Besides featuring a temperate climate and beautiful scenery, Gibraltar, which is a UK overseas territory, has proven to provide asset protection for wealthy investors and those individuals with financially high-risk occupations.
The overseas British territory is located on the south end of the Iberian Peninsula, which is situated at the entrance of the Mediterranean Sea. The 2.3 square mile or 6.0 km area of land shares its north border with Andalusia, Spain.
Many investors feel that the economy of Gibraltar is almost synonymous with its landmark the Rock of Gibraltar as the icon overlooks a densely populated city that is home to approximately 30,000 Gibraltarians as well as people from other nationalities. This locale also draws a large number of investors who want to preserve their wealth and, therefore, look upon Gibraltar as possessing the ideal economic climate in order to effect the activity.
Since its integration in 1973 inside the European Economic Community, Gibraltar has adopted all of the European directives established for holding assets, except those that cover indirect taxation (VAT), which are not applicable to the jurisdiction. Because of its EU status and its capability to offer financial services inside a low tax jurisdiction, Gibraltar is considered to be among the major finance centres in Europe and the world.
Asset protection is afforded to investors in Gibraltar who also do not have to worry about the payment of a capital gains tax or inheritance tax. A low corporation tax and low personal income tax are featured as well. Individuals who possess a high net worth tax status enjoy a stable government and economy as well as a legal system that makes trust and estate planning or asset holding secure and reliable practices.
Who Takes Advantage of Asset Protection Trusts?
When you look at the subject of asset protection trusts, the main focus of the activity is to protect the assets of wealthy individuals or the holdings of people who are involved in high-risk financial occupations, such a real estate investors, lawyers, and doctors. Asset protection serves to reduce the tax burden for investors, as well as any debt issues as well.
Leading proponents of asset protection suggest that the financial safeguard is appropriate for anyone who possesses a net worth of one million dollars. In some instances, some financial planners advise that people who hold only half that amount of net worth can also benefit from the practice.
Reviewing the History
You only have to look at the history of asset protection to understand its influence in today’s financial climate. For example, part of the reason for the decline of English feudalism from 1215 to 1540 is that the law courts at the time were unwilling to enforce obligations that were trust-like in character. As a result, beneficiaries received very little safeguards against the practices of dishonest trustees. As time progressed, and the coffers of the wealthy grew, asset protection planning became increasingly common.
Asset Protection: A Trend Among the Wealthy?
Today, asset protection is provided for tax mitigation purposes as well as to avoid creditor claims. Conservative financial estimates suggest a “not-so-conservative” dollar amount in asset transfers. The transfer of assets connected to asset protection and the avoidance of creditor claims is estimated to be approximately one trillion dollars. In fact, one UK solicitor in the asset protection field has indicated that his company alone has a roster of clients who hold over three billion dollars’ worth in asset protection trusts.
As indicated, asset protection trusts are not featured or supported solely for major players in the world of finance. Offshore trusts today have been touted and are being marketed to professionals, especially doctors, as safeguards against divorce claims or judgments of malpractice.
Unfortunately, these kinds of trusts have also been used by less-than-trustworthy people to stash the gains they have received as the result of fraud. It comes as no surprise then that asset trusts play a prominent role, in some instances, in creditor avoidance.
Because strict legal enforcement removes the positive incentives that evolve from the creation of asset protection trusts, the trust beneficiary’s interests are considered to be equitable rather than legal in nature.
By enhancing the security that is available to trust beneficiaries, the availability of equitable financial relief has made the trust device a popular vehicle.
The trust itself has proven to be a reliable means of protecting assets as well as a tool for accomplishing a broad range of financial objectives. Long acknowledged as a worthwhile device for transmitting wealth from one generation to the next, the trust is also considered to be a major commercial instrument in the world of business.
Trusts, in the financial world, have gained unmitigated success because of their adaptability and flexibility. That is because the essence of the trust, whether it is used for protecting assets or for transferring wealth, is to divide and distinguish one’s beneficial ownership from his legal ownership.
When you review the featured trust and wealth-building services at such Gibraltar firms as the Acquarius Trust Group, you truly understand why the word “trust” is not only a hallowed word but a highly regarded concept among the wealthy.
This flexible vehicle makes it possible for people to safeguard their funds and make the most of their holdings, whether those holdings are being directed for personal use or for investor-related or commercial initiatives.
If the use of the trust had not been implemented, the transfer of assets for purposes of inheritance or business would have been negatively impacted. That is why knowing a reputable company that provides services for asset holding and trust and estate planning makes it easier for both companies and individuals to enjoy the advantages that come with succession planning, the transfer of assets and the protection of those assets from taxes and creditors.