How much does it cost to set up an offshore trust?
The following describes what constitutes trust in Labuan and why creating trust in this jurisdiction is so popular among offshore founders. The advantages of an offshore trust in Labuan are indicated, and it is explained why trusts are very beneficial for founders.
The founders need to understand the main difference between a non-offshore and an offshore trust, namely: in an offshore trust, assets are stored in another country, and the trust is created under the laws of an offshore jurisdiction.
What is trust in Labuan?
Legislation of Labuan defines trust as an agreement between the founder of the trust property and the trustee to manage the assets of the founder in the interests of the designated beneficiaries. When creating a trust, the founder must meet a number of requirements, the founder appoints the trustee, who must be an adult in his right mind. The founder’s claims on the trustee are set out in the trust declaration or trust agreement, and such provisions are binding on the trustee. To control the management of a trust, there may be a guarantor ensuring compliance of the trust work of the trust declaration (trust agreement).
A trust in Labuan, when it is created, does not acquire the qualities of a legal entity, but allows the founder to transfer its own assets into it, where the trustee will dispose of them. In the Laboan Trust, the founder and beneficiaries are appointed during the creation of the trust. A trust must not have any real estate in Malaysia, and at least one of the trustees of the trust must be in the form of a “company” (a company entered in the Labuan Companies Registry Law of 1990). The trust company does not have to have its own office, however, it must hire a manager. Also in Labuan it is necessary to appoint at least two employees of the trust.
According to the legislation of Labuan, the life of the trust can reach 100 years, however, this period can be specified in the terms of the trust creation. Foreign trusts are recognized and can be registered in Labuan.
Why create an offshore trust in Labuan?
Labuan serves as a tax haven for investments and international offshore trusts since the creation of the Labuan Offshore Financial Services Service (LOFSA). Since 2006, offshore founders have created international trusts in Labuan to protect their assets. The Offshore Trusts Law in Labuan 1996 was passed by the Malaysian government to ensure the confidentiality of the work of trusts in Labuan. Disclosure of trust in Labuan constitutes an offense.
The strategic location of Labuan in international waters makes it possible to work effectively and maintain international relations. Since the adoption of the Law on Offshore Trusts in Labuan in 1996, Labuan became a haven for offshore trusts, since it is possible here to effectively plan the payment of taxes and protect property in conditions of strict confidentiality and security. The state structure in Labuan is stable, Labuan is a financial center attracting offshore investments from all over the world.
Assignment of trusts in Labuan
– Asset Protection
– inheritance planning
– Benefits for children
– Benefits for employees.
The most frequently created trusts in Labuan
Currently, offshore founders most often create special trusts in Labuan. A special trust allows owners of the company in Labuan to hold there shares and shares of partners. Such trust is based mainly on the structure of the trust adopted in the British Virgin Islands. The main advantage of a special trust is that it allows both Malay and foreign founders to accept Malay assets, including stocks and insurance policies.
In addition, in Labuan you can create such trusts:
– Trust Trust
– Discretionary trust
– Charitable Trust.
The advantages of offshore trusts of Labuan
Some advantages (without limitations):
– Efficient property tax planning
– Lack of currency regulation
– Legality of trusts in Labuan
– The possibility of placing in trust of assets of various types, such as bank accounts, insurance policies, objects of intellectual property.
– Balanced Trust Law in Labuan with amendments in 2002
– Lack of property taxes and inheritance
– No capital gains tax
– There is no requirement for reporting of trusts in Labuan.