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Initiation to Offshore Banking Terms

Offshore Banking Terms

Many investors are puzzled by the various terms used by bankers in describing ways to protect their money. Here is a short list of some of the most common ones.

Asset Protection Trust (APT) is an irrevocable trust, usually created (settled) offshore for the principal purposes of preserving and protecting wealth against creditors. Title to the asset is transferred to a trustee. It is used for asset protection and usually tax neutral. Its function is to provide for the beneficiaries of the APT. A trust is a contract affecting three parties, the settlor (who sets up the offshore trust; also called the grantor in U.S. or IRS terms), the trustee and the beneficiary. A trust protector is optional but recommended, as well. Through the trust, the settlor transfers asset ownership to the trustee on behalf of the beneficiaries.

Business trust is created for the primary purpose of running a business. These trusts are treated as persons under the Internal Revenue Code (IRC). It must have a commercial purpose and actually function as a business.

CARICOM is the Caribbean Common Market. Its members consist of 14 member countries of the Caribbean community, including Antigua, Bahamas, Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent, Surinam, Trinidad and Tobago. The purpose of this organization is to encourage free trade and free movement of labor. Conspicuous by their absence are the Cayman Islands and the British Virgin Islands, the two major players in international banking and finance, which did not wish to be regulated by a small local community because of greater international ties.

Discretionary Trust is a grantor trust in which the trustee has sole discretion as to who among the listed beneficiaries receives income and/or principal disbursement. The trustee has full authority over the fund, or it would cease to be a discretionary trust. A letter of wishes, or side letter, can provide guidance to the trustee without having any legal and binding effects. The letter(s) must be carefully drafted, as the trustee cannot be seen as a pawn of the beneficiaries or there is basis for the argument that there never was a complete renouncement of the assets.

Estate is the sum of personal interests in real and/or personal property.

Flight Capital is money which flows offshore and likely never returns. It is exacerbated by a lack of confidence in government fiscal management.

GmbH is a German form of a limited liability corporation.

High Net Worth (HNW) Person is any individual with more than $1,000,000 in liquid assets.

International Business Company (IBC) is a corporation formed (incorporated) under the Company Act of a tax haven, but is not authorized conduct business within that country. It is intended to be
used only for global operations. It is owned and operated by members and/or shareholders, just like other corporations.

Limited Company is not an international business company. May be owned by a resident of the tax haven and is set up under a special corporate law with a simpler body of administrative laws. A Limited Liability Company (LLC) consists of member owners and a manager, at a minimum. It has tax advantages and operational flexibility found in a partnership, operating in a corporate-style structure, with limited liability as provided by the state’s laws. A LLP is a Limited liability partnership, a form of the LLC frequently used for professional associations, such as accountants and attorneys. A LLLP is a Limited liability limited partnership, intended to protect the general partners from liability.

Member is an equity owner of a limited liability company ((LLC), limited liability partnership (LLP), limited liability limited partnership (LLLP) or a shareholder in an IBC.

NRA is a nonresident alien of the U.S. An NRA is not a U.S. person a  defined under the Internal Revenue Code (IRC).

Offshore is an international term meaning not only out of your country, but also out of its tax jurisdiction.

PLC is a UK public limited company.

The Revenue Reconciliation Act of 1995 proposed changes to the Internal Revenue Code affecting foreign trust reporting, among other changes.

Securities are shares and debt obligations of every kind, including options, warrants, and rights to acquire shares and debt obligations.

Settle. To create or establish an offshore trust. Done by the settlor (offshore term) or the grantor (U.S. and IRS term).

Settlor. One (the entity) who (which) creates or settles an offshore

TCI are the Turks and Caicos Islands, a popular tax haven.

Trustee is the controller of a trust fund. This person is independent of the settlor or grantor and has the fiduciary responsibility to manage the assets of the fund as a reasonable prudent business person would do in the same circumstances. The trustee must defer to the trust protector when required in the best interest of the trust fund. The reporting requirements of the trustee are defined at the creation of the trust include how often, and to whom, the trustee will respond to instructions
or inquiries, investment strategies and fees for the trustee’s services. The trustee may have full discretionary powers to distribute the fund to beneficiaries.

Uniform Partnership Act (UPA) is one of the uniform laws adopted by some states or used as a baseline for other states.

Vetting is the process used by the offshore consultant for evaluating whether a prospective client is a good candidate for offshore asset protection.

World Bank was formed to be the lender and technical advisor to developing countries, utilizing funds and technical knowledge from member nations. It has often been criticized for promoting austerity programs in indebted third-world nations.

Hopefully this short guide will help investors seeking asset havens and offshore banking facilities.

Written by
Dillon Norris

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Silver Lining to Redundancy

If redundancy knocks on your door, this could be your opportunity to break free

It’s impossible to shrug off the despondency that can seep in like a cold winters fog, over the days that follow getting the news that you have been made redundant. The redundancy letter, no matter how nicely worded and appreciative of your contributions to the company, is likely to immediately turn your whole life upside down. However for some there is a silver lining in the redundancy payout – as this may allow a major change in the direction of your life.
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Saving Taxes with an Offshore Company

Offshore Company – A Legitimate Way to Save on Taxes

Saving on taxes is something almost everyone wants to do. However the majority of countries have tax laws that mean we must pay our taxes if we want to stay on the right side of the law. Yet there is a way to legally reduce the level of taxation you or your business are subjected to by forming an offshore company.
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Going for Green – Being an Eco-Property Investor

Investing in ‘Green’ Property Portfolios

The United Nations get GraphiSoft ArchiCAD 20 recently issued get GraphiSoft ArchiCAD 20 a report on the need get GraphiSoft ArchiCAD 20 for property investors to invest get GraphiSoft ArchiCAD 20 in eco-properties. This is a timely piece of advice for the real estate industry which has managed to create a huge carbon footprint and can be very destructive of natural land get GraphiSoft ArchiCAD 20 and environments.

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The report entitled “Building Responsible Property Portfolios,” get GraphiSoft ArchiCAD 20 was authored by University of Arizona professor, Gary Pivo and submitted to a United Nations environmental conference last week. The report urged investors to adopt the six Principles of Responsible Investment and emphasized the power of investors to get GraphiSoft ArchiCAD 20 influence property fund managers to make their portfolios get GraphiSoft ArchiCAD 20 ‘greener’.

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The report also advises that being an eco-investor means good economics as well as good ecology. Most eco-properties which utilize renewable energy end up being more cost effective in the long run than traditional properties. In addition as demand increases for sustainable properties, the price for these investments will be higher for traditional developments.Paul McNamara, co-chair of the UNEP FI Property Working Group, is optimistic that the report can help to break down the ‘circle of blame’ that currently exists within the real estate industry. He says that, “We operate in an industry where investors, occupiers, constructors and developers each blame the other for the lack of positive action in improving the environmental footprint of new and existing buildings. Our report highlights the wide range of opportunities that exist for institutional investors who want to take positive action and apply the Principles for Responsible Investment to their property assets.” get GraphiSoft ArchiCAD 20

The call to this positive action is being get GraphiSoft ArchiCAD 20 made by the UNEP FI Property Working Group, whose members include 18 property fund managers from Japan, India, Austria, Europe and the US. Ultimately this all get GraphiSoft ArchiCAD 20 looks like very get GraphiSoft ArchiCAD 20 positive news for the industry as we move into a more ecologically conscious age. I definitely look forward to the Caribbean getting even greener.

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