal or other competent advisers. Before making any decision or taking any action, you should consult a professional. While we have made every attempt to ensure that the information contained in this report is accurate, BTG Consulting Ltd. and its related companies, officers, agents and employees are not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this report is provided "as is", with no guarantee of completeness, accuracy or of the results obtained from the use of this information, and without warranty of any kind, express or implied. In no event will BTG Consulting Ltd, its related companies, officers, agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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