Offshore Trust

• The confidentiality of asset ownership;
• Enhancing the protection of assets;
• Assuring the orderly succession of a business or estate;
• Mitigating estate and other tax exposures; and
• Maximizing investment opportunities.

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	Objectives of setting up an Offshore Trust

• Preservation Of Assets
  Trusts can reduce tax liabilities, and protect assets from future creditors or certain civil suits to the extent permitted by law. In the event when new unfavourable legislation is implemented, trusts can prevent your assets from being seized or blocked.

• Conceal One’s Financial Affairs
  A trust works on a basis of anonymity as the legal owner of the assets is the trustee. Furthermore, the settler can still execute a degree of influence over the trust assets even if he is one of the beneficiaries.

• Estate Or Inheritance Taxes And For Tax Planning Purposes
  Tax protection has long been known as one of the best uses of a trust. Assets properly held in a trust by an offshore trust may not be subject to tax upon the settlor’s death, even if there are changes to the onshore tax legislation.

• Aggregate Personal Assets From Business Assets
  Modern offshore trusts can be flexibly structured to give trustees a large degree of discretion over the management of assets.

• Proper Wealth Inheritance And The Preservation Of Family Wealth
  Trusts are an extremely effective structure to use when dealing with family assets and the individual rights of the family members over those assets. A trust protects against wealth fragmentation often as a consequence after immediate distribution to heirs upon death. Distribution intervals of the trust to the beneficiaries can be stipulated and placed under the trustee’s control to best look after the interest of the beneficiaries.

Our team of professionals’ collective experience provides a wealth of knowledge to draw upon to assist you tailor trust solutions from the initial planning stages through to implementation. We assure maintaining a high standard of service, whilst offering the highest level of sophistication when planning your trust structure.

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	Procedures and Benefits of setting up an Offshore Trust

There are two types of trust structures that we deem simple and easy to administer – 1) a BVI Private Trust Company (PTC) and 2) a BVI VISTA Trust (VISTA).

1) PTC Structure

Under a PTC structure, the trust structure is as follows:

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	Structure Requirements for setting up a PTC

• The BVI Private Trust Company is owned by one or more members of a family and is to act as trustee of one or more trusts of which the members of the family are the principal beneficiaries; or
• The BVI Private Trust Company is formed on behalf of a company or a group of companies to be the trustee of one or more trusts.

In both instances, the Private Trustee is precluded from receiving remuneration, either directly or indirectly.

A Private Trustee does not require a licence and there is no requirement to have a physical presence in the BVI. Professional advice should be taken at the outset by a Private Trustee to ensure that when acting as trustee, the trust and underlying companies, if any, remain offshore.

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Procedures for setting up a PTC

• A company (PTC) is set up under the International Business Companies Ordinance 1984 in BVI to act as Trustee of a trust.
• The Settlor is the person who gifts the assets to the Trustee to hold in Trust for the beneficiaries.
• The assets of the Trust can be held directly by the PTC or another company (BVI Co. A) can be set up to hold the assets of the Trust.
• A Deed of Trust is executed between the Settlor and the Trustee. A Letter of Wishes is also drawn up to outline what the Settlor’s wishes are in relation to the assets gifted into Trust. Normally this letter would be very specific on beneficiaries’ entitlements both during and after the Settlor’s lifetime. It would also give clear guidance to the Trustee on what the Settlor’s wishes are for the administration of the assets while held in Trust.
• A Protector can also be appointed to the Trust. The Protector is an independent third party from the Settlor and Trustee who consents to certain acts of the Trustee. Normally the Trust Deed specifies what the duties of the Protector are and these duties are confined to major transactions or issues that face the Trust. In most instances we suggest that a family member or very close family friend be appointed to this position.

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Benefits of a PTC

• A Private Trustee can be used by a Settlor who is reluctant to transfer ownership of his/her assets to a professional trustee. A Settlor is able to elect directors to form a board that the Settlor is comfortable with. Often, the board of the Private Trustee will consist of people with specialist knowledge, especially where a trust has an underlying operating company. Such a board can make speedy decisions and better facilitate the business of the trust’s operating company.
• A Settlor with difficult family relationships can elect people for appointment to the board of a Private Trustee that provide the Settlor with confidence that his/her wishes will be carried out on death.
• Should new directors be required to be elected to the board of a Private Trustee, the process is far simpler and faster than appointing a new professional trustee. Deeds, chain indemnities and lawyers’ fees are dispensed with, as the appointment and removal of directors are routine company secretarial tasks.
• Depending on the size of the trust, the cost associated with using a Private Trustee may considerably less than if a professional trustee was used.

2) VISTA Structure

Under a PTC structure, the trust structure is as follows:

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Structure Requirements for setting up a VISTA

• Trustee must be a BVI licensed trustee
• VISTA can only hold shares of a BVI Company

VISTA is a separate legal regime for trust of shares in private companies, tailored to the type of asset to be held on trust. The only property that may be held directly on VISTA trust is shares of a BVI company – other assets, such as investments or shares in non-BVI companies that the Settlor wishes to be held on trust, must be owned by the BVI company, of which the Settlor (or whomever he may appoint) is typically the director.

VISTA allows property to be held on a trust to retain rather than for sale, and also allows the trustees to leave the management of the BVI Company, and any underlying companies, to the company directors.

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Procedures for setting up a VISTA

• A company (BVI Co. A) is set up under the International Business Companies Ordinance 1984 in BVI to hold assets of a trust.
• The Settlor is the person who gifts the assets to the Trustee to hold in Trust for the beneficiaries.
• The Trustee can only hold shares of the BVI Company (BVI Co. A) and the BVI Company will in turn hold the assets of the trust.
• A Deed of Trust is executed between the Settlor and the Trustee. A Letter of Wishes is also drawn up to outline what the Settlor’s wishes are in relation to the assets gifted into Trust. Normally this letter would be very specific on beneficiaries’ entitlements both during and after the Settlor’s lifetime. It would also give clear guidance to the Trustee on what the Settlor’s wishes are for the administration of the assets while held in Trust.
• A Protector can also be appointed to the Trust. The Protector is an independent third party from the Settlor and Trustee who consents to certain acts of the Trustee. Normally the Trust Deed specifies what the duties of the Protector are and these duties are confined to major transactions or issues that face the Trust. In most instances we suggest that a family member or very close family friend be appointed to this position.

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Benefits of a VISTA

• It provides certainty that assets will be dealt with as the Settlor intends.
• It removes the trustee’s monitoring and intervention obligations under general law (except to the extent that the Settlor otherwise requires).
• It permits the Settlor to give the trustee a role more suited to a trustee’s abilities (a duty to intervene to resolve specific problems).
• It allows trust instruments to lay down rules for the appointment and removal of directors.
• It ensures both beneficiaries and directors have the right to apply to the court if the trustees fail to comply with the requirements for non-intervention or the requirements for director appointment and removal.
• It imposes on the trustee an obligation to retain the shares.
• It gives power to the trustee, if required, to sell the shares at the direction of the directors.

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Note A
The various factors considered by the Court in deciding whether trading income is derived from trading "in" Singapore, include the following:-

1. Is the contract concluded in Singapore. Although this is an important factor, it is not conclusive.
2. Is the business operations wholly or partly carried on in Singapore.
3. Is capital employed in Singapore.
4. Are stocks maintained in Singapore for habitual fulfilment of orders.
5. Was the title to the goods passes from the seller to the buyer in Singapore.
6. Was proceeds of sale received in and payments for expenses made from Singapore.

Note B
Revenue Department may look at whether the BVI CO can be established to be carrying on business in Singapore though a "permanent establishment" in Singapore in the form of the Singapore Company.

"Permanent establishment" is defined under Section 2 of the Act as follows:-
" …. A fixed place where a business is wholly or partly carried on including-

• a place of management;
• a branch;
• an office

Without prejudice to the generality of the foregoing, a person shall be deemed to have a permanent establishment in Singapore when he:

1. has and habitually exercises authority to conclude contracts;
2. maintain a stock of goods or merchandise for the purpose of delivery on behalf of that person; or
3. habitually secures orders wholly or almost wholly for that person or for such other enterprises as are controlled by that person."

Note C
Section 13(5) of the Income Tax Act only exempt non resident individual from tax if he does remit his overseas income to Singapore in each tax year of assessment.
This Section is currently silent on non-resident corporate entity. In view of the foregoing, it is more appropriate to place the sale proceeds outside Singapore.

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