Using an Off-Shore Trust

Although the non-resident, non-citizen shareholders of a non-U.S. corporation are insulated from U.S. estate tax, they still should consider the advantages of holding their stock ownership in a foreign off-shore trust. Those advantages include:

Avoidance of probate in their home country and in the jurisdiction of the trust.

Confidentiality: Bank secrecy laws allow for anonymous ownership.

Protection against expropriation by their home country.

Transmission of the trust assets to the younger generation automatically and without the intervention of a probate court or court order.

Centralized control of the investment. The trust can control the flow of income and the sale of the assets. Protection against future disagreement among the beneficiaries as to investment decisions.

Favorable tax treatment. Estate and gift tax can be avoided in the U.S. and in the jurisdiction where the trust is located (such as the Cayman Islands, the British Virgin Islands or the Bahamas). Estate and gift taxes can also be avoided in the home country as well.

Without an off-shore trust, usually a court order will be required before the stock of a foreign corporation can be transferred to the beneficiaries of a deceased shareholder.