An offshore financial plan is an investment and business strategy specifically designed to add privacy, protection, flexibility and superior performance to your financial affairs. It involves holding personal or corporate wealth outside one's country, where it is subject to local secrecy regulations, low or no taxation, and local regulations that protect investment structures.

There are a number of reasons people and companies add offshore structures to their financial strategy.

Asset Protection - In America, the number of frivolous lawsuits filed each year is enormous. If you're American, you have a 10% chance of being sued in any given year, and a 33% chance of being sued in your lifetime. Worse, this trend appears to be spreading through all countries in the Western world. For professionals facing potential malpractice liability and individuals and companies with "deep pockets", the best line of defense may be to protect your assets offshore well before any claims are made against them.

International Investment Options - If you have maximized your domestic tax benefits and have extra money to invest, you can typically generate much better returns offshore than onshore. Some estimate that more than 80% of the world's top grossing mutual funds are not available to investors from the United States. While some of the best investments are located offshore, many governments prevent them from advertising "onshore". Why? Because governments know that people would avoid domestic investments if they had a choice to do better elsewhere. Further, with lower operating costs and overhead, offshore investment vehicles in many tax favorable jurisdictions can afford to pay better rates of return than those available in other countries.

Guaranteed financial privacy - Your onshore financial records are an open book both to governments and potential third party litigants. Experts predict this intrusiveness will increase as time and technology march on. In most offshore environments, financial records are vigorously protected by local secrecy legislation, and violations typically result in serious civil and criminal liability. For decades, the offshore world has held the right to financial privacy at an absolute premium.

Flexible transfer of family wealth - Establishing an offshore trust in an offshore jurisdiction typically grants greater flexibility and efficiency in estate matters than onshore legislation will allow. In an offshore environment, probate fees are typically non-existent, inheritance taxes can be minimized, and perpetuity rules generally do not apply.

No or low taxes - In some cases, offshore financial planning can reduce tax liabilities. Assets placed in an offshore trust structure are, in simple terms, no longer considered the settlor's. Income and capital gains generated by those assets may be taxed according to the rules of the trustees' country of residence. So long as the legal separation between assets, original owner and potential beneficiaries remains intact, any income derived from the trust assets could continue to be taxed at the offshore rate, likely 0%.

Of course, once the assets and income from them are repatriated to an onshore climate, they would be subject to tax, but people who might one day collect the trust property will have the luxury of being able to plan for this eventuality in many ways. For instance, they could elect to repatriate funds in years where their own domestic income is very low, thus minimizing their tax rate in jurisdictions that operate on a higher income-higher tax rate system. Alternatively, a beneficiary might elect to give up their residence onshore and move to a low or no tax jurisdiction before collecting any trust assets.

This is one just example of the potential tax benefits of moving your assets offshore. It is important to note, however, that tax benefits vary considerably from country to country. IFG Trust does not offer legal or financial advice. Please consult a local tax advisor for specific information on offshore tax benefits as they apply to your country's tax legislation.