By James Hartland,
Co-Founder of The Astra Group, Life Coach, Expat and advisor of over 30+ years.
Trusts are often misunderstood and considered too complex and expensive for most people. The reality is that this is not the case, and a good advisor can outline the importance of trusts in family and estate planning.
Trusts can be simple and easy to understand and also not expensive. This article addresses where trusts can be used by ‘International People’ and why.
If for example you are an expat living in somewhere like the UAE, Singapore, HK or other expat areas and take out Life Insurance while you are abroad it makes sense to put that Insurance in a Trust.
Why Do You Need An International Trust?
In many expat locations when someone dies the ‘family visa’ is quickly cancelled often before you have the opportunity to get the proceeds from local Insurance policies or Investments.
A trust resolves this issue as benefits are paid out quickly without the need to deal with Insurance or Investment companies in the location you have left.
Trusts are also very important for people whose situation is slightly complex; this could be couples who hold different passports or couples who have different religions.
For couples who come from different countries or have a different religion often inheritance issues become more complex because you are not sure in which jurisdiction to have a Will. Some countries also have forced heirship where you do not get to choose your beneficiaries.
Certain religions stipulate that assets must be left to certain sections of your family which is unlikely to be what you would want.
Trusts enable you to bypass the need for a Will for the assets included in the trust. A trust can also overcome forced heirship and religious issues.
Trusts are becoming an essential discussion point for more and more people and are also more affordable. If you leave your country off citizenship for work or other reasons it is likely you will benefit from a trust.
As well as helping assets pass quickly to your beneficiaries reducing costs and administration burden, trusts are a legitimate tax planning tool.
If you leave your country of citizenship but leave assets behind you are likely to still be taxed on those assets if they produce income. Moving those assets into a trust is likely to remove them from paying tax and not need to any greater costs.
Covid has and will change the world and it’s impact has left most governments around the world with massive debts which they will need to reduce over the next decade. This will certainly lead to higher taxes but for those who are living and working abroad there is the potential to reduce these taxes with the use of legitimate use of International Trusts.
Any discussions around trusts need to build in flexibility as the world continuously changes and certain jurisdictions no longer work due to changes in government or new rules which might make a trust less effective.
What about the costs?
Simple trusts which enable assets to pass whether they be investments or insurance products are often either free or cost less than a $1,000 to set up. These trusts achieve all the basic goals of avoiding religious issues, forced heirship and waiting for probate so assets pass to the beneficiaries quickly and without cost.
More complex trusts designed for ‘generational planning’ and which allow you to hold multiple assets within the trust like property, investments and insurance can be set up for a starting fee of around $5,000 with annual running costs of around $2,000.
Like with most aspects of financial planning trusts require a detailed knowledge of the client and their circumstances. Once the advisor has this they can then provide a solution which is cost effective, easy to understand and geared to the needs of each individual situation
Do you have an international trust in place or not sure how to get started? Please make sure that you are covered and ready for the expected as well as the unexpected. Let's chat today to make sure that you and your family remain protected.