More Advisors Urged To Consider Trusts

by Phillip Morton, Investors Offshore.com

20 February 2009

New research from Skandia International, the offshore investment arm of the Skandia Group, has concluded that overseas advisers are hesitating to recommend trusts to clients, with potentially negative tax consequences for investors.

According to the study, only 5% of over 250 offshore advisers surveyed globally stated that they use trusts for the majority of their clients with three quarters of advisers confirming that they use trusts for just 10% of their clients.

Inheritance tax planning is the top reason to use a trust according to 40% of advisers, with asset protection from creditors being a close second.

Skandia warns that by not writing assets such as life assurance policies, direct investments and property into trusts, investors could be putting themselves at risk of having to pay higher tax charges than they need had they used a trust in their financial planning.

Rachael Holland, head to product law and financial planning at Skandia International comments:

"Trusts are viewed by many to be complicated which perhaps is why few offshore advisers use them. Trusts need not be complicated and are relevant to the majority of clients that seek financial planning."

"Most people are able to use a trust for some form of protection and trusts could be used more often as they can add real value to investors' financial plans in many cases."

“One could argue that there is good reason to consider writing offshore policies into trust, even if tax reasons don’t apply. For example, if a client is resident and dies in a jurisdiction different to the residency of the offshore bond provider – it may be necessary for probate to be obtained both in the country where the client has died and also in the country the offshore bond provider is resident – involving a potential delay which could be avoided had the bond been put in trust.”

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