Privatus Maximus searches the world for the best trusts and asset protection jurisdictions. And here we bring you something even more rock solid and classier than Switzerland. Indeed, it could be said that this tiny country is even better than Switzerland. With only a population of 38,000 people, Lichtenstein is a country devoted to trust, wealth management and banking services.
Why would you go to all the expense of purchasing the Rolls Royce of trusts? Well,let’s look at the secrets that only the world´s wealthiest families know:
- Many of the world´s wealthiest family offices hold assets in Lichtenstein and that should tell you something about this country, here is why:
- Lichtenstein is per capita one of the richest countries in the world. It is also the most politically stable. No wars, no refugees, no communists, and virtually impossible immigration make Lichtenstein a financial mecca for the world’s wealth. Why? Because wealthy families plan trusts for a long time, so that their heirs can benefit from tax optimization and asset protection forever. Lichtenstein has more chance of politically surviving than Europe, the United States, and Latin America because it is ahuge bank pretending to be acountry.
- Wealth managers, lawyers and family officeprofessionals in Lichtenstein are highly educated, very reliable and pass on their trade intergenerationally. This is important when you are trusting billions to your asset manager.
- The trust and indeed foundation have been tested by 100 years of legal precedent. No surprises here, full asset protection, no gift, wealth, inheritance or other taxes and it´s smack in the middle of Europe. Does Liechtenstein care about the OECD? Not really, Liechtenstein could buy Europe if it wanted to and most of Europe’s wealthy people hold their money there.That’s why it’s not blacklisted.It’s not what you know,it’s who you know.
- To most people expense isa disadvantage, but to Lichtenstein expense is its trademark. A Liechtenstein trust, likea Rolls Royce is a symbolthat says “I´ve made it and my money is in the safest place on earth”.
If you want the best asset protection, then you should definitely consider Liechtenstein. In this article I will walk you through the advantages and characteristics of Liechtenstein trusts.
The Liechtenstein trust
The international trusts are extremely popular asset protection tools used by many individuals and families all around the world.
We have explained the basic functioning of a trust in this article , but essentially, a trust is an agreement under which a person transfers his or her assets to a custodian or trustee for the benefit of a third party. This structure offers unique advantages as the person now doesn’t own the assets directly, but they are under the trust´s control.
Thanks to its nature, the world´s best trusts offer incredible benefits such as:
- Asset protection
- Succession planning
- Effective estate planning
- Protection from dissipation
- Where to establish the trust
What are the best trusts and trust jurisdictions? That is a question that will be better answered during a consultation. The truth is that there are jurisdictions that offer great incentives for the creation of trusts and this depends entirely on the regulating framework of the jurisdiction.
The right jurisdiction and trust for you will depend on your particular case, nationality, business and, the most important, the purpose of the trust. However, in Privatus Maximus we have our favorite jurisdiction for tax structures and there are some countries that offer great incentives that generally work out for most of the cases.
What should you have in mind when choosing the right jurisdiction?
One of the most important things, and maybe even obvious, is to consider the stability of the jurisdiction. When you establish the trust, you are going to be transferring many of your assets which can be properties, cash, works of art, precious metals, etc.
Since the trust will depend on the country´s legislation, you are going to want a country with economic and political stability. It is important that you can rest assured that your trust will protect your assets for a long time, maybe intergenerationally, so it is important to choose a reliable jurisdiction with no history of abrupt policy changes, no political turmoil, and with a stable currency and economy.
After this, another important aspect is taxation. If you establish your trust in a low tax jurisdiction there is a good chance for you to optimize your taxes. This will, of course, depend on your country of origin or residency. If you are from the United States, for example, you have to pay tax on your worldwide income no matter where you live, in this case your country of residency is not so important. If you are from a different country, let´s say, Argentina, you are not subject to worldwide taxation if you don´t reside in your country.
Thus, you can maintain your Argentinian passport and establish your residency in, for example, Panama or Vanuatu. These countries don´t tax your worldwide income and you won´t be paying taxes in Argentina if you don´t officially reside there.
However, and due to the complexity of the subject and to the different legislation, we recommend asking for a personal consultation to find out what are the best trusts and trust structures for you and your loved ones.
Another important aspect to consider when choosing the right country is reputation. When you have business, companies, a trust or bank account in a foreign country, if you want to expand your business or make transactions, the counterparts will probably research your background. In a world where international transparency has become more important than ever and where the exchange of information between countries has become easier and faster due to the development of
technology, it is important to be associated with reliable and reputable jurisdictions. This means a jurisdiction that is not blacklisted and, if possible, that did not have major political or financial turmoil in the past three decades.
Like I pointed out before, one of the world´s best trusts can be found in Europe. From all available trust jurisdictions one of the best and most reputable ones is Liechtenstein, a very attractive country located in the very heart of Europe, between Switzerland and Austria. With an area of over 160 kilometers, this is the fourth smallest country in Europe, being a constitutional hereditary monarchy on a democratic-and parliamentary basis.
Liechtenstein’s economy is outstanding, having one of the highest GDP per person in the world. This country has been known as an important financial center because of its business-friendly policies.
Advantages of Liechtenstein as a business center:
- One of the lowest tax rates in Europe with a flat rate of 12.5% for profit tax, making it a great jurisdiction if you wish to expand your business into this continent.
- The country has world-class infrastructure and a business-friendly legal and regulatory environment.
- Low value added tax (VAT) compared to many European countries.
- Business-friendly environment and policies which constantly encourages innovation.
- Access to many double tax treaties allowing for tax optimization and successful development of business and investments.
- Excellent and modern infrastructure.
- Access to important markets such as the EU and Switzerland.
- Liberal economic policy and liberal company law
- Social, legal, and economic stability and high degree of political continuity.
- Stable and reliable currency with the Swiss franc as its legal currency.
Establish your trust structure in Liechtenstein
Under Liechtenstein´s law, a trust can be created with one or more settlors and one or more trustees. The assets that are transferred into the trust are called the “trust fund” and are kept under the trustee´s custody for the beneficiaries’ benefit. The trust can have one or more beneficiaries who will receive the corresponding benefits according to what´s stipulated in the trust deed.
If you establish a trust in Liechtenstein for a period of more than one year, then the trust should be registered into the commercial Companies Registry . This includes entering the following information: designation, date of register and duration, surname, first name and place of domicile (if natural person) or company name and registered office of the trustee (if legal entity).
These are all the details that you will be required to submit. However, if you do not enter these details you can deposit a notarized copy of the trust deed, which will not be disclosed to the public.
The settlor can be a natural person or a legal entity from Liechtenstein or from any other country. The settlor will be bound by the provisions of the trust deed and it´s his responsibility to make the funds available when registering the trust.
The trustees can also be legal or natural persons from any country, however, at least one trustee must reside in Liechtenstein. It works the same way if the trustee is a company, it should be domiciled in the Principality.
The trustee is bounded by the trust deed and will manage the assets in his own name and must fulfil his duty in a professional way. A trustee has the right to resign anytime.
The trustee is not bound to comply with the settlor´s directions, however, he is bound to the trust deed. If the trustee doesn’t carry out his duties according to this, then his liability is unlimited. If there are more than one trustee, then they all equally share the liability unless specified otherwise.
Regarding beneficiaries, Liechtenstein’s trusts are similar to those of other jurisdictions. There are no restrictions as to who the beneficiaries can be, and even the settlor can be appointed as a beneficiary. Like with all trusts, the way beneficiaries are appointed and their rights to the assets are stipulated in the trust deed.
The settlor can assign other participants that will be specified in the trust deed, who can be advisory board members, protectors, and others. The trust fund covers all assets deposited by the settlor and it has no minimum value requirements. Each year the trustee is required to provide a detailed list of the assets held under the trust.
Following the basic principle of the trust, the trust fund in Liechtenstein is protected against creditors. Since the trust fund does not belong legally to the settlor anymore, the assets held in it cannot be reached by any creditors the settlor may have. However, there are situations where the trust fund can be accessed by way of vested interest within the framework of the Rescission Act, or otherwise depending upon the type of endowment such as in the case of donations or on the basis of inheritance law.
Creditors of the beneficiaries can bring claims against the trust fund, but this will only happen if the trust deed does not include a provision to prevent such a scenario. For this reason, it is extremely important to establish your trust with highly qualified professionals who consider all the possible scenarios and establish the right clause to protect the assets under all circumstances.
One of the advantages of Liechtenstein’s trusts is that they are not under an Anglo-Saxon system. Thanks to this, trusts in Liechtenstein can have limited or unlimited duration and have no limitation for accumulation of funds.
Liechtenstein´s trusts are subject to taxes like formation duty and income tax. When forming a trust, you´ll have to pay 0.2% of the transferred assets, which should not be less than 200 CHF. Regarding other taxes, trustsare subject only to an analogous application of the minimum income tax which is 1200 CHF a year. There is a limited tax liability for domestic earnings like rental income from Liechtenstein, real estate or domestic permanent establishment net income.
To sum up, Liechtenstein is one of the jurisdictions that has a foundation law in place for 100 years. This makes it a great jurisdiction where to establish your trust, especially if you are looking for a European, reputable, and reliable jurisdiction.
Liechtenstein is a unique jurisdiction with a stable political situation and located in the heart of Europe, offering excellent asset protection options.
Our experts in Liechtenstein have wide experience in foundation law and trust formation, and they offer special promotions and special care to all Privatus Maximus readers. Contact us now for a consultation and establish your trust in the strongest European economy.