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
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
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
Estate is the sum of personal interests in real and/or personal
Flight Capital is money which flows offshore and likely never returns.
It is exacerbated by a lack of confidence in government fiscal
GmbH is a German form of a limited liability corporation.