AUG 18: Offshore Bank Accounts and the Best Ways to Open Them

by David Jenyns on August 18, 2007

Before we can discuss what you need to know before you open offshore bank accounts, we must first define all the terms: if you don’t know precisely what you’re doing, the offshore world can be a dangerous place.

Ask yourself this question. Do you really want to make a serious mistake? If not read the rest of this article.

– The trust deed is the private legal agreement between the settlor and the trustee. This deed can be drawn up in many different ways to reflect the requirements and concerns of the settlor and generally consists of the following: definition of who the trustee is and who can order their replacement or retirement; definition of the trustee’s powers and their restrictions; definition of the assets and how they are to be managed; and definition of who is to benefit and who they are at present.

– The settlor is the person who gives away their assets by transferring the legal ownership to the trustee. The settlor also arranges the trust deed to leave the distribution of the benefits of the trust to the trustee or clearly defines how the benefits should be distributed.

– The trustee is the person or corporate body into whose ownership the assets are transferred. The duty of the trustee is to ensure the wishes of the settlor are carried out and the beneficiary’s interests are protected. The trustee can be removed or replaced by a new trustee if for any reason it is deemed appropriate.

– The beneficiary is the person or any other legal entity that has benefit under the trust deed. They may be nominated specifically by the settlor and their benefits clearly defined, or, conversely, no specific beneficiaries need be nominated. Instead, a class of person like son, daughter or grandchild may be nominated. The trustee is normally guided by the written or verbal wishes of the settlor.

Now that we’ve defined all the terms involved, let’s look at the seven things you absolutely must consider before opening offshore bank account in any jurisdiction.

1) What is the main language used in the particular jurisdiction, and what is the time difference between you?

Can you communicate with this jurisdiction easily in your native tongue? Do you need to get up in the middle of the night to communicate with the particular jurisdiction? In this regard, if you’re comfortable using email to communicate, then the time difference is irrelevant and you can use the jurisdiction of your choice.

2) What is the political and financial stability of the particular jurisdiction?

Are you going to lose any assets placed in this jurisdiction due to a civil war or political unrest? How long have they maintained peace and stability?

3) What is the geographical location of the particular jurisdiction?

How hard is it for you to access if you ever need to go there?

4) What are the laws and regulations regarding privacy?

Is your valuable information going to be kept in confidence and what penalties exist for any breach of privacy?

5) What is the reputation of the trustee or incorporation company?

How long have they been around?

6) What are the fees associated with the particular offshore bank accounts?

Are all of your profits going to be eaten up in fees?

7) Does the jurisdiction have any tax treaties with your country of domicile?

Do they share information freely between your country of residence?

These seven questions will allow you to make the best possible choice when opening offshore bank accounts in any jurisdiction: you’ll be knowledgeable, informed, and you’ll have yourself and your hard work to thank if your investment is successful.

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