Inheritance of offshore and other foreign companies

Юридическая компания » Offshore and foreign companies » Maintenance of foreign and offshore companies » Inheritance of offshore and other foreign companies

Sooner or later, after having successfully invested and received a considerable yield, businessmen start to wonder about how to effectively pass on their assets to their families and other close people.

A professionally performed transfer of a business as a whole, part of it or just specific assets as inheritance secures the owner from dishonest competitors.

Even if the owner still plans to carry on his business activity for another several decades it is important to carefully plan the future inheritance structure and, of course, account for time and money such planning will consume. But all of it in the end pays out when you know that your assets and corporate rights will be in the right hands in future.

Before starting to draft the plan itself, it is necessary to study possible ways of transferring assets (corporate rights, fixed assets, funds) through inheritance, paying attention to details and various aspects, especially tax implications of such inheritance structure.

Instruments for effective transfer may come in many forms, like offshore companies, family funds and trust, which are specifically tailored for inheritance purposes.

Offshore companies can be used to acquire tangible assets by inheritance owned by the company. When a company is not fictitious and carries out its business activity legally, company assets can be easily transferred under the management of another person by simply changing the signatory to the corporate bank account and thus granting the right to control company’s assets. It is also possible to appoint the “heir” as company director and in such way there will be no need to issue a separate Power of Attorney in his name.

If the task is to pass on corporate rights (shares) of the company, which is used as an important business instrument then it is advisable to structure such transfer through foundations or trusts.

One way would be to present the heir with bearer shares. This can be useful from the standpoint that bearer shares provide anonymity of their holder and yet the person is considered to be the lawful shareholder with all corresponding rights. Bearer shares are transferred by physically passing share certificates to the new holder.

Bearer shares do however have obvious disadvantages. Losing a share certificate practically means loss of control over the company. Another disadvantage is that many jurisdictions do not allow for bearer shares. Also, some banks may require depositing these bearer shares with them, when the company applies for opening a corporate account. When requiring this banks refer to their agreements with international organizations and sometimes local legislation, which deals with combating money laundering.

Trusts are very convenient instruments designed for ownership and asset management while the settlor is alive and after his death. Assets are put in a trust and are then held and managed by this same trust.

Donor’s trust: such irrevocable trust lets one transfer corporate rights for a certain period of time. During this time the donor keeps receiving income from the trust. At a particular point in time the trust is dissolved and the beneficiary becomes the owner of corporate rights. Such trust company may be used when parents want to quit working and receive pension before their child is mature enough to manage business.

Such trust can also provide for an annuity agreement, which would stipulate donor’s right to receive a fixed payment, based on the overall value of trust’s assets during a specific period of time.