Canada: Avoiding The Traps: The Top Five Questions To Ask Before A
U.S. Or Cross-Border Offering

November 2008

Canadian companies embarking on a U.S. offering or including U.S.
investors in a Canadian offering can make the process go more smoothly
if they answer the following questions while they are still in the
planning stages.

1. Is the company a "foreign private issuer"? If a company is not a
foreign private issuer under SEC rules, it may face restrictions under
U.S. securities laws in conducting a Canadian offering. In addition,
the company will not be eligible for exemptions from SEC reporting
requirements that are otherwise available to non-U.S. companies.
Companies organized outside the U.S. will not meet the requirements
for foreign private issuer status if a majority of their voting
securities are held by U.S. residents and any of the following is
true: a majority of their directors or executive officers are U.S.
citizens or residents; 50% or more of their assets are located in the
United States; or their business is administered from the United States.

2. Is the company an "investment company"? The U.S. Investment Company
Act of 1940 regulates companies that are engaged primarily in the
business of investing in securities. Operating companies are sometimes
caught within the definition of investment company as a result of
significant holdings in cash or investment securities. Research and
development companies and real estate companies may be eligible for
exemption, and other companies may be able to avoid becoming
investment companies through careful planning. Absent an exemption, a
non-U.S. investment company may not offer its securities in the United
States, except in certain private offerings.

3. Is the company a "PFIC"? Under U.S. tax law, U.S. investors in a
passive foreign investment company, or PFIC, face adverse tax
consequences. A non-U.S. corporation is classified as a PFIC if either
(i) 75% or more of its gross income is passive income for the taxable
year or (ii) on average for the taxable year, 50% or more (by value
or, in certain cases, by adjusted basis) of its assets produce or are
held for the production of passive income. While many companies that
are PFICs find that they can still market their securities
successfully in the United States, PFIC status may affect pricing and
will require disclosure.

4. Is the company an "operating company" for purposes of ERISA? Under
the U.S. Employee Retirement Income Security Act, or ERISA, special
rules apply to companies that are engaged in the passive investment of
capital. If U.S. "benefit plan investors" hold at least 25% of the
outstanding equity in such companies, then the companies themselves
may be subject to ERISA fiduciary obligations, including prohibitions
from engaging in certain transactions. Privately held companies are
generally able to limit benefit plan investment, and other companies
may be able to structure their business so as to qualify as operating
companies.

5. Is the company MJDS eligible? The Multijurisdictional Disclosure
System gives certain Canadian companies a number of advantages in
filing registration statements and reports with the SEC. With a few
exceptions, these advantages are only available if the company has
been subject to continuous reporting requirements in Canada for at
least one year and has a "public float" of at least $75 million. The
public float is the market value of the company's securities that are
held by persons anywhere who are not affiliated with the company. For
this purpose, affiliates are persons who, directly or indirectly, own
or control more than 10% of the company's outstanding equity
securities. Companies that have previously relied on MJDS may lose
eligibility if their stock price declines.
The content of this article is intended to provide a general guide to
the subject matter. Specialist advice should be sought about your
specific circumstances.

http://www.mondaq.com/article.asp?articleid=69456

By Wendell Cayton
Posted November 03, 2008

Estate planning for the mature couple contemplating remarriage after
widowhood or divorce is complicated by a number of factors, including
large differences between net worth of parties, one or both having
children that the party wishes to provide for after his or her death,
disparity in ages, or both parties having similarly valued assets that
each wishes to keep "separate."

The institution of marriage offers definite tax advantages when it
comes to estate planning. States such as Washington and California are
community-property states, allowing each partner in the marriage an
equal share in the property, but upon the first death the entire cost
basis of the property is "stepped up" to the fair market value at date
of death. This allows the surviving spouse to sell appreciated
property without being taxed on the gain.

Community property laws also give the first spouse to die the right to
pass his or her interest in the community property to anyone he
chooses. It's this right that causes problems in a mature remarriage
where the potential partners may have children from prior marriages.

For example, H and W are contemplating marriage. Both have substantial
assets of their own (separate properties), including retirement plans.
Both have good jobs, plan to buy a house together and both have grown
children from prior marriages.

After the wedding they buy a home in a community-property state, hold
title as community property and pay living expenses from their
incomes. As a community-property asset, each has the right to say
where their respective interests go upon their death.

If H is first to die and wishes to leave W his half interest in the
home plus his separate property assets for her continued support, he
disinherits his children, but avoids estate taxes at his death by
transferring everything to his spouse. Since W has control of the
property, she is under no obligation to give up the property to H's
children at her death.

Conversely, if H decides to leave all his property interests,
including his share of the community property to his children, he
disinherits W. Further, since property left to a non-spouse does not
qualify for the unlimited marital deduction, estate taxes may have to
be paid on this distributed amount.

Among the more common solutions to these problems is for the
first-to-die spouse to leave property in trust for the surviving
spouse. This trust, known as a Qualified Terminal Interest Trust
(QTIP), allows the surviving spouse the right to receive the income or
enjoy the use of the property for his or her lifetime. Thereafter on
the death of the surviving spouse, the property passes to the
first-to-die spouse's intended heirs. The surviving spouse has no
right to give away or otherwise change the original intentions of the
decedent spouse.

This trust qualifies the property for the unlimited marital deduction
and thereby avoids death taxes at the first death. When the surviving
spouse dies, estate taxes will be due before distribution to the
heirs. Further, when the first spouse dies, the property receives a
stepped-up basis and may be sold by the trust, free of capital gains
taxes. Any subsequent income earned by the assets is considered
taxable income to the surviving spouse.

There may be an undesirable timing result from the QTIP solution if
the decedent's spouse is much younger, thereby denying his children a
timely inheritance. This could be offset with life insurance on the
life of the first to die, owned by an irrevocable life insurance
trust, with the kids as beneficiaries.

http://wenatcheeworld.com/apps/pbcs.dll/article?AID=/20081103/BIZ/711039984

By Valentino Sabuco
Universal Press Syndicate

Q: A close family friend and his wife died in an accident last year at
53. They didn't have a will or any estate planning and dealing with
their estate has been a mess. I don't want this to happen to my spouse
or family. What can we do to get our estate planning house in order
and keep it there?
-- A. M., Kentucky

A: Estate planning is a very important component of everyone's
financial planning, regardless of the size of the estate. It's the
only way to control what happens to your assets when you become
disabled or pass away.

You can't just talk about estate planning because verbal agreements
aren't legal. You'll need to have your attorney put it in writing.
Here's how to save time and money on legal fees to get your estate
planning house in order and keep it there over your lifetime.

WRITE DOWN YOUR PERSONAL GOALS -- Identify beneficiaries who you want
to inherit something when you die. Specify how much, what percentage
or which assets go to each person or charity. Take note of the special
needs of any beneficiary, such as a disability preventing work or an
inability to manage money, and identify backup beneficiaries in case
your first choices do not survive you.
If you don't have strong feelings about individuals, consider
selecting a favorite charity or "cause" to be your primary or
secondary beneficiary.

Also, consider the timing for distributions to designated recipients.
Some beneficiaries can handle a large, lump-sum distribution. Others,
such as children, benefit from distributions that are spread over time.

Identify guardians of the person to raise your minor children should
you and your spouse die or become incapacitated. Also select guardians
of the property to handle your children's inherited assets. Identify
backups, too.

Identify executor(s) and trustee(s) to carry out your wishes after
death. You'll need an executor to administer your will, and if you
have trusts, you need to name trustees to manage them.
For each position, come up with several choices because you don't know
who will be willing and able to serve when the time comes. Consider
selecting two or, in larger estates, three trustees as a
check-and-balance system.

Identify other decision makers to carry out your health and money
choices for you if you're incapacitated.

For special needs and concerns, list any sensitive family
circumstances or concerns you have that may affect your planning, such
as prior marriages, ill parents, troubled children.
GATHER PERSONAL AND FINANCIAL INFORMATION -- List full names,
addresses and Social Security numbers for you and your family members.

List your current financial advisers.

List your assets and liabilities.

Gather retirement plans and beneficiaries' statements.

Identify how you hold title to each asset.

Summarize your cash flow.

Gather employment benefits statements, life insurance policies, deeds
to real property, partnership and business agreements, and the last
two years of income tax returns.

Include divorce papers, premarital agreements, existing estate plan
documents and any other such documents.

List questions, concerns and ideas.

SEEK OUT THE RIGHT ATTORNEY -- Identify several attorneys who
specialize in estate planning by getting referrals from your certified
financial planner, certified public accountant, banker, financial
adviser and-or friends. Call the attorneys and ask how many wills and
trusts they have prepared this year and in the past 10 years. Ask
whether they also handle estate administration after someone dies to
see if they're familiar with issues after a death.

Ask how they charge. Estate-planning attorneys are specialists, and
some charge hourly rates, $100 to $500, while others charge a flat fee
for document preparation. Ask if they will provide an introductory
meeting with you at no charge. Make sure you are comfortable with your
attorney as he or she will be asking you thought- provoking questions
and you will be discussing personal affairs.

MAKE THE MOST OF YOUR FIRST MEETING -- Bring your notes and the
information from above when you meet with an attorney. This could save
one to five hours (or more) of billable time. Discuss your overall
goals and see how they can be met.
Ask the attorney about the main documents that need to be prepared:

Will
Living trust

Durable power of attorney for asset management

Advanced health care directive or a durable power of attorney for
health care

Before leaving the attorney's office, if you are satisfied, request an
engagement letter quoting the fee for services and a brief summary of
your estate plan -- written in terms you can understand -- to serve as
a record of the decisions made. Confirm that you're taking advantage
of all tax-saving possibilities and, when desirable, avoiding probate.

REVIEW AND SIGN DOCUMENTS -- Have copies of draft documents sent to
you for review and approval. Note questions and changes in red ink in
the margins. Be specific. If you have an estate worth more than $1
million or a complex family situation, have a copy of your documents
sent to your CPA or financial adviser for a second opinion. Discuss
questions and possible changes with your attorney.

After you sign the documents, ask your attorney where they should be
kept and what should be provided to family members, executors and
trustees.

TAKE CARE OF TITLE AND BENEFICIARY DESIGNATIONS -- Have your attorney
make sure that titles on all your assets and your beneficiary
designations, such as life insurance and retirement plans are
coordinated with your will and-or living trust.

UNFORTUNATELY, ESTATE PLANNING IS FOREVER -- Call your attorney about
updating your plan at least every three years or any time you have
major changes in your personal situation because of births, deaths,
marriage or divorce, as well as significant increases or decreases in
the size of your estate.

Estate plan documents are technical and very dry; they do not
communicate personal feelings. Consider drafting a personal letter to
your spouse and family expressing your final thoughts and feelings.
It's important to keep your key financial paperwork readily
accessible, for those who will be dealing with your affairs when
something happens to you.

http://www.modbee.com/business/story/484500-p2.html

BY CHRISTOPHER YUGO

Q: My mother passed away in April. How long do we have before we have
to pay the inheritance tax?

A: An Indiana inheritance tax return must be filed within nine months
of the date of death. If you are unable to file the return within the
nine-month time frame, you can seek an extension.

An extension may be granted by the probate court if it determines that
an "unavoidable delay" made it impossible for the inheritance tax
return to be filed timely. It has been my experience that the probate
courts interpret an "unavoidable delay" pretty liberally. If it is
possible to justify an extension, the courts generally side with the
taxpayer and grant the extension.

If you fail to file the return timely and you don't obtain an
extension, a late filing penalty can be imposed. However, the late
filing penalty tends to be pretty insignificant. A taxpayer can be
fined 50 cents per day with a maximum penalty of $50. Fifty bucks is a
lot of money, but it's probably not going to break anybody.

Although the tax return must be filed within nine months of the date
of death, the actual inheritance tax does not have to be paid until 12
months following the date of death. Think about that for a minute.
Although you have to have the inheritance tax return on file within
nine months, the tax doesn't have to be paid until 12 months following
the date of death.

If you file the return in a timely fashion but fail to pay the tax at
that time, the Indiana Department of Revenue will review the return.
But it won't issue a closing letter until the tax is actually paid.

If you fail to pay the tax within 12 months of the date of death, you
could be subject to interest on the unpaid tax of up to 10 percent
annually. The interest due on the unpaid tax accrues from the date of
death, not the date the tax is due. So if you pay the tax one day
late, you could be subject to a full year's interest because it runs
from the date of death. The court can reduce the interest rate to as
low as 6 percent, but it doesn't have to.

Finally, although the actual tax isn't due for 12 months, Indiana
offers you an incentive to pay it sooner. If you pay the inheritance
tax within nine months of the date of death, Indiana will give you a 5
percent reduction in the tax due.

Since it is not unusual for an estate to need additional time to file
an inheritance tax return, it is common for the estate to pay what it
thinks it will owe within the nine-month period to obtain the 5
percent discount. By paying estimated inheritance tax, the estate can
take advantage of the 5 percent discount while it deals with the
reporting delays. Also, the court might consider the fact that you
prepaid the inheritance tax when it determines to waive late filing
penalties and or reducing the interest rate on any unpaid taxes.

Unfortunately, it isn't enough to ask when the tax is actually due.
Although the inheritance tax isn't due for 12 months, the return is
due within nine months. With that in mind, I usually work with an eye
on the nine-month deadline. By assuming everything is due within nine
months, I know that I'll get the tax paid early enough to obtain the
discount, even if I can't get the return completed. But that's just me.

http://www.nwitimes.com/articles/2008/10/27//business/business/docdc14cee66ec2b2\
1c862574eb006422b2.txt

Melvin Pasternak

Canada is generally viewed as a country with no estate tax. While
that's true, what many people don't realize is that a "deemed
disposition tax," which is similar to an estate tax, applies when you
die. In this article, we'll provide tips on minimizing your estate's
exposure to this tax as well as structuring your estate plan to ensure
your beneficiaries get the assets you intend for them.

Taxation Issues
Deemed disposition tax is so-named because your investments are deemed
to be sold at death. Any capital gains triggered by their sale are
included in a final income tax return filed in the year of death. A
final tax return also includes the value of any retirement accounts
and income received from stocks, bonds, real estate investments and
even life insurance proceeds in the year of death, from January 1 up
to the date of death. With Canadian federal income tax rates of up to
29%, this final taxation can be substantial. Provincial taxes and
probate fees also apply.

The good news is the tax is deferred if the assets are transferred to
a surviving spouse. Taxes are deferred even if the assets are held in
a spousal trust, which provides income to the surviving spouse.
However, if the spouse sells the assets, then the tax applies. When
the spouse dies and the assets are passed on to other heirs, 50% of
the capital gains of any stocks, bonds, real estate investments and
other assets are taxable at the personal income tax rate.

Why It's Important To Make A Will
"Nothing is certain but death and taxes," American inventor Ben
Franklin is attributed to saying. While you can't control either of
these two inevitable events, you can make a will to ensure your
financial affairs are managed according to your wishes once you're no
longer able to, due to incapacity or death.

Without a valid will, you are considered to have died intestate. When
that happens, in Canada the province decides how your assets are
distributed, without regard to your wishes. Following the laws of
intestacy, the province typically distributes the first $50,000 of
value to a surviving spouse, then divvies up the rest between the
spouse and children. If you don't have a surviving spouse or children,
your parents are next in line to receive your assets, followed by any
brothers and sisters.

Dying without a will also leads to delays and extra expenses. The
court appoints a bonded administrator to serve as an executor of the
estate. In addition, any assets distributed to children under 19 must
be passed along to a bonded guardian or to the Public Trustee. The
process of appointing these administrators is both expensive and
time-consuming.

Three Types Of Wills
To ensure your affairs are handled the way you want them to be, you
need a will. There are three main types of wills in Canada:
Last will and testament
General durable power of attorney
Living will (also called an advance healthcare directive)
Let's take a closer look at each one.
Last Will
The purpose of a last will is to give instructions to a person you
choose as an executor on how you want your assets distributed after
your death. It typically doesn't give directions on your funeral or
burial, since it won't be opened until after the funeral, when the
heirs come together for the reading of the will.

Power Of Attorney
The power of attorney gives the person of your choice the power to
manage your financial affairs if you become incapable of managing them
yourself. It gives this person, designated as your agent or
attorney-in-fact, the power to handle such day-to-day tasks as:
paying bills
filing tax returns
opening mail
banking
talking with accountants and lawyers
looking after pets
voting on your behalf
Without a power of attorney, a spouse has no legal authority to do any
of these tasks on your behalf if you become disabled.

Living Will
A living will gives healthcare/mental power of attorney to a person of
your choice. It gives this person, acting as your agent or
attorney-in-fact, the power to implement the medical treatment you
wish to receive if you become unable to communicate your wishes. The
document tells doctors, family members and the courts your wishes for
life-support and medical procedures, if you were to become brain dead,
unconscious, terminally ill, or otherwise unable to communicate your
wishes.
A living will essentially gives your chosen agent the power to choose
whether or not to "pull the plug" or to decide your fate for you, but
its value is debatable. Euthanasia isn't legal under section 215 of
Canada's Criminal Code, and the living will has no legal status.
However, Canada's Charter of Rights throws the constitutionality of
this section of the Criminal Code into question by giving everyone the
right to "security of the person and the right not to be deprived
thereof."

Trusts Simplify Your Estate Planning
A will ensures your heirs get exactly what you want them to, but a
trust can simplify the process of transferring these assets to your
heirs. The main difference between the two is that a trust lets you
transfer assets to beneficiaries while you're still alive, and a will
transfers your assets when you die.

A trust is a legal entity that owns some or all of your assets, such
as bank accounts, real estate, stocks and bonds, mutual fund units and
private businesses. The terms of a trust are more legally binding than
those of an ordinary will, which can be challenged in a court of law
as to whether it fulfills the deceased's "moral obligation." A trust
also allows you to avoid the probate process, where the contents of
your will are made publicly available.

Types Of Trusts
The main type of trust in estate planning is a revocable living trust,
so-called because you can change or revoke the terms of the trust at
any time while you're alive. The trust instructs the trustees how to
distribute your assets to beneficiaries while you're alive, after
death or if you become incapable.

Both you and your spouse can be trustees and manage the trust's
assets. This feature of a living trust may be important, for example,
if a family business is placed in a trust and you want to continue to
have some control over its operations. When one spouse dies, the
surviving spouse continues as trustee, but the trust becomes
irrevocable in that only limited changes can be made to the terms of
the trust.

Since the income is taxable at Canadian trust tax rates, living trusts
are not as popular in Canada as they are in the U.S., where the income
is taxed at your personal income tax rate. A living trust established
after June 17, 1971, is subject to tax on all income at the highest
marginal rate of tax in the province of residence. In most Canadian
provinces, this rate can range from 39-47% on the first dollar of
income. In contrast, a testamentary trust, which operates only after
death, is taxed at the personal provincial tax rate.

In addition, assets that are transferred into or out of a Canadian
trust are generally treated as if they have been sold and taxed on any
increase in value (appreciation) from the purchase date. However, two
relatively recent trust structures, the alter-ego trust and
joint-spousal trust, allow you to avoid capital gains taxation.

Conclusion
In sum, to ensure your assets are distributed the way you want them to
be, you will need a last will, and you also may want to consider a
living will as well as a power of attorney, together with a trust.

http://biz.yahoo.com/investopedia/081020/3920.html?.v=1

By Amy Feldman

It's not something that makes good campaign politics. But given the
crumbling economy and the federal government's budgetary needs, some
Americans are likely to be hit with a tax increase regardless of who
wins the Presidential election.

To be sure, there are vast differences in the tax plans of Barack
Obama and John McCain. Obama's proposal calls for a bunch of
middle-income tax cuts paired with an increase in the top marginal tax
rates to 36% and 39.6% from the current top rate of 35%, to be paid by
families with incomes over $250,000 and singles over $200,000. It
would also increase the rate on those earners for long-term capital
gains and qualified dividends to 20%, from 15%. McCain vows to extend
George Bush's 2003 tax cuts on income and investments. (McCain
recently said he would halve the cap-gains rate, to 7.5%, in 2009 and
2010.) Without new tax legislation, those rates are set to expire at
the end of 2010. With a financial bailout to pay for and a potentially
Democratic Congress, tax experts figure that rates on both income and
capital gains will be in play over the next two years.
"The difference between the two (candidates) is not that Obama wants
to collect more tax, but that he wants to collect it from different
people," says Clint Stretch, director of tax policy at Deloitte in
Washington. "One of the challenges is that both plans would collect
less income tax (than is collected) today. In the Obama world, maybe
fiscal discipline means some tax benefits he would give people don't
come to pass. In the McCain world, maybe the extension of Bush tax
cuts he proposes would not come into effect. It's really a question of
how this gets bargained out with a Democratic Congress -- if there is
one -- because if nothing happens then taxes go up."
It's unlikely that any tax plan will be pushed through quickly, so you
have time to consider your options. Here are four ways you might be
affected by higher taxes and some suggestions for thinking about the
consequences.

Capital Gains

Common wisdom says to sell your winners if you believe rates will go
up. Yes, it's obvious. It's also not always the best strategy. That's
because you're paying taxes early, and you'll need to recoup that
outlay as well as transaction costs through higher gains on your
investment. "Those two things can outweigh the tax savings," Stretch
says. "If you have an investment with a low cost basis and low
transaction costs, then it may make sense to sell. If you have a high
basis or your gain is in the 10%-to-20% range, it probably does not
make sense. For most people you are talking about a reasonably small
amount of money, and there are cases in which taking the gain is
detrimental."

Let's say you own shares of Stock A that is now valued at $10,000, and
your cost basis is $7,000. If you sell now, at the 15% rate, you'll
pay $450 in tax. If you wait, and the cap-gains rate goes to 20%,
you'd pay $600. Is that worth the potential $150 savings, especially
after fees?

"The big question is, 'What are you going to put the money into? And
will you earn enough more to recoup the taxes paid?' " says Robert
Barbetti, an executive compensation specialist with J.P. Morgan
Private Bank (NYSE:JPM - News)in New York. According to his figures,
it would take two years invested in something that offered an
additional two percentage points in return annually to recoup the tax
paid in the example above. To make the right decision, you need to
think about what you're going to buy once you sell, and whether it
offers enough extra return to be worthwhile.

Company Stock

With most 401[k] plans, if you've been laid off or are over 59 1/2 and
eligible for distributions, there's a little-known opportunity to take
company stock out of the plan and pay tax just on its cost basis.
Here's how it works. Say you have 100 shares of stock in Company X
that trades at $50, and your basis is $10. You would take the stock
out and pay $350 in tax, assuming you're in the 35% tax bracket.
The difference between the $50 value and the $10 basis, or $40, for
tax purposes is called net unrealized appreciation, or NUA, and is
taxed at long-term capital gains rates regardless of when you sell.
Even without an increase in rates, that's a nice savings. At a 15%
capital gains rate, you'd pay a total of $950, instead of $1,750 if
you had to pay income taxes on the entire distribution. If the
marginal income tax rate goes up, that benefit becomes more valuable.
Barbetti says that with more people being laid off, especially on Wall
Street, he's been seeing increased interest in this tax move.

Deferred Compensation

If you're lucky enough to have a deferred compensation plan, you know
that the big benefit is tax deferral, which allows money to compound
tax-free until it's withdrawn. That's valuable if tax rates remain
constant or decline. Even if tax rates went up as high as 50%, much
higher than anything under consideration, deferring compensation would
still make sense over the long haul. You might want to reconsider
deferring compensation if you expect rates to rise at the time you
want to take your money out.

You'll need to think about this in advance. If you want to defer base
salary and nonperformance-based bonuses earned in 2009, you will need
to elect to do so by this Dec. 31. Once you choose to defer, you can't
change your mind and take the money out of the plan sooner.

Restricted Stock

If you've been offered restricted stock, you should think about taking
the 83[b] election. That election, which must be made within 30 days,
allows you to pay the income tax up front and pay tax on future gains
at the lower cap-gains rate. If you don't make the election, you pay
tax when the stock vests, regardless of whether you sell it. If the
stock goes up dramatically before it vests, you'll save yourself a
hefty amount of cash by choosing the 83[b].

But if the stock remains flat (or worse, declines), you may have paid
tax (or, worse, too much tax) years in advance for no reason. "You are
triggering tax but not putting cash in your hand, so you need to look
at the opportunity cost," says Deloitte's Stretch.

Say you're given $10,000 worth of restricted stock. If you're in the
35% bracket and make the 83(b) election, you'd pay $3,500 now. If the
stock rises to $15,000 and you sell when you vest, you'd pay an
additional $750 at today's 15% cap-gains rate, for a total of $4,250.
(If the cap-gains rate goes to 20%, you'd pay $250 more.) If you
didn't make the 83(b) election and paid income tax on the full
$15,000, you'd owe $5,250. If you're in the highest marginal rate and
it goes to 39.6% by the time your restricted stock vests, you'd owe
$5,940. That potentially higher tax hit, plus the likelihood that
stock you'd receive has been pummeled in the market rout, is why
Barbetti recommends considering the 83(b) election now. "If you think
your restricted stock will vest in a higher tax year," he says, "then
maybe you bite the bullet and pay the tax this year."

http://news.yahoo.com/s/bw/20081020/bs_bw/0843b4105078906801

BY CHRISTOPHER YUGO | Sunday, October 19, 2008

Q: How will creating a trust affect my tax returns? Do I have to
prepare a tax return for the trust?

A: As a general rule, creating a revocable living trust naming
yourself as trustee will not affect your tax reporting.

Mot revocable living trusts do not require a taxpayer identification
number (TIN). You will continue to use your social security number on
your accounts and income will continue to be reported on your personal
income tax returns.

It's your money after all, and as long as you are reporting the income
and paying any resulting tax, Uncle Sam should be cool.

In my job, I see a lot of trusts that name First National Bank as
trustee rather than the person creating the trust. In these cases, we
apply for a TIN for the trust and file a fiduciary tax return. The tax
return is really just an informational return, but we do in fact file
the return.

Since it is important for a professional trustee to keep track of
income and principal, a separate tax return makes the administration
easier. Some accountants have told me that a separate TIN and an
informational return isn't required for our revocable living trusts.
However, from an administrative standpoint, I like having the
separation. Formality for formality's sake.

After your death, when the trust becomes irrevocable and settlement
begins, a separate TIN is required as is a fiduciary tax return. After
your death, income should no longer be reported under your social
security number. At that point the trust has it's own tax reporting
requirements.

Immediately after the death of the settler, I request a TIN for the
trust and start reporting the income to the trust rather than the
individual. Even in situations where I already have a TIN for a
revocable living trust, I request a new TIN for the death transfer
trust. Remember, after your death, the trust becomes an irrevocable
trust. In other words, the John Doe Revocable Living Trust becomes the
John Doe Irrevocable Trust after your death. The new trust requires
it's own TIN and fiduciary tax returns.

Having said all that, don't let the tax reporting dissuade you from
creating a trust. Most people won't notice a difference.

Also keep in mind that we are talking about revocable living trusts
with the settler as the trustee. If you create an irrevocable trust,
such as Irrevocable Life Insurance Trust, a separate TIN and tax
return are likely to be required.

I suppose the rule of thumb is if your created the trust, have total
control over the assets and receive all of the benefits and income, it
probably doesn't require its own TIN and it can be reported on your
tax returns. If in doubt, ask your attorney or accountant

http://www.nwitimes.com/articles/2008/10/19//business/business/doc5026635f1a85bd\
1f862574e400689026.txt

Experience
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Intelligent Advice
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When it comes to trusts, foundations, IBC's, LLC's, investments and
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want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals.

http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

By Kirk Matthews

There was a time when most of us thought of a "trust" as a legal
document for wealthy families. Not so. Experts tell us more and more
families are using a trust to protect their assets and their future.

Whether it's cash, a car, or property - a will alone may not be enough
to keep your estate out of probate court.

Financial Advisor, Diane Chong says, "Probate really has a bad ring
for people. People think that probate is such a bad thing. Really,
it's just a court-supervised process to make sure that your assets go
to its rightful owners."


It is not just enough to draw up a will and/or a trust. you need to
assign your assets to the trust.

"And that's a really important point because some times people - they
take the time, they spend the money to draw up a 20 page trust
document and they never change any of their assets to the trust name."


Chong says it's also a good idea to let your financial institution
give you some help.

"The better thing is, if you have bank accounts, you take a short form
of the trust document to the bank and you say I want to change the
title from my individual name to my trust."

Again, Chong emphasizes your will and trust have to be in agreement -
- and your assets have to be titled.

"So you can have a will drawn up, you could have a trust drawn up, but
everything is joint. Those two documents aren't really going to
control anything. It's really how your assets are titled that's going
to determine how they pass at your death."

Another good bit of advice - keep track of what you own.

"Filling out an organizer like this is good because it makes you list
down everything and how it's titled and then you can get a big picture
of your total estate."

http://www.khon2.com/news/local/31209569.html

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When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
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about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals.

http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

By Albert B. Crenshaw
Special to The Washington Post
Wednesday, October 15, 2008; Page H06

With the decline of traditional pensions, tax-deferred saving through
401(k) plans, IRAs and the like has become a key element of most
Americans' funding.

But tax-deferred isn't the same as tax-free. And when retirement -- or
at least relatively old age -- rolls around, people who have built up
substantial tax-deferred nest eggs will find that they are required to
start pulling that money out and paying taxes on it, whether they want
to or not.

And these withdrawals, or "distributions," as they are called in tax
jargon, get no special benefits, such as the lower rates for long-term
capital gains. It's all "ordinary income," taxable at the same rates
as wages and interest.

Thus, when the baby boomers, and the generations behind them, reach
retirement, they will find that any tax planning they did while
working and/or steps they took at and in retirement will make a major
difference in the amount of spendable income they have late in life.

"People should think about tax planning in terms of maximizing their
lifetime net worth," said Elissa Buie of Yeske Buie, financial
advisers with offices in Vienna and San Francisco. For example, opting
for tax-deferred saving over taxable investments that qualify for
capital-gains rates "may or may not be the smartest thing for them to
do," Buie said.

Knowing the right moves to make, however, isn't simple. Not only are
the tax laws complicated, but individuals' circumstances vary, so that
what works best for one person might be a bad idea for another.

But whether you are just setting out on a career or are on the cusp of
old age, it's not too soon, or too late, to try to minimize your
taxes. Remember, said Buie, when you have to pay taxes, "that's money
that's just gone."

Here are some areas to look at as you try to work out the most
advantageous strategy:

While You're Working

· Get the match. Of course, for taxes to matter in retirement, you've
got to have some income in retirement. So as soon as you begin work,
be sure and sign up for your employer's 401(k) or other retirement
plan if there is one.

Check also to see if your employer will match some of the money you
put into the plan. If there is a match, find out what the maximum is
and try to contribute enough to get all of it. The match is free
money, tax-deferred, and if you don't sign up or if you contribute too
little, you'll be leaving some or all of it on the table.

And remember, both contributions and any match are "pre-tax," meaning
that they are not counted when you figure your taxable income next
April 15, typically reducing the tax you pay. Taxes on the
contributions and on any income earned in the account are deferred
until you begin withdrawal, presumably after you have retired.

· Check out a Roth IRA. Once you're getting the full match in your
401(k), you have come to the first decision point.

Your can put more into the k-plan -- up to $15,500 this year, plus an
additional "catch-up" contribution of up to $5,000 if you're age 50 or
over -- and it will all go untaxed until retirement. But in
retirement, it will be added to other income you have and taxed in
whatever bracket that works out to.

This has led some advisers to suggest that if you have maxed out the
match with your 401(k), you should consider funding a Roth IRA, if you
are eligible to do so. These accounts are funded with after-tax money
and thus do not reduce your current taxes. But withdrawals in
retirement are tax-free.

To be sure, economists will tell you that in the long run the value of
tax deferral today is exactly the same as the value of tax-free
tomorrow, assuming that you're in the same tax bracket now and later.
But if you are young and just starting out, you may in a lower bracket
now than in retirement -- or tax rates in the future may be higher
than they are now. Either way, money in a Roth account is protected.

Further, unlike a traditional IRA or 401(k), there are no mandatory
withdrawals from a Roth. Thus, if the money is not needed, you can
leave it there to grow tax-free, and perhaps bequeath it to an heir to
create a tax-free lifetime stream of income for him or her.

But there are important drawbacks: Roth IRAs are available only to
workers whose income is below certain levels, and the amount you can
contribute is limited. Taxpayers may contribute no more than $5,000
($6,000 if age 50 or over), and that only if their income is less than
$159,000 for a married couple or less than $101,000 for a single.
Above those limits, the amount you can contribute phases out, reaching
zero at income of $169,000 for a couple and $116,000 for a single.

· Capital gains for the long term. Generally, it has been the
government's policy to tax capital gains -- profits on the sale of
assets such as stock -- at lower rates than wages, interest or other
types of income. Also, as long as any profits remain on paper -- that
is, until the asset is sold -- no tax is levied.

These features make stocks an appealing component of a retirement nest
egg. Stock owners can defer taxes to a certain extent simply by not
selling, and they will pay lower taxes when they do sell. (Keep in
mind, however, that experts caution against holding something that
ought to be sold simply because of taxes.) In addition, under current
law, most dividends qualify for lower tax rates, too.

At and in Retirement

· Required beginning date. For holders of tax-deferred accounts, 70
1/2 is a key age. That is the age at which you must begin taking
distributions from your account(s). The amount is based on the total
value of all your deferred accounts and your life expectancy -- and
that of your spouse if you have one -- as laid out in tables by the
Internal Revenue Service.

This has been simplified in recent years, but some account holders
still miss the date and are subject to stiff penalties, so as you
approach that age, be alert. In fact, you actually have until April 1
of the year after the year in which you turn 70 1/2 to take your first
distribution, but many experts advise taking that first distribution
in the year you turn 70 1/2 rather than waiting. That is because if
you wait, you have to take two distributions in the same year, which
could raise your taxes. Make sure you include all your IRA and 401(k)
accounts; you don't have to take the distribution from any particular
one, but you have to get the overall percentage right. Consult an
accountant or other expert if you are uncertain.

And there are some exceptions to the rule. Roth IRAs aren't subject to
required withdrawals. And if you have a 401(k) with an employer for
which you are still working when you turn 70 1/2 , you don't have to
begin withdrawals until you retire from that company (unless you own 5
percent or more of it).

· State taxes. Once you are retired you may find it possible or even
desirable to pack up and move to another part of the country. If you
do, you may be able to cut your taxes considerably. And you don't
always have to go very far. A District resident, for example, can cut
his or her top state income-tax rate from 8.5 percent to 5.75 simply
by moving across the river into Virginia. By moving farther -- to
Florida, Texas or one of the half dozen states with no income tax --
you can cut the rate to zero.

Further, if you are lucky enough to have an old-fashioned pension,
note that many states have special breaks for pension income, or for
senior citizens in general. Government pensions qualify for complete
state income-tax exemptions in a number states.

· Social Security. Although the Social Security Administration says
that fewer than one-third of current Social Security benefit
recipients pay taxes on their benefits, that is undoubtedly changing.
The benefits are taxable if your income exceed certain thresholds,
which were set in the1980s and '90s and have not been indexed for
inflation. If the sum of one-half of your Social Security benefits
plus other income you have, including interest on tax-exempt bonds,
exceeds $25,000 for a single person or $32,000 for a married couple,
then 50 percent of your benefits is taxable. If the sum of one-half of
your benefits plus all your other income is more than $34,000 ($44,000
for married couples), up to 85 percent of your benefits is taxable.

Note that while distributions from traditional IRAs are included in
figuring whether your Social Security benefits are taxable,
distributions from Roth IRAs are not.

The interplay of Social Security benefits, other income, taxes, and
the fact that the longer you wait to collect Social Security (up to
age 70) the larger those benefits become makes for a very complex stew
of choices for retirement.

For example, if you receive income that is a combination of Social
Security benefits and distributions from a traditional IRA, it's
likely your benefits will be 50 or even 85 percent taxable and your
distributions fully taxable. But suppose early in retirement you defer
collecting Social Security and draw more from your IRA until at age 70
your IRA is exhausted. You then begin drawing Social Security
benefits. Since you've waited, your benefits will be quite a bit
larger than they would have been at age 62 or even 65, and if they are
your only income they may well be tax-free. Further, future Social
Security cost-of-living adjustments will be calculated off your higher
benefits, giving you bigger COLA boosts later on.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/13/AR2008101302394.\
html?sid=ST2008101500688&s_pos=

Experience
Trust
Intelligent Advice
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Extraordinary Customer Care
When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
Because international investment and legal advice is no place to guess
about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals.

http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

By THE ASSOCIATED PRESS

Published: August 19, 2008

A federal court in Philadelphia has ordered the former president and
founder of a hedge fund to pay nearly $300 million for defrauding clients.

Federal prosecutors indicted Paul Eustace, president and founder of
the Philadelphia Alternative Asset Management Company, in November on
two criminal counts of commodities fraud.

The government said Mr. Eustace stole $200 million from clients from
2001 through 2005. The government accused Mr. Eustace, of Ontario,
Canada, of creating false account statements, raising management fees
based on false profits and transferring clients’ money to himself.

On Tuesday, the Commodity Futures Trading Commission said Mr. Eustace
was ordered to pay $279 million in restitution and a $12 million civil
penalty.

The Federal District Court for the Eastern District of Pennsylvania
also banned Mr. Eustace from trading indefinitely.

“This concludes a successful effort by our division of enforcement to
stop fraud in its tracks, return as much money as possible to
defrauded investors, and to bring wrongdoers to justice,” the acting
chairman of the trading commission, Walter Lukken, said.

Philadelphia Alternative, which traded in commodities futures and
options, collapsed in 2005. But the hedge fund was ordered to pay $8.8
million in fines and may have to pay the $276 million if Mr. Eustace
does not.

The futures and options broker MF Global agreed in December to pay
more than $77 million to settle federal charges that it failed to
watch over Mr. Eustace.

According to the commodities trading commission, Mr. Eustace
fraudulently operated four commodity pools from 2001 to 2005, when he
lost about $200 million while trading commodity futures and options.

He hid the losses using false accounts and bogus account statements
that showed huge profits.

http://www.nytimes.com/2008/08/20/business/20hedge.html?_r=1&oref=slogin

Experience
Trust
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When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
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about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

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   File        : Brochure Red Sea 2007.pdf
   Description : Red Sea Management, Ltd Company Brochure
   Size        : 3576 KB

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through email.  Instead, you can access the file at this URL

http://groups.yahoo.com/group/offshoretrust/files/Brochure%20Red%20Sea%202007.pd\
f

LONDON -(Dow Jones)- The U.K. Treasury is planning changes to the tax
rules for asset management funds, something that will make the sector
more competitive, the U.K. government said Monday.

A consultation document said the government is considering a direct
tax exemption for authorized investment funds.

"The framework is based around moving the taxation from the AIF (the
asset management fund) to the investor," the document said. That would
mean investors facing essentially the same tax treatment as they would
if they owned the underlying assets directly.

For those funds that opt into the new regime, they will remain exempt
from capital gains tax, while "defined streams of income" generated by
the fund would be tax-free.

Announcing the proposals, Kitty Ussher, Economic Secretary to the
Treasury, said: "we are determined to maintain momentum on
improvements to the taxation of asset management to ensure the
industry remains highly competitive in the face of new global challenges."

The government also proposed changes to the tax rules for Investment
Trust Companies to deliver "tax efficient investment into interest
bearing assets."

These U.K.-based firms manage GBP3.8 trillion in assets and employ
more than 25,000 people, the government said.

The industry has until October 22 to respond to the proposals.

HM Treasury Web site: www.hm-treasury.gov.uk/

Experience
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When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
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about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

BY CHRISTOPHER YUGO | Monday, July 28, 2008

Q: How confidential are trusts? Is there anything I can do to make my
trust more confidential?

A: Confidentiality is one of the big selling points for trusts. If you
meet with an attorney, you will likely be told how estate files are
public records yet trusts are not.

All of that is true, to an extent. As a general rule, probate estate
files are public records, theoretically, available to the public.
Personally, I don't think it is quite that easy.

In order to view a probate file, you need to get past the clerk.
Before a person can gain access to a probate file, there may be some
questioning. Probate files are not sitting out on the counter
available to anyone who happens by. On the other hand, if you are
persistent, you will likely be able to review the file.

If a person gains access to a probate file, what they will find may
not be all that interesting anyway. Sure they will be able to see the
will and who is getting your stuff, but information such as social
security and bank account numbers are redacted and kept in a separate
file that is not available to the public.

Unlike wills, trusts are generally not presented for probate.
Therefore, there will not be a file at the clerk's office with a copy
of the trust in it.

A copy of the trust must be attached to the Indiana Inheritance Tax
Return when it is filed. However, an Inheritance Tax Return is
confidential and not available to the pubic for review.

Usually when the confidentiality of a trust is challenged, it's not at
the clerk's office, but rather at a place you wouldn't expect, your
bank. Before some banks will re-title bank accounts into the name of a
trust, they insist on seeing a copy of the trust. I once had a bank
tell me that they didn't need an entire copy of the trust, but wanted
to be the ones making the copies of the pages they did need. As silly
as it sounds, they got their way.

My position is that bank does not need an entire copy of the trust.
All they need is certain pages from the trust: front page, signature
page, successor trustee page and the powers of the trustee page(s).
The other pages are none of your bank's business and I would resist
turning over an entire copy. If your bank insists on seeing a full
copy of the trust, you have the option of providing them the
information or doing business somewhere else. Guess which one I would
choose?

On the other-hand, if you provide a copy of your trust to your bank,
it's not like it's going to be posted on the rate board. Banks are
subject to rules regarding confidentiality that are much stricter than
those imposed on the clerk's office.

If you are concerned about your neighbors knowing how much money you
left your family, you should consider using a trust. On the
other-hand, I think you'd be surprised how little your friends and
family actually care.

http://www.nwitimes.com/articles/2008/07/28//business/business/doce04585950e2d0c\
3f86257490006c2c12.txt

Experience
Trust
Intelligent Advice
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When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
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about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.cr/

A federal judge on Tuesday cleared the way for prosecutors to force
the Swiss banking giant UBS to turn over the names of wealthy clients
as part of an investigation of its offshore private banking practices.

An order signed by Judge Joan A. Lenard of Federal District Court in
Miami gives prosecutors and the Internal Revenue Service the authority
to request the information. It was unclear whether UBS would turn over
the names or appeal the process.

The decision is a setback for UBS, which is struggling to maintain its
tradition of Swiss banking secrecy amid the rapidly unfolding
investigation. The bank said in an e-mailed statement Tuesday that
“UBS looks forward to working with the I.R.S. to address the summons.”

The embattled bank, which is struggling against investor concerns
about further write-downs and its ability to retain vital private
clients, also announced a major overhaul of its corporate governance
rules on Tuesday.

It said it would replace four directors and more clearly separate the
responsibilities of the board from those of the executive management
to end what some critics called a cozy relationship that had led to
the bank’s becoming one of the first and largest casualties of the
subprime mortgage turmoil.

Federal prosecutors have accused UBS of helping American clients hide
$20 billion overseas in secret offshore accounts, evading $300 million
or more in taxes.

The I.R.S. and prosecutors want UBS to turn over the names of all
American clients who had accounts from December 2002 through 2007 at
the Swiss offices of UBS, its subsidiaries or affiliates ďż˝" and for
which UBS did not have a tax form known as a W-9.

The request covers any taxpayer with the authority to receive account
statements or trade confirmations or to withdraw money from the
Swiss-based accounts. And it covers accounts that were not just
managed by but also maintained and monitored by UBS. Included in the
request are the names of clients for whom UBS did not accurately or
timely file 1099 forms, which report income earned, or taxes withheld.

“As we have noted, UBS takes this matter very seriously and is working
diligently with both Swiss and U.S. government authorities, consistent
with Swiss law and the legal frameworks for intergovernmental
cooperation and assistance,” the UBS statement said.

http://www.nytimes.com/2008/07/02/business/worldbusiness/02tax.html?_r=2&ref=bus\
iness&oref=slogin&oref=slogin

Experience
Trust
Intelligent Advice
Exceptional Service
Extraordinary Customer Care
When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
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about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.co.cr/

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   File        : Brochure Red Sea 2007.pdf
   Description : Red Sea Management, Ltd Company Brochure
   Size        : 3576 KB

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http://groups.yahoo.com/group/offshoretrust/files/Brochure%20Red%20Sea%202007.pd\
f

by Robert Lee, Tax-News.com, London

Despite growing criticism from multinationals over its corporate tax
burden, the UK is the most popular European inward investment
destination for corporates, and will trail behind only the US and
China for inward investment in the next year, according to a new
report by tax and advisory services firm KPMG.

In a global survey of corporate investment plans carried out by KPMG
International, corporate investment strategists from over 300 of the
largest multinational companies in 15 major economies were asked where
they plan to invest in the next 12 months and in five years’ time.

According to KPMG, the results "look very positive for the UK" with an
outlook of stability and continued growth. The UK lies third in the
table for investment this year, behind only the US and China, with 14%
of respondents planning to invest.

Looking ahead to 2013/14, the UK is predicted to increase its share of
investment by 3 points to 17%, although by then it falls down the
table to fifth place after being overtaken by Russia and India, but
maintains its strong position ahead of the rest of the world.

By 2013/14, most respondents thought that the credit crunch would no
longer be having an effect on their investment plans. Six out of ten
respondents felt that it would affect investment for the next two or
three years but not longer, with just 18% suggesting that it was “a
major problem for the foreseeable future".

The research also examined corporates’ global investment plans in
specific sectors - in financial services, the outlook is even more
positive for the UK. It is second only to the US now, and equal first
with the US in 5 years.

In IT and telecoms, the UK sits alongside Germany and the US for
investment for this year, but Germany again gives way to China, India
and Russia 5 years from now. In the property and transport sector, the
UK leads for investment both now and in five years.

Speaking at KPMG’s 2008 EMEA Tax Summit in Barcelona, where the survey
was launched, Sue Bonney, Head of Tax for KPMG’s EMEA region and a
partner in the UK firm noted that: “It is striking that at a time when
there is little good news on the economic front, our survey paints
such a positive picture for the UK.”

The survey also examined the reasons behind a corporate decisions to
invest in a particular territory. Asked what are the main attributes
they look for in a country before investing, the most popular was
access to new customers, closely followed by political stability and
other factors.

Sue Bonney added: “Clearly the commercial imperative of reaching new
markets takes priority in corporates’ investment decisions and that is
the driving reason behind the strong performance of the BRIC nations."

"For countries such as the UK and other European nations that cannot
offer such dynamic customer growth opportunities, due to their mature
markets or declining populations, it is interesting to see that
factors such as the general stability and fairness of the regulatory
and political environment are ranked so highly. And within that it is
interesting to note that tax policy is a significant factor ďż˝" ranked
above quality and cost of labour and the transport system.”

According to KPMG, the survey’s results suggest that improving the UK
tax system could reap particularly strong benefits. Sue Bonney
explained that: “Even though the debate over the UK’s relatively low
attractiveness to business from a tax perspective is raging and some
companies have announced their intentions to leave the country because
of our tax system, Britain still ranks extremely highly as an inward
investment destination."

"But investing into operations here is very different from
establishing a headquarters in the UK. If we could manage to make this
country as attractive a location for a head office as it appears to be
for inward investment we could potentially win on both fronts.”

Looking at UK corporates investing overseas, for this year, British
investors are interested in the US (30%), China, (25%) and Germany
(20%). Looking ahead, China stays at 25%, the US and Germany are
attractive for 20%, and Russia looks promising for 15%.

Virtually all of the UK’s investments will be additions to existing
projects in these countries, with the exception of a relatively small
but growing number of investments in European countries.

Sue Bonney concluded:

“Overall the shift in influence that these strategists expect towards
the BRIC economies looks like the beginnings of a fundamental change
in the balance of economic power."

“Our survey shows that corporate investors are already planning their
responses to such a shift that has been happening for some time. The
results help confirm the rise of the BRIC economies as viable
alternative places to invest, taking funds primarily from the US economy."

"The continued strength of the European economies may come as a
surprise to some, but the fact that they hold up so well suggests that
we may be developing a roughly equal balance of economic power between
the Americas, Europe and Asia Pacific. That would indeed herald the
start of an entirely new global economic game.”

http://www.tax-news.com/asp/story/UK_To_Lead_Europe_For_Inward_Investment_Despit\
e_Tax_Concerns_xxxx31392.html

Experience
Trust
Intelligent Advice
Exceptional Service
Extraordinary Customer Care
When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
Because international investment and legal advice is no place to guess
about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.co.cr/

The following file was arranged to be sent to the offshoretrust
group automatically.

   File        : Brochure Red Sea 2007.pdf
   Description : Red Sea Management, Ltd Company Brochure
   Size        : 3576 KB

However, due to the large size of the file, it is not sent
through email.  Instead, you can access the file at this URL

http://groups.yahoo.com/group/offshoretrust/files/Brochure%20Red%20Sea%202007.pd\
f

By Patti S. Spencer

"It's an ill wind that blows nobody good." ďż˝" Old proverb.
In recent months the credit crisis and the disruption in the U.S. and
world markets have caused many investment assets to drop in value and
interest rates have declined to historical lows.

Transferring assets when they are at a low value is always good
planning. Couple that with a technique that takes advantage of low
interest rates and you have a great opportunity to reduce estate and
gift taxes. There are a number of estate planning techniques that are
based on valuing property interests using the IRS rate, which is
published monthly. When real returns over a period of time exceed the
IRS assumed rate, there is an opportunity for significant estate and
gift tax savings.

The IRS rate for May, which is used for the valuation of certain
interests, is 3.2 percent. For June, it is 3.8 percent. The May 3.2
percent rate can be used for valuations of property interests
transferred in May, June and July 2008. That means you have until the
end of July 2008 to put in place any of these planning techniques and
get the benefit of the 3.2 percent rate. If you can't get it together
by the end of July, no worries. The June rate of 3.8 percent is still
very good, and the rate may not be going up so fast after that.
A charitable lead annuity trust is a very effective technique for
transferring wealth and, at the same time, making a significant gift
to charity. A donor makes a gift to an irrevocable trust that
distributes a specified amount annually to one or more charitable
organizations for a specified period of time. Because of the estate
and gift tax savings generated by the technique, the distribution to
charity comes at little cost to the family. At the end of the trust's
term, the remaining trust assets are distributed to family members.
When the CLAT is created, two gifts are made: One is the present value
of the charity's distributions which qualifies for the gift and estate
tax charitable deductions. (Note: The gift does not qualify for the
income tax charitable deduction, but the income of the trust that is
payable to the charity is not included in the donor's return, so the
net effect is the same as if a deduction were permitted for the
charitable distributions.)

The second gift is the present value of the family's right to receive
the remainder of the trust at the termination of the charities'
interest. These two interests are valued using the IRS interest rate,
which for May was 3.2 percent (and can be used through the end of July).

Here is an example: A charitable lead annuity trust that pays 9
percent for 14 years can be transferred to family with zero tax.
Whether the amount transferred to the trust is $100,000 or $1 million,
there is no taxable gift because the IRS valuation assumes that the
trust is only earning 3.2 percent while paying out 9 percent. The
assumption is that doing this over 14 years exhausts the trust. In
reality, if the trust is able to earn 9 percent (on a total return
basis) and pay that amount to charity, then the full value of the
property transferred to the trust is transferred to family at the end
of the trust term with zero gift or estate tax.

The lower the IRS interest rate, the lower the value of the remainder
interest that is subject to tax.

The CLAT allows the donor to make a sizable gift to a charitable
organization at relatively little cost to heirs. It is true that if
the assets are not put into a trust with a charitable payout
obligation, they will grow faster. However, these appreciated assets
will be subject to gift or estate tax before passing to the heirs.
Because the tax rate is 45 percent, the heirs would only receive 55
percent of the appreciated assets. By using a CLAT, far less tax is
paid to the government, and far more money is donated to the
charitable organization.

http://articles.lancasteronline.com/local/4/221968

Experience
Trust
Intelligent Advice
Exceptional Service
Extraordinary Customer Care
When it comes to trusts, foundations, IBC's, LLC's, investments and
legal services...it all comes down to this: Trust.
Because international investment and legal advice is no place to guess
about the safety or the security of you or your clients assets. You
want proven reliability from a firm that has over time earned the
trust of thousands of people we serve worldwide both corporate
and individuals. Red Sea Management, Ltd

http://www.redseamanagement.com
http://www.offshorebanking.co.cr/
http://www.offshoreinvestment.co.cr/
http://www.offshoretrust.co.cr/
http://www.offshore.co.cr/

Dear colleague
It depends on the work involved.
We charge generally by the hour:
300 e for partners
200 e for associates
We can also agree on a global fee for instance 3000 e for the creation of a company plus registration expenses.
Best regards

-----Original Message-----
From: Стефан Стефанов <bvo@...>
To: offshoretrust@yahoogroups.com <offshoretrust@yahoogroups.com>
CC: jack@... <jack@...>
Sent: Thu May 15 21:46:17 2008
Subject: Re: RE: [offshoretrust] Asset Protection Trusts

Dear Mr. Jack,
My company in Bulgaria register companies companies too. Please be so kind to send me your fee for a professional to cooperate in this business.
Kind regards
Dr. B. Orozov
Director
INTERNATIONAL PARTNERS S.E.
Nishava 55;  1680 Sofia Bulgaria



>-------- Оригинално пи�мо --------
>От: Johnson Chien
>Отно�но: RE: [offshoretrust] Asset Protection Trusts
>До: "offshoretrust@yahoogroups.com"
>�зпратено на: Сряда, 2008, Май 14 19:30:27 EEST
>----------------------------------
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>


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>

GCSL has offices in Anguilla, Belize, Cook Islands, Nevis and Samoa
>to offer Trust, IBC, LLC, Mutual Fund establishment services.  Please feel free
>to visit www.gcsl.info


>
>




>
>

Best Regards,


>
>




>
>

>
>

Johnson Chien


>
>

Global Consultants and Services ( China ) Limited Shanghai Rep.
>Office


>
>

Room 206, 12 on the Bund / (No.12 Zhongshan Dong Yi Road),
>Shanghai 200002 , China


>
>

Tel: +86 21 6323 6890      Direct: +86 21 6323 6892


>
>

Fax: +86 21 6323 6899


>
>

Mobile: +86 1582 172 3200 ( China)


>
>

Email:  <mailto:johnson@...> johnson@...      Web site:  <http://www.gcsl.info> www.gcsl.info


>
>




>
>

_____________________________________________________________________


>
>

CONFIDENTIALITY NOTICE


>
>

The information contained in this communication, including any
>attachments, is confidential and is intended only for the use of the named
>recipient(s). If you are not a named recipient(s), please notify the author by
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From: offshoretrust@yahoogroups.com
>[mailto:offshoretrust@yahoogroups.com] On Behalf Of doclawwithme@...

>Sent: Thursday, May 15, 2008 12:09 AM

>To: offshoretrust@yahoogroups.com

>Subject: Re: [offshoretrust] Asset Protection Trusts


>
>

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>




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>

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>

Costa Rica would never be my
>choice.  The Cayman Island have a 6 year statue of limitations.

>Look to Belize and St.Kitts. Nevis.

>

>I have contacts that are reasonable

>

>John King  J.D.,LLM (taxation)

>

>

>-----Original Message-----

>From: Edward B De Vlugt <delikato2005@...>

>To: offshoretrust@yahoogroups.com

>Sent: Thu, 8 May 2008 1:05 pm

>Subject: Re: [offshoretrust] Asset Protection Trusts


>
>

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Gentlemen:


>

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>




>

>

>

How does Costa Rica based TRUST rate in
> comparison to the ones in i.e Cayman Islands.


>

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>




>

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>

Edward B DeVlugt


>

>

>

Vienna -
> Austria


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>

> --- On Wed, 5/7/08, Red Sea Management <redseamgmt@...>
> wrote:


>

From: Red
> Sea Management <redseamgmt@...>

> Subject: [offshoretrust] Asset Protection Trusts

> To: offshoretrust@yahoogroups.com

> Date: Wednesday, May 7, 2008, 7:23 AM


>

>

>

>

INTRODUCTION

>

> There has been a good deal of interest in recent years in what are

> known as asset protection - or sometimes creditor protection trusts -

> and the subject has been much discussed at seminars dealing with

> offshore trusts. The reason for the interest is understandable,

> particularly from residents in the United States of America. There,

> court awards (eg damages in professional negligence claims) have

> reached such heights that the result can be total ruin for the

> individual concerned. How much more attractive, therefore, to be able

> to put aside a nest egg beyond the reach of his creditors, which he

> can enjoy later if the axe should fall and which will enable him and

> his family to live comfortably.

>

> Is the Cayman Islands a safe haven for his assets? Until 1989, the

> answer was almost certainly not. The law on the subject was governed

> by an ancient statute passed in England in 1571 during the reign of

> Elizabeth I which rendered void any disposition intended to defeat,

> delay or hinder the interests of creditors. In appropriate

> circumstances, that had the effect of allowing a creditor, who may not

> have existed at the time of the creation of the settlement, to set

> aside a disposition to trustees leaving the trustee in the disastrous

> position of not only receiving no fees to cover his professional

> trusteeship, but possibly also out of pocket for the expenses of

> defending the "trust". In 1989, the legislature in the Cayman
> Islands

> passed The Fraudulent Dispositions Law, 1989 which replaced the

> Statute of Elizabeth with a more modern and moderate regime which set

> out to protect the interests of legitimate creditors but at least give

> some comfort to settlors (and, even more so, to trustees) of trusts

> established under the laws of the Cayman Islands. The Cayman Islands

> now has the Fraudulent Dispositions Law (1996 Revision).

>

> FRAUDULENT DISPOSITIONS LAW (1996 REVISION)

>

> The effect of the Fraudulent Dispositions Law (1996 Revision) is to

> render voidable (at the instance of a creditor prejudiced thereby) any

> disposition made with an intent to defraud and at an undervalue. It

> should be noted that the test for setting aside such a disposition is

> twofold: it must be with intent to defraud and also at an undervalue.

>

> Intent to defraud at an undervalue

>

> "Undervalue" is defined as either no consideration or a
> consideration

> for the disposition significantly less than the value of the property

> being disposed.

>

> "Intent to defraud" is defined as meaning "an intention of a

> transferor wilfully to defeat an obligation owed to a creditor."

>

> "Obligation" is defined as meaning an obligation or liability

> (including a contingent liability) which existed on or before the date

> of the disposition and of which the transferor had notice. The

> question of whether actual notice is necessary has not yet been

> determined but it seems most likely that constructive notice would be

> sufficient. It would seem unlikely that the courts would assist a

> transferor to defeat his creditors where he knew or ought to have

> known of their existence.

>

> "Creditor" is defined, rather simplistically, as being a person to

> whom an obligation is owed.

>

> The result is that a disposition made even at an undervalue (such as a

> disposition to trustees) is safe from the attack of creditors unless

> they can show an intent to wilfully defraud creditors then existing.

> Even if such an attack succeeds, the disposition is only set aside to

> the extent necessary to satisfy the creditors prejudiced by the

> disposition. It should be noted that the statute specifically provides

> that the burden of proof of the transferor's intent to defraud is

> placed squarely on the creditor seeking to set aside the disposition.

> It is, however, unlikely that he would have to show a specific intent

> to defraud him; it will probably be sufficient to establish a general

> intent to defraud, although this point remains to be determined by the

> courts.

>

> As a final saving, the statute provides that there is a limitation

> period of six years after the disposition which prevents any action

> being taken to set aside the disposition after that time.

>

> Protection for trustees and beneficiaries acting in good faith

>

> If the court is satisfied that a trustee has not acted in bad faith in

> receiving the property, the trustee will be able to retain sufficient

> to pay its entire costs incurred in defending the proceedings (not

> merely court taxed costs) and also will be entitled to retain its

> proper fees and costs incurred in administering the trust, as would

> any predecessor trustee who had similarly not acted in bad faith.

>

> Any beneficiary who has received a distribution properly from the

> trust fund in terms of the trust will be entitled to retain that

> distribution provided that he has not acted in bad faith.

>

> Cayman as jurisdiction of choice

>

> With the passing of this legislation, the Cayman Islands became an

> attractive jurisdiction in which to locate asset protection trusts,

> provided that the settlor acted before the claims arose. It is

> obviously too late for the settlor to act when he is already aware of

> outstanding claims (which is of course the most common time when

> enquiry is made). However, an individual can, before embarking on a

> course of conduct which could give rise to claims, set aside a fund to

> look after himself and his family if the worst happens. With the

> ever-spiralling cost of professional indemnity insurance, this may be

> an attractive prospect for many professionals who in the past have

> been exposed to large awards of damages for tortious claims. In many

> ways, it is similar to a prudent businessman incorporating a limited

> liability company for the purpose of embarking on a speculative

> undertaking. Of course, tortious liability remains the responsibility

> of the individual committing the tort, but by proper planning and

> responsible behavior, the prospects can be improved.

>

> It is fair to say that while the Cayman Islands have been often

> mentioned as a suitable place for establishing asset protection

> trusts, the local trust companies have not unreservedly welcomed that

> role. There is a concern among them that the reputation of the

> jurisdiction will suffer if it is seen to be offering a shelter for

> the unscrupulous - what has been referred to as a "rip-off artists

> charter". There is also perceived to be a moral barrier to being a

> party to assisting individuals avoid liabilities to creditors,

> although this attitude is somewhat inconsistent in a jurisdiction

> which thrives to a large extent from the incorporation of limited

> liability companies. However, there is no doubt that if the situation

> justifies it, a trustee can be found and attitudes are certainly

> softening. There is certainly a large body of professional expertise

> available in the Cayman Islands to act as trustees.

>

> BANKRUPTCY

>

> There is perhaps a word of caution still needed. The Bankruptcy Law

> (1997 Revision) of the Cayman Islands still allows a trustee in

> bankruptcy appointed under that statute to set aside a settlement

> (other than a marriage settlement or made in favour of a purchaser or

> incumbrancer in good faith and for valuable consideration) if the

> settlor becomes bankrupt within two years of the settlement, or within

> ten years unless the parties claiming under the settlement can show

> that the settlor was at the time of the settlement able to pay his

> debts without the aid of the property settled. The statute, however,

> only applies to individuals personally present in, ordinarily resident

> or having a place of residence in the Cayman Islands, or carrying on

> business in the Cayman Islands, either personally or through an agent

> or manager, or through a partnership. That will presumably strictly

> limit the application of the statute as far as most creators of asset

> protection trusts are concerned, but it is worth bearing in mind.

>

> In relation to bankruptcy elsewhere, it should be emphasised to the

> settlor that he may have to export himself from his present

> jurisdiction in the event of his bankruptcy if he intends to reap any

> benefits from his asset protection trust. There is little point in

> having trustees make distributions to him which will have to be paid

> directly to his trustee in bankruptcy. This is a factor which many

> potential settlors tend to ignore but should not as it will obviously

> have a significant impact on their lives.

>

> STRUCTURE

>

> We are often asked what an asset protection trust looks like. There is

> no easy answer other than that it ought to reflect the settlor's

> intentions just as any other trust would. Indeed, all trusts are in

> essence asset protection trusts being designed to preserve assets for

> the enjoyment and benefit of their beneficiaries. There are, however,

> a number of factors to be considered when establishing an asset

> protection trust in the Cayman Islands, some of which are discussed below.

>

> Irrevocable trust

>

> The trust should be irrevocable (preferably) or, if revocable, its

> revocability should cease on the bankruptcy of the settlor. There is

> no point in establishing an asset protection trust which can be

> revoked by the settlor's trustee in bankruptcy.

>

> Discretionary trust

>

> The interest of the settlor (if any) should be such that it cannot be

> attacked by his trustee in bankruptcy. For this purpose, it would

> probably be most convenient to use a form of discretionary trust.

>

> Limit powers on bankruptcy

>

> The powers (if any) reserved to the settlor should be carefully

> considered. Clearly any power reserved to a settlor could be exercised

> by his trustee in bankruptcy. It may therefore be necessary to limit

> such powers or terminate them on the bankruptcy of the settlor.

>

> Independence of trustee

>

> Similarly, it is important that the trustee must act independently and

> not slavishly follow the wishes of the settlor. Recent authorities

> have considered trusts which followed such a course to be a mere sham

> and have set them aside.

>

> Solvency of settlor

>

> The trustee should satisfy himself that the settlor is solvent when he

> creates the settlement or adds property to it at any time thereafter,

> and that the settlor is not aware of any claims or potential claims

> (eg claims under a personal guarantee).

>

> Settlor offshore

>

> The settlor should not be physically present or resident or carrying

> on business in the Cayman Islands at the time of creation of the

> settlement, or at any time subsequently when property is transferred

> into the trust.

>

> "Caymanise" trust property

>

> The property being transferred to the trust should be to the extent

> possible "Caymanised" , that is treated as property in the Cayman

> Islands for the purpose of Cayman Islands conflict of law rules. One

> way to achieve this would be for the settlor to incorporate a company

> in the Cayman Islands, transfer the property intended to be settled to

> the company, in consideration for the issue of shares to him (which

> would be a valuable consideration and not a transfer at an undervalue)

> and thereafter settle the shares on the trustee. This ought to ensure

> that, so far as the courts in the Cayman Island at any rate are

> concerned, the property being transferred under the disposition which

> is being attacked is within the jurisdiction of the Cayman Islands courts.

>

> Location of trust assets

>

> The trust assets should to the extent possible be kept out of any

> jurisdiction where any significant risk of attack is feared, eg the

> residence or domicile of the settlor, or where he carries on business.

>

> Purpose of trust

>

> The trust should have a higher aim than simply asset protection, which

> should merely be ancillary to a wider reaching plan, eg to provide for

> the settlor's family. Similarly it is probably advisable not to be to

> greedy and to refrain from settling the whole of the settlor's

> property in trust. While this is not an absolute point, it will be of

> assistance in any attempt to show that the settlor was not acting in

> bad faith. Similarly, it is useful for the settlor to produce personal

> financial statements dated immediately following any transfer into

> trust, together with an affidavit by the settlor swearing that,

> following the transfer into trust, the settlor could meet his debts as

> they fall due.

>

> Protect from risk of litigation

>

> Although not a legal point, the trustee ought to bear in mind that an

> asset protection trust is by its very nature a potential invitation to

> attack from the settlor's creditors and the trustee may well become

> involved in litigation to defend the establishment of the trust. He

> should, therefore, as well as taking into consideration the points

> made above, consider whether it is economically justifiable for him to

> accept the risk. He should also ensure that sufficient assets will be

> available to him to fund such litigation. It may well also be

> appropriate to ensure that distributions from the trust fund are

> restricted until all applicable statutory limitation periods have expired.

>

> CONCLUSION

>

> If such prudence and forethought is applied to its creation, an asset

> protection trust established under the laws of the Cayman Islands will

> have every prospect of achieving its objective. Indeed, the

> legislation in the Cayman Islands has been deliberately framed in what

> is perceived as a conservative approach, rather than following the

> innovative and aggressive approach taken by some other jurisdictions.

> The hope is that a foreign court will be persuaded it is proper to

> uphold the disposition in that it is consistent with legal principles

> applicable in its own jurisdiction and does not offend any principle

> of public policy there. Time alone will tell if this hope is realistic.

>

> http://www.mondaq. <http://www.mondaq.com/article.asp?articleid=60010>
> com/article. asp?articleid= 60010

>

> Experience

> Trust

> Intelligent Advice

> Exceptional Service

> Extraordinary Customer Care

> When it comes to trusts, foundations, IBC's, LLC's, investments and

> legal services...it all comes down to this: Trust.

> Because international investment and legal advice is no place to guess

> about the safety or the security of you or your clients assets. You

> want proven reliability from a firm that has over time earned the

> trust of thousands of people we serve worldwide, both corporate

> and individuals. Red Sea Management, Ltd

> http://www.redseama <http://www.redseamanagement.com/>
> nagement. com

> http://www.offshore <http://www.offshorebanking.co.cr/>
> banking.co. cr/

> http://www.offshore <http://www.offshoreinvestment.co.cr/>
> investment. co.cr/

> http://www.offshore <http://www.offshoretrust.cr/>
> trust.cr/


>

>

>

>

>
>




>
>

>
>
  _____ 


>
>

>
>

Be a better friend, newshound, and
>know-it-all with Yahoo! Mobile. Try it now. <http://us.rd.yahoo.com/evt=51733/*http:/mobile.yahoo.com/;_ylt=Ahu06i62sR8HDtDypao8Wcj9tAcJ> 


>
>

>
>

>
>

>
>

>
>
  _____ 


>
>

>
>

Plan your next roadtrip with MapQuest.com <http://www.mapquest.com/?ncid=mpqmap00030000000004> :
>America's #1 Mapping Site.


>
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> 

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Thank you.

If you don't mind my weigh in on this question, the Caymans are a mediocre asset protection jurisdiction as a result of the recent trend (7-8 years) toward transparency to the US government, longer statute of limitations, etc.  Costa Rica is also not at the top of the list as a consequence of potential for political unrest.  There are far more attractive and settled AP jurisdictions, such as Nevis or the Cook Islands, that should be considered if optimum asset protection is desired.

Bill Ensing

 

William A. Ensing, Esq.
Ensing Law Firm, Ltd.
Comprehensive and Integrated
Wealth Transfer and Wealth Protection Planning
272 Market Square, Suite 2726
Lake Forest, IL  60045 USA
off. (847) 295-5736
fax. (847) 295-0876
www.ihidem.com

Orchestrating Peace of Mind in a Litigious Society?

 

In a message dated 5/14/2008 11:04:01 A.M. Central Daylight Time, delikato2005@... writes:

Gentlemen:   How does Costa Rica based TRUST rate in comparison to the ones in i.e Cayman Islands.   Edward B DeVlugt Vienna - Austria           --- On Wed, 5/7/08, Red Sea Management <redseamgmt@yahoo.com> wrote: From: Red Sea Management <redseamgmt@yahoo.com> Subject: [offshoretrust] Asset Protection Trusts To: offshoretrust@yahoogroups.com Date: Wednesday, May 7, 2008, 7:23 AM INTRODUCTION There has been a good deal of interest in recent years in what are known as asset protection - or sometimes creditor protection trusts - and the subject has been much discussed at seminars dealing with offshore trusts. The reason for the interest is understandable, particularly from residents in the United States of America. There, court awards (eg damages in professional negligence claims) have reached such heights that the result can be total ruin for the individual concerned. How much more attractive, therefore, to be able to put aside a nest egg beyond the reach of his creditors, which he can enjoy later if the axe should fall and which will enable him and his family to live comfortably. Is the Cayman Islands a safe haven for his assets? Until 1989, the answer was almost certainly not. The law on the subject was governed by an ancient statute passed in England in 1571 during the reign of Elizabeth I which rendered void any disposition intended to defeat, delay or hinder the interests of creditors. In appropriate circumstances, that had the effect of allowing a creditor, who may not have existed at the time of the creation of the settlement, to set aside a disposition to trustees leaving the trustee in the disastrous position of not only receiving no fees to cover his professional trusteeship, but possibly also out of pocket for the expenses of defending the "trust". In 1989, the legislature in the Cayman Islands passed The Fraudulent Dispositions Law, 1989 which replaced the Statute of Elizabeth with a more modern and moderate regime which set out to protect the interests of legitimate creditors but at least give some comfort to settlors (and, even more so, to trustees) of trusts established under the laws of the Cayman Islands. The Cayman Islands now has the Fraudulent Dispositions Law (1996 Revision). FRAUDULENT DISPOSITIONS LAW (1996 REVISION) The effect of the Fraudulent Dispositions Law (1996 Revision) is to render voidable (at the instance of a creditor prejudiced thereby) any disposition made with an intent to defraud and at an undervalue. It should be noted that the test for setting aside such a disposition is twofold: it must be with intent to defraud and also at an undervalue. Intent to defraud at an undervalue "Undervalue" is defined as either no consideration or a consideration for the disposition significantly less than the value of the property being disposed. "Intent to defraud" is defined as meaning "an intention of a transferor wilfully to defeat an obligation owed to a creditor." "Obligation" is defined as meaning an obligation or liability (including a contingent liability) which existed on or before the date of the disposition and of which the transferor had notice. The question of whether actual notice is necessary has not yet been determined but it seems most likely that constructive notice would be sufficient. It would seem unlikely that the courts would assist a transferor to defeat his creditors where he knew or ought to have known of their existence. "Creditor" is defined, rather simplistically, as being a person to whom an obligation is owed. The result is that a disposition made even at an undervalue (such as a disposition to trustees) is safe from the attack of creditors unless they can show an intent to wilfully defraud creditors then existing. Even if such an attack succeeds, the disposition is only set aside to the extent necessary to satisfy the creditors prejudiced by the disposition. It should be noted that the statute specifically provides that the burden of proof of the transferor's intent to defraud is placed squarely on the creditor seeking to set aside the disposition. It is, however, unlikely that he would have to show a specific intent to defraud him; it will probably be sufficient to establish a general intent to defraud, although this point remains to be determined by the courts. As a final saving, the statute provides that there is a limitation period of six years after the disposition which prevents any action being taken to set aside the disposition after that time. Protection for trustees and beneficiaries acting in good faith If the court is satisfied that a trustee has not acted in bad faith in receiving the property, the trustee will be able to retain sufficient to pay its entire costs incurred in defending the proceedings (not merely court taxed costs) and also will be entitled to retain its proper fees and costs incurred in administering the trust, as would any predecessor trustee who had similarly not acted in bad faith. Any beneficiary who has received a distribution properly from the trust fund in terms of the trust will be entitled to retain that distribution provided that he has not acted in bad faith. Cayman as jurisdiction of choice With the passing of this legislation, the Cayman Islands became an attractive jurisdiction in which to locate asset protection trusts, provided that the settlor acted before the claims arose. It is obviously too late for the settlor to act when he is already aware of outstanding claims (which is of course the most common time when enquiry is made). However, an individual can, before embarking on a course of conduct which could give rise to claims, set aside a fund to look after himself and his family if the worst happens. With the ever-spiralling cost of professional indemnity insurance, this may be an attractive prospect for many professionals who in the past have been exposed to large awards of damages for tortious claims. In many ways, it is similar to a prudent businessman incorporating a limited liability company for the purpose of embarking on a speculative undertaking. Of course, tortious liability remains the responsibility of the individual committing the tort, but by proper planning and responsible behavior, the prospects can be improved. It is fair to say that while the Cayman Islands have been often mentioned as a suitable place for establishing asset protection trusts, the local trust companies have not unreservedly welcomed that role. There is a concern among them that the reputation of the jurisdiction will suffer if it is seen to be offering a shelter for the unscrupulous - what has been referred to as a "rip-off artists charter". There is also perceived to be a moral barrier to being a party to assisting individuals avoid liabilities to creditors, although this attitude is somewhat inconsistent in a jurisdiction which thrives to a large extent from the incorporation of limited liability companies. However, there is no doubt that if the situation justifies it, a trustee can be found and attitudes are certainly softening. There is certainly a large body of professional expertise available in the Cayman Islands to act as trustees. BANKRUPTCY There is perhaps a word of caution still needed. The Bankruptcy Law (1997 Revision) of the Cayman Islands still allows a trustee in bankruptcy appointed under that statute to set aside a settlement (other than a marriage settlement or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration) if the settlor becomes bankrupt within two years of the settlement, or within ten years unless the parties claiming under the settlement can show that the settlor was at the time of the settlement able to pay his debts without the aid of the property settled. The statute, however, only applies to individuals personally present in, ordinarily resident or having a place of residence in the Cayman Islands, or carrying on business in the Cayman Islands, either personally or through an agent or manager, or through a partnership. That will presumably strictly limit the application of the statute as far as most creators of asset protection trusts are concerned, but it is worth bearing in mind. In relation to bankruptcy elsewhere, it should be emphasised to the settlor that he may have to export himself from his present jurisdiction in the event of his bankruptcy if he intends to reap any benefits from his asset protection trust. There is little point in having trustees make distributions to him which will have to be paid directly to his trustee in bankruptcy. This is a factor which many potential settlors tend to ignore but should not as it will obviously have a significant impact on their lives. STRUCTURE We are often asked what an asset protection trust looks like. There is no easy answer other than that it ought to reflect the settlor's intentions just as any other trust would. Indeed, all trusts are in essence asset protection trusts being designed to preserve assets for the enjoyment and benefit of their beneficiaries. There are, however, a number of factors to be considered when establishing an asset protection trust in the Cayman Islands, some of which are discussed below. Irrevocable trust The trust should be irrevocable (preferably) or, if revocable, its revocability should cease on the bankruptcy of the settlor. There is no point in establishing an asset protection trust which can be revoked by the settlor's trustee in bankruptcy. Discretionary trust The interest of the settlor (if any) should be such that it cannot be attacked by his trustee in bankruptcy. For this purpose, it would probably be most convenient to use a form of discretionary trust. Limit powers on bankruptcy The powers (if any) reserved to the settlor should be carefully considered. Clearly any power reserved to a settlor could be exercised by his trustee in bankruptcy. It may therefore be necessary to limit such powers or terminate them on the bankruptcy of the settlor. Independence of trustee Similarly, it is important that the trustee must act independently and not slavishly follow the wishes of the settlor. Recent authorities have considered trusts which followed such a course to be a mere sham and have set them aside. Solvency of settlor The trustee should satisfy himself that the settlor is solvent when he creates the settlement or adds property to it at any time thereafter, and that the settlor is not aware of any claims or potential claims (eg claims under a personal guarantee). Settlor offshore The settlor should not be physically present or resident or carrying on business in the Cayman Islands at the time of creation of the settlement, or at any time subsequently when property is transferred into the trust. "Caymanise" trust property The property being transferred to the trust should be to the extent possible "Caymanised" , that is treated as property in the Cayman Islands for the purpose of Cayman Islands conflict of law rules. One way to achieve this would be for the settlor to incorporate a company in the Cayman Islands, transfer the property intended to be settled to the company, in consideration for the issue of shares to him (which would be a valuable consideration and not a transfer at an undervalue) and thereafter settle the shares on the trustee. This ought to ensure that, so far as the courts in the Cayman Island at any rate are concerned, the property being transferred under the disposition which is being attacked is within the jurisdiction of the Cayman Islands courts. Location of trust assets The trust assets should to the extent possible be kept out of any jurisdiction where any significant risk of attack is feared, eg the residence or domicile of the settlor, or where he carries on business. Purpose of trust The trust should have a higher aim than simply asset protection, which should merely be ancillary to a wider reaching plan, eg to provide for the settlor's family. Similarly it is probably advisable not to be to greedy and to refrain from settling the whole of the settlor's property in trust. While this is not an absolute point, it will be of assistance in any attempt to show that the settlor was not acting in bad faith. Similarly, it is useful for the settlor to produce personal financial statements dated immediately following any transfer into trust, together with an affidavit by the settlor swearing that, following the transfer into trust, the settlor could meet his debts as they fall due. Protect from risk of litigation Although not a legal point, the trustee ought to bear in mind that an asset protection trust is by its very nature a potential invitation to attack from the settlor's creditors and the trustee may well become involved in litigation to defend the establishment of the trust. He should, therefore, as well as taking into consideration the points made above, consider whether it is economically justifiable for him to accept the risk. He should also ensure that sufficient assets will be available to him to fund such litigation. It may well also be appropriate to ensure that distributions from the trust fund are restricted until all applicable statutory limitation periods have expired. CONCLUSION If such prudence and forethought is applied to its creation, an asset protection trust established under the laws of the Cayman Islands will have every prospect of achieving its objective. Indeed, the legislation in the Cayman Islands has been deliberately framed in what is perceived as a conservative approach, rather than following the innovative and aggressive approach taken by some other jurisdictions. The hope is that a foreign court will be persuaded it is proper to uphold the disposition in that it is consistent with legal principles applicable in its own jurisdiction and does not offend any principle of public policy there. Time alone will tell if this hope is realistic. http://www.mondaq. com/article. asp?articleid= 60010 Experience Trust Intelligent Advice Exceptional Service Extraordinary Customer Care When it comes to trusts, foundations, IBC's, LLC's, investments and legal services...it all comes down to this: Trust. Because international investment and legal advice is no place to guess about the safety or the security of you or your clients assets. You want proven reliability from a firm that has over time earned the trust of thousands of people we serve worldwide, both corporate and individuals. Red Sea Management, Ltd http://www.redseama nagement. com http://www.offshore banking.co. cr/ http://www.offshore investment. co.cr/ http://www.offshore trust.cr/

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