New Tax system is hostile to Trusts

04 Jan
Joseph Ferdinand Keppler - The Pirate Publishe - Restoration by Adam Cuerden - Trusts

Joseph Ferdinand Keppler – The Pirate Publisher – Puck Magazine Restoration by Adam Cuerden

The tax system is generally hostile to foreign trusts. The hostility is understandable– trusts interfere with the government’s ability to impose or collect tax. As a result, the laws are slanted against foreign trusts. Income is taxed punitively. The right paperwork must be prepared “just so” and filed on time, or massive penalties can result.

International Trusts are irrevocable

Giving up what is rightfully yours to use and control is a decision once made that cannot be changed forever.

  • Trusts are hard to create
  • Trusts are trying to predict and control the future

Can you imagine what your family will be like in 50 years? Can you imagine what life, the economy, and the world will be like in 50 years?

Now think of writing a document that is designed to send a time capsule containing a fortune 30 or 50 years into the future.

Beware of trusts and foundations abusive tax evasion scheme:

When using a Trust or Foundation the taxpayer who still exercises full control over his/her business and assets there is no tax strategy.

Beware of Foundations where the documentation and business records of this scheme all make it appear that the taxpayer is no longer in control of his/her business or its assets. The reality is that nothing ever changed. The taxpayer still exercises full control over his/her business and assets.

There can be many different variations to this abusive tax evasion scheme.

Trusts are subject to Regulatory Exchange of Financial Information Agreements

  • Foreign Financial Institution exchange of information decreased Person access to foreign financial accounts, thereby limiting the possibility of a person obtaining bankable assets overseas via
  • foreign bank or brokerage account
  • Foreign Financial Institutions (FFI) are bound by rules to disclose beneficial ownership of all foreign financial accounts
  • Experience says that no regulatory compliant foreign financial institution would be willing to accept a trust with a U.S. beneficiary application
Trusts have complex financial accounting

Distributions to beneficiaries require the trustee to keep complex financial accounting records that satisfy tax requirements, even if under local laws the record keeping and accounting is unnecessary.

Trust distributions can create huge tax bills

Beneficiaries may pay gigantic income tax bills when they receive distributions.

Trusts are not free from the risk of law suits
  • Trusts are not free from the risk of law suits. A Trustee is not free from the risk of being sued; law suits can take on its own life with claims, counter claims, new parties joined, summons, discovery, dispositions, interrogatories and endless court appearances
  • Trusts are not recognized as private and secret in Common, Civil or Sharia Law
  • Trusts have legal entity ownership that is not separate from custody
  • For safety and security legal entity ownership needs to be separate from custody
  • The custodian needs to know who the beneficial owner is and the client beneficiary needs to know that the custodian is not going to act without talking to the client
  • Trusts merge legal entity ownership and custody

International Trusts are not recognized in Intergovernmental Agreements

  • Not in Double Tax Agreements
  • Not in the Foreign Account Tax Compliance Act
  • Not in Foreign Financial Account Information Exchange Agreements
  • There are troubling cases where settlers of an Foreign Trust have actually gone to jail for contempt of court when the foreign trustee refused to release assets and settle a court claim
  • If a Trust goes around with an “in your face” response to a judicial inquiry then they undermine confidence and are suspected of not running a proper show. A country is supposed to have laws that are recognized as proper by other countries
Trust status cannot extend to beneficiaries and participants

The point for all to grasp is whatever the legal, juridical and tax status of funding structures, that status cannot extend to beneficiaries and participants as individuals. That is why a trust is quite useless to beneficiaries and participants. The better answer is this acknowledged Hong Kong pension fund because we know exactly where we stand instead of guessing

There is much consternation with International Trusts, given its tainted criminal history and portrayal in the mainstream media. Therefore, it is best to manage your expectations.

We recommend a registered and regulated Hong Kong pension fund, which is exempt from foreign financial account reporting

It is exempt from foreign financial account reporting in the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) of the O.E.C.D. and 13 other countries. Exempt is the ONE safe method to transparency that retains non-disclosure, secret and private benefits.

Only this specific entity can be used to defer income as tax deferred on gains and accumulations that is registered in Double Tax Agreements, Tax Information Exchange Agreements and by International and Domestic pension law as by government and governance registered and recognized non-disclosure, secret and private.

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