Offshore Asset Protection Structures vary widely in design depending on for whom and why they are being implemented.
Most asset protection structures, however, are similar in that they consist of one or more companies, trusts, or foundations, interwoven to protect the beneficiary’s funds from attack — either by unscrupulous attorneys with frivilous lawsuits, a spouse, criminal enterprises, or an overreaching government.
Structures can come in two different flavors as they relate to taxes — either tax advantaged, or tax neutral.
Tax advantaged offshore structures connote some form of tax savings or tax avoidance onto the beneficiary by structuring the client’s affairs in a way to take advantage of differential tax laws in different jurisdictions. This is done frequently by multi-national corporations, as profits are realized in jurisdictions with the lowest tax treatment for profits, and expenses are heaped onto those units of the company that reside in jurisdictions with high tax rates on profits. Individuals, and small businesses often create similarly advantageous strategies through their offshore asset protection structures.
Tax neutral structures pass on no tax savings or benefit to the beneficiary or asset base. They are typically constructed as a defense against appropriation of the assets by either a spouse, criminal enterprise, or a country’s legal system.
Offshore asset protection structures utilize laws in particular countries that make them more difficult to attack and more difficult to extract settlements from.