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Throughout recorded history people have sought ways to protect what they've worked hard to create and accumulate. Modern times require a multitude of strategies to deal with the current complicity of threats to your financial security. Seeking out accurate information, is an integral part of developing a well-designed strategy. You will need to develop new privacy habits and be cautious with whom you discuss your overall financial strategies. Many people mistakenly believe that tax avoidance and asset protection tools that are not well known by the majority of people are somehow less effective or less legal. This is not true. Why is it that we instantly believe it's perfectly legal for the Rockefellers or the Kennedy's to use international structures but are highly suspicious if it's our next door neighbor?

You may be familiar with a number of legal devices but are not familiar with asset protection and privacy values. Some structures, such as international asset protection trusts, seem almost mystical and are generally assumed by most to be used only by the ultra wealthy. The fact that the very rich have been using these structures for centuries verifies that they are superb and effective asset protection tools that preserve wealth. When combined with an International Business Company you can actually build a financial fortress for privacy, protection and accumulation of wealth.

There are many legal and ethical devices that can and should be used to protect the assets of those in every income bracket. If you have a home, a bank account, investments, corporate securities, valuable family heirlooms, a business, or you feel that you just cannot afford to start all over again, then your assets are at risk in today's litigious and over-taxed society and should be protected.
We, at Prosper International, offer information and education to help you take the steps to implement strategies to take back your privacy, invoke asset protection mechanisms, reduce your taxes where possible, increase your investments, and simply help you make and keep a great deal your more money!

Educational Topics (click below to view topic):

TRUSTS IBC'S

WHAT IS A TRUST?

Trust is defined as the expectation of regular, honest, cooperative behavior based on shared norms or values. "Trust" in this sense becomes an economic value because it lowers what economists call transaction costs. In other words, when people who work together trust one another, their interactions and transactions are conducted in harmony and therefore, without the direct or indirect expense of negative behaviors ranging from errors to theft or sabotage that arise from conflicting values within a group. As a result, "trust" lowers the cost of "being" (as in cost of living) or "doing" (as in cost of doing business) for all involved. From this idea comes "the trust," wherein several entities work together toward the same purpose under a shared set of values.

A trust is a vehicle used in financial planning and tax structures whereby the legal and equitable title of property is transferred to the named Trustees. The person setting up the trust is called the Settlor or Grantor. The trust is created in the form of a legal document called a Deed of Trust or Trust Deed.

The trustees are required to hold the property in accordance with the obligations imposed by the terms of the Trust Deed, and in particular, to administer the property of such persons (the beneficiaries) as are named in the Trust Deed. Property that forms the contents of a trust (the trust property) can include anything that can be transferred, such as money, shares, and real estate.

The beneficiaries can be named specifically by name, or generally as holders of the Bearer Certificate of the Trust. Beneficiaries have recourse in law to compel the trustees to act in accordance with the terms set forth in the Trust Deed.

A trust is not a contract. A contract is usually an agreement between two or more contracting parties enforceable only by and against the contracting parties. However, with the trust, a beneficiary may enforce the trust even though he is not a party to the trust instrument.

Although the trustee has, in legal terms, unfettered control over the assets in the trust, in practice, the trustee gives full consideration to the wishes of the settlor, or, significantly, any third party nominated by the settlor, when dealing with the trust assets.

The trustee will observe a Letter of Wishes which is addressed to the trustee by the settlor, and which usually sets out, clearly, how the settlor wishes the trustee to deal with the trust assets. Such Letters of Wishes can be altered at any time and, under its terms, the trustee can be speedily replaced, if desired for any reason.

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WHO PARTICIPATES IN A TRUST?

There are three or four types of participants in a trust:

THE GRANTOR: YOU, the one who sets up the trust, use it to shift the legal ownership of investments and business assets.

THE BENEFICIARIES: The people who will benefit from the activities of the trust. You can name anyone, including yourself as a beneficiary.

The TRUSTEE: A qualified institution that assumes legal ownership of the assets. In doing so, it takes on a legally enforceable duty to protect the assets and to use them for the Beneficiaries you have named.

THE PROTECTOR: An optional fourth participant. The Protector has the power to monitor the Trustee, to assure that it doesn't lose sight of the Grantor's intentions in establishing the trust. The Grantor might name his attorney or a trusted friend or relative as Protector or he might keep the job for himself.

A Trust is usually governed by a written Trust Agreement, which defines the powers and duties of the Trustee, the rights of the Grantor and the Beneficiaries, and the powers of the Protector.

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HISTORY OF TRUSTS

Evidence of the earliest known trust was discovered in an Egyptian tomb, as part of a document containing a personal last will and testament written in 1805 BC. Trusts existed in both Roman and Greek law as well.

Acceptance of the trust resulted when a wealthy Roman asked a friend to act as the trustee of his property after his death. Since his wife was not a Roman citizen, neither she nor their children could inherit. So the Roman devised a plan in which he willed his property to the friend, in exchange for the friend's promise to use it only for the benefit of the children. After the man's death, however, his friend betrayed the trust by using the property for himself. The news of this deceit was brought before the Roman courts, and he was found guilty of breach of trust and punished. This ruling was the first recorded judicial approval of trusts in Roman law. This device became so popular among Romans that a special court was created to deal exclusively with trust matters.

In the Middle Ages, trusts afforded the benefit of privacy. When the quasi-religious Order of Knights Templar acted as international financiers in Paris, the trust was a common device for royal and ecclesiastical investors to shield their financial activity from the public and each other.

The trust may also have been the western world's first tax shelter. In 16th-century England, trusts took on tax-shelter aspects that allowed citizens to avoid feudal taxes on property inheritances and transfers.

Trusts are rooted in common law. During America's colonial period, English common-law tradition did not change much over the course of time. The U.S. constitution, ratified in 1789 and based on common law inherited from England, became the foundation on which the American legal system was built.

Common law is the law of the land and the U.S. Constitution. Statutory law is legislated law enacted by a legislative body (Congress, Senate, Town Council and other levels of government). Over the centuries, the concept of the trust, born of the common-law tradition, was greatly refined by use and development, especially in British common-law nations. Later, U.S. court decisions also played a key role in refining the law of domestic trusts, with significant legal and tax consequences.

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REASONS FOR TRUSTS

The most common reasons for establishing a Trust are:
  • Protecting assets, which is accomplished by severing ownership so that a trust can avoid assets being repatriated or being made accessible to subsequent creditors;
  • Reducing, avoiding, or deferring taxation, especially wealth and inheritance taxes;
  • Ensuring property passes in the desired order, as a trust deed can name the line of succession of the trust property over the life of the trust; and
  • Preventing family property from being dissipated by potential spendthrifts, by enabling them to benefit from income from the property under the trustees' supervision.

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VERSATILITY

Trusts are versatile. You can design one to fit your purpose exactly, to shift tax burdens from one person to another, shrink your taxable estate, protect wealth from lawsuits, and even protect trust beneficiaries from their own inexperience. A trust can:
  • Conduct a business
  • Hold title to and invest in real estate, cash, stocks, bonds, negotiable instruments and all sorts of personal property
  • Take care of minors or the elderly
  • Assist in the execution of a premarital agreement
  • Provide financial support in retirement, marriage or divorce
  • Serve as a major avenue to avoidance of the probate entanglements and the burden of inheritance taxes.

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THE TRUST AS A FINANCIAL PLANNING TOOL

The first element in anyone's financial, tax, and estate planning should be a common-law pure (i.e., irrevocable and discretionary) trust. As a legal mechanism for financial management, the trust is one of the most flexible available. Trusts are useful for almost any purpose that is not illegal or against public policy. In general, though, the primary purpose of a trust is to protect assets from judgment and other settlements (these are often call "protective trusts"), with tax avoidance/deferment a close second.

Trusts may be implied by law, or can be expressly created verbally or by a written document, depending on the nature of the trust property. For tax planning purposes the trust is established with a written document called a Trust Deed, a Declaration of Trust, or a Trust Instrument. Trusts can be domestic or international, with the latter providing the greatest advantages for asset protection and tax avoidance.

In any case, establishing and maintaining a trust can be a relatively simple and inexpensive operation that provides significant protection and tax savings in a secure and confidential environment.

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DOMESTIC VS. INTERNATIONAL TRUSTS

A domestic trust is one that you establish within your home country. A revocable living trust is a common example of domestic trusts that many Americans use. But they have no tax advantages, and do nothing to protect your assets against lawsuits. Domestic trusts do not provide the same degree of protection and tax avoidance that international trusts do. This is primarily because your assets are still subject to the laws of your home country, which makes them vulnerable to judgments and taxes.

An international trust is a broad term for any kind of trust you established outside of your home country. In simplest terms, here is how it works: a resident of a high-tax area (you, the settlor) transfers ownership of the trust property to a resident of a low-tax area. This person or entity (such as a bank, a law firm or a trust company) becomes the trustee. The trust instrument will set out how the trustee should invest and deal with the trust property, when and to whom distributions should be made, and other powers the trustees will exercise at their discretion. The protector (typically you, a member of your family or a close friend) works closely with the trustee to help protect your interest. Transferring the trust property to the trustee gives you (as settlor) two economic advantages. First, because the legal ownership of the trust property becomes vested in the trustee, the property is no longer taxed as part of the settlor's estate. And second, if the trust is properly managed, it can earn and accumulate income and make tax-free distributions for the length of the trust period.

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ADVANTAGES OF AN INTERNATIONAL TRUST

International trusts can do everything domestic trusts do, but international trusts provide you with advantages that domestic trusts can't. You can establish an international trust to:
  • Achieve substantially stronger and more reliable protection from creditors.
  • Protect assets even if you are a trust beneficiary.
  • Create powerful tax-saving machinery for your heirs.
Some of the main features of an international trust are:
  • Severability - The validity of the trust, interpretation of its terms, and the administration of the trust property are each separately regarded aspects of the trust. Accordingly, in the document creating the trust, one can specify that the laws of other countries are to apply to the interpretation and administration of the trust.
  • No Time Restriction - Unlike trust laws in countries such as Canada, Britain and the United States, international trusts can exist in perpetuity. International trusts are not deemed to dispose of the trust property after any stipulated time period.
  • Non-application of Foreign Laws - Other than as may be expressly provided for, the laws of the jurisdiction of the individual creating (or setting) the trust have no application as to whether the disposition of property to the trust is valid or enforceable. In other words, the laws of the country in which you reside as a settlor have no jurisdiction over the trust whatsoever.
An international trust is a foundation for a fortress of financial safety stronger than family limited partnerships or any trust you can set up at your local bank. It lets your wealth "emigrate" while you stay home. When you transfer assets to the trust, you place them under the laws and courts of the country you choose. By doing this you remove those assets from the laws and courts of your home country. In this way, an international trust enhances your freedom as well as your safety.

In the right circumstances and used properly, an international trust gives you:

Asset Protection: Asset protection, along with tax avoidance, is a key benefit of a properly structured international trust. The assets you send to the trust "leave" the system that governs all your assets. An international trust also puts assets beyond the reach of potential creditors as well as government agencies. That is because the trust lets you "resign" as an owner of an asset but still benefit from it. It is your resignation that protects the asset; since you no longer own it, no one can force you to relinquish it. So no matter what happens in your home country, those assets properly structured will be in the trust when you need them. In fact, withdrawing money from the trust can be as simple as using a credit card. The trust can also send a check to pay for goods or services or even send you money as a long-term capital gain, etc.

Financial Privacy: If you establish an international trust in a tax haven, a "zone of privacy" will surround the trust. This means no one can get information from the trustee. You can extend this zone anywhere in the world, even into the U.S.

Income Tax Savings: If you select a trustee who will manage the trust with an eye to tax consequences, the trust can reduce your income tax liability.

Estate Planning Advantages: The safety and income tax advantages free you to make lifetime gifts to family members, and to make wealth-shifting transactions that chip away at your taxable estate. And you can put your international trust on the receiving end of those transactions.

Financial Planning Advantages for Your Heirs: Unlike property you leave in your will, property you leave in the trust need never be subject to estate tax. The trust itself (apart from the assets it contains) can be a powerful financial planning tool to benefit your heirs for generations. After your death, the trust automatically disconnects from the home country tax system. As a result, your beneficiaries will have no tax liability for earnings the trust accumulates, and no obligation to file tax returns or other reports on the trust's activities. And they can use it to protect their own assets and reduce their own tax bill.

It may be difficult at first to appreciate how simple it is to exploit the protective power of an international trust. If all you want from the trust is to protect your assets from potential creditors, you can have that protection now, with no special conditions or complex tax considerations. Assets you transfer (validly) to the trust "disappear" until you or another beneficiary needs them. They are invisible, gone! No one can seize those assets, and no one can make you bring them back onshore.

Having an international trust is similar to having your own international agency dedicated to the well being of and financial security for you and the people you care about. Remember, this protection can continue as long as you like, even past your lifetime.

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TYPES OF INTERNATIONAL TRUSTS

The two main types of international trusts that you can set up are the discretionary trust and the asset protection trust.

Discretionary Trusts

With a discretionary trust, no beneficiary has a fixed interest in the trust such as the right to receive a fixed share of its income or capital. Instead, the trustee, working with the protector (you), has wide discretion in dividing benefits among the beneficiaries. In other words, with the protector's advice, the trustee determines who gets what, and when, but gives preference to your own financial needs.

The general principle in tax haven jurisdictions is that if the trust is created (settled) by a non-resident settlor (you), solely for the benefit of non-residents, and it derives income from outside the jurisdiction, the trust will be free of all taxes and duties.

Usually the trust instrument will specifically exclude from the potential class of beneficiaries any residents of the jurisdiction in which the trust is administered. But under modern law, many tax agencies in jurisdictions that recognize a trust as a legal entity tend to look through the trust arrangement if any beneficiaries are entitled to the income of a trust (or to have it applied for their benefit), and tax them accordingly even if they were never actually paid any of the money.

For this reason, the modern practice is for the trust property to be settled on the trustees, who hold it to apply the income, the capital or both for the benefit of a class of beneficiaries in whatever proportion the trustees think is appropriate. This way, no one can then say that any one beneficiary is legally entitled to a share in the trust's income or capital because the trustees may decide to exclude that beneficiary in favor of the other members of the class.

Because you, as the settlor, divested yourself of legal ownership of the trust property, it's no longer part of your estate, and therefore not subject to inheritance taxes.

Apart from the favorable tax treatment of the trust, the following advantages of the international discretionary trust include:
  • The ease and speed with which a trust can be established.
  • The ability of a trust to form and own companies. A company that the trust wholly owns may be used to hold the trust property. This arrangement may have advantages in terms of administration, since such a company may be exempt from income tax. Because there is no requirement to file the trust instrument, the true beneficial ownership of the company can remain confidential.
  • No requirements, generally, to file trust accounts.
  • No requirement to disclose the settlor's identity.
  • The ability to create a trust where no beneficiaries are named at the outset (only in some jurisdictions).
  • The ability to appoint a counselor (also know as a guardian or protector) without whose consent, the trustees may not exercise certain powers. But it's important to treat this carefully, so that it is not left open to interpretation by home country tax authorities as your attempt, as the settlor, to keep some control over the trust property.
  • The common custom that the trust instrument be accompanied by the settlor's Letter (or memorandum) of Wishes. While not legally binding, the trustees can use it as a guide in deciding on distributions to beneficiaries. You can change or update the Letter whenever it needs to meet a change in your circumstances.
  • The common practice, due to the long-term nature of the trust, of including a provision for moving the trust to another jurisdiction in certain specified circumstances (such as a political change, the re-imposition of exchange controls or higher tax levels). You can use the discretionary trust not only as a way to divest yourself of certain assets, but if you work overseas, you can also accumulate savings offshore, since those assets will not be part of your taxable estate when you return to your country. And in conjunction with an international company, the discretionary trust serves international traders who want to accumulate profits internationally for the benefit of others.

Asset Protection Trusts

The asset protection trust is a newer form of trust instrument. If you have assets to protect from meddling courts, lawsuits, etc., the international trust laws can help you. Some small countries, including several tax havens, do not recognize court judgment of other countries. The judgment could relate to business, divorce, malpractice, negligence, inheritance, or even libel. These countries have now introduced laws, which reduce to fairly short periods, the time in which legal action must be taken, especially when transfers for fraudulent purposes are alleged. By the time your assets have been located it will, hopefully, be too late to start proceedings.

For example, malpractice damages awarded in the US courts are often in excess of the malpractice insurance coverage that professionals can afford (if they can even get the coverage level they need in the first place) in what is now a highly litigious society. Even with coverage, there is always the possibility that the insurer will refuse to pay; and certain risks may not be insurable. As a result, asset protection trusts are popular among healthcare providers, design engineers and other US professionals who practice without the benefit of limited liability.

NOTE: Your Prosper Trust is an Asset Protection Discretionary Irrevocable Trust.

Uses of an Asset Protection Trust

Malpractice, Negligence, Business Liability: While the law will not generally allow trusts to defeat or defraud current or known pending creditors, they can be effective against unknown future claimants. An asset protection trust may remove or reduce the anxiety of an engineer, doctor, or businessperson who otherwise would fear a potential malpractice claim. The first step toward protecting your assets is to set up a trust in a jurisdiction whose laws specify a suitably short period for legal proceedings. Although the trust is international, your assets may not physically leave your country of residence. Nevertheless, complicated laws make it very difficult for your opponent's lawyers to put their hands on them, even when a court has made a judgment. In fact, the typical settlement in such cases is often 15% of the original demand. (A doctor who was facing malpractice claims amounting to $7 million settled those cases for $18,000). Clearly, one key benefit of the asset protection trust is peace of mind knowing you're secure from potentially ruinous civil action.

Another common situation in which this type of trust can protect you is in business. As an owner or director, you need protection against business liability, product liability and even environmental or pollution claims. Perhaps you've had to give personal guarantees for business finance and personal loans or leases. Your personal assets need protection in case of default.

Divorce and Other Settlements: Americans and others also turn to asset protection trusts to protect themselves from huge unfair divorce settlements. The use of the trust in this instance allows assets to be disposed of based on the owner's wishes rather than any statutory obligation. In countries with forced-heirship laws and with the growth of stricter liability laws, these trusts are becoming increasingly popular outside the U.S. as well.

Other Uses: In addition, this trust can be used to:
  • Avoid exchange controls or seizure of assets (particularly moveable assets) by authorities.
  • Hold share in international companies.
  • Avoid or defer taxes.
  • Sidestep death duties (and probate); restrict an undeserving relative's legally mandated claims (as under English law) on your estate.
  • Set aside funds for your children's education.
Countries where this type of trust is established often have no treaties enabling foreign court orders to be enforced. Legal action may be initiated against you in the country where the trust is held, but lawyers there often require a bond from the person suing you, to ensure they receive the fee whether they win or not.

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TRANSFERRING ASSETS TO THE ASSET PROTECTION TRUST

To create a valid trust, you must actually transfer property to the trustee or start to accumulate assets in the trust. By participating in the Independent Referral Agent Plan you may accumulate assets in the trust. You may also want to transfer other assets or you may encumber assets thus eliminating or diminishing their value. Prosper International provides professional and individualized assistance for you concerning transferring or encumbering assets.

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THE TRUSTEE'S ROLE

Once your trust is established and assets are transferred into it or are accumulating in it, the trustee at his discretion manages them in your best interest and distributes assets and income to the trust's beneficiaries, to you and anyone else you name.

In principal, the trustee has the same opportunity to defer and avoid taxes for you as you do. But in practice, the trustee may have much greater success than you would for several reasons, one including his ability as an expert tax planner. This should be part of the trustee's business. The trustee knows where to research information and has the expertise to be creative in applying it for your benefit.

THE TRUSTEE HAS AN IMPORTANT ADVANTAGE: After your lifetime, your trust will no longer be a settlor trust so that eventually no one will have a tax liability for its income.

In addition, the trustee can help the beneficiaries not just by distributing money to them directly, but indirectly as well. For example, the trustee can have the trust purchase a home for a beneficiary to live in; hire a doctor or a lawyer for a beneficiary; or pay a beneficiary's bills. The trustee can also lend trust money to a beneficiary or invest it in a beneficiary's business. All of this is done at the trustee's discretion.

THE TRUSTEE'S DISCRETION: This discretionary authority is at the heart of the trust's power to protect. To the uninitiated, the trustee's extensive and "absolute" discretion might sound like a dangerous thing, like giving a stranger your money and the power to use it on your behalf and hoping for the best. But that isn't what "discretion" means.

The trustee's discretionary power doesn't allow it to act at its own pleasure or convenience, or for its own profit or other advantages. The trustee's discretion is only the authority to act in accordance with the purpose of the trust, i.e., for the welfare of the beneficiaries as outlined in the trust document. In actuality, the trustee's discretionary authority enhances the trust's power to protect your assets and reduce taxes for succeeding generations. Additional provisions in the trust document can reinforce that power. For example, the trust document can spell out additional rights and authority for the trustee, such as postponement. This gives the trustee the right to delay payments to a beneficiary in order to prevent the beneficiary's creditors from seizing the money. If the trustee knows your creditors are waiting at your mailbox for a check from the trust, the trustee can ensure that they have a long wait.

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THE PROTECTOR'S ROLE

The trustee's discretion keeps the trust safe, but the protector's power makes it safe to give the trustee much discretion. As protector, you (or the person you name as protector) can:
  • Consult with the trustee on any matter relating to the trust, including investment decisions and distributions to beneficiaries. As explained above, the trustee is authorized to rely on the information and advice you, as protector, give it.
  • Force the trustee to resign if you find his performance unsatisfactory, and replace him/her with another.
  • Appoint your own successor as protector (who in turn has the power to appoint his own successor).
To reinforce the protector's powers, the trust document should include carefully crafted provisions that protect your autonomy and insulate you as protector from pressure or coercion, especially from court orders. The trust document should spell out terms that authorize the protector to act only out of free will, so that any action the protector takes (or attempts to take) under duress would be void. As an example, this provision would prevent anyone from forcing you to appoint a new trustee, such as a bank in your home country that would follow a domestic court order to turn over trust assets to creditors, litigants or tax authorities.

Clearly, the trustee's discretionary power is not a license to act arbitrarily or out of a whim. On the contrary, the trustee is obligated to follow the protector's advice and direction. Since the trustee's business is to earn trustee fees, it ordinarily wants to avoid being replaced. So you can expect the trustee to weigh your advice carefully and give full consideration to your recommendations. In fact, following the advice you give is the trustee's easiest and safest path (provided, of course, that you don't suggest something unreasonable or something that would violate the trust). The trustee is also obligated to use its own discretion responsibly, and exercise that discretion when it would be unreasonable not to.

For the trustee, then, discretion is duty. And that duty is enforceable by law. For all of these reasons, and because the trustee is a professional company of many years' standing, the assets in the trust are usually quite safe.

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FOREIGN GRANTOR TRUSTS*

A Foreign Grantor Trust (FGT) is a trust established by a settlor in a foreign jurisdiction. For purposes of U.S. taxation, the settlor cannot be a U.S. citizen, resident or taxpayer. The FGT is created and administered under the laws of the foreign jurisdiction and the trustees are not located in the U.S. or its possessions. For purposes of U.S. taxation, the assets and profits of the FGT are treated as if owned by and taxed to the foreign settlor, and as such should not be subject to U.S. taxation, unless the assets are situated in the U.S. In the case where the assets are situated in the U.S., there may be tax consequences.

U.S. citizens or residents may transfer money directly to a FGT. There are income tax benefits to the FGT in that non-U.S. citizens and residents are taxed in the U.S. only on income derived from the U.S. that is fixed or determinable such as interest, dividends, rents, etc. Non-U.S. citizens are not taxed on capital gains unless the capital gains relates to conduct of a U.S. business or trade or relates to U.S. real property interest. There is no U.S. gift tax applied to gifts of intangible property by non-U.S. citizens or residents. Again, all the money paid into your international trust is of course paid tax-free; but to keep within the current legislation for both US and Canadian citizens, we must advise you to declare the existence of the trust on your annual Tax Return, unless you have a "Foreign Grantor".

A Foreign Grantor Trust can be established through The International Community for the cost of an additional $300 USD, plus a document amendment fee of $25 USD. These fees can be deducted directly from trusts or mailed in with a Letter of Wishes requesting a FGT. The trust documents will be reissued naming the foreign settlor, and a Power of Attorney will be provided to the member in order that the member may carry out activities in the name of the trust.

* Materials condensed from "Offshore Asset Protection & Tax Planning Strategies" by Alan R. Eber, LL.M. Prosper International arranges foreign settlor services. The member is responsible for and encouraged to seek the advice of tax planning professionals to determine his needs for this service.

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LETTER OF WISHES

In many jurisdictions, a settlor will normally provide the trustee with an informal and confidential Letter of Wishes (LOW), which will provide guidance as to how the trustee might exercise its discretion. The Letter of Wishes does not form part of the Trust Deed and can, therefore, be amended at any time.

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TRUST CLAUSES

SPENDTHRIFT CLAUSE: This obligates the trustee to disregard any instructions from beneficiaries to pay money due them to a third party. The clause is so named because it protects imprudent beneficiaries from squandering future benefits, and from being forced to transfer their rights to a creditor.

FLIGHT CLAUSE: This authorizes the trustee (and/or you as protector) to move the trust to another country, thereby protecting the trust against unforeseeable changes in the country where the trust is established. It also discourages a beneficiary's creditors from attacking the trust, as they would quickly realize that the trust could disappear to another haven instantaneously. (Of course, if the trust were moved, it would be administered by a new trustee and governed by the laws of its new country).

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THE TRUST AS A "WORKING PARTNER"

Whether discretionary or asset protection, an international trust works smoothly with other financial planning devices, and can even increase their effectiveness.

For example, if you have a:
  • Family Limited Partnership - a trust can be a limited partner or own a corporation that serves as a general partner. In the family business corporation, an international trust can protect it by owning some or all of the stock.
  • Living Trust - it can receive money from the international trust when you need it or send money to the international trust after your lifetime.
  • Will - that calls for property to be held in trust for your heirs, the trust will give them the greatest benefit.
  • Qualified Pension Plan - the trust can collect any portion of your benefits or the money from your IRA you don't spend in your lifetime and rescue the proceeds from income tax. You can leave the trust any assets you have help privately outside the U.S. without compromising that privacy.
Despite the advantages of an international protective trust, few investors actually have one, no matter how much they want to reduce their tax bill and avoid lawsuits. Until recently, there have just been too many obstacles.

Setting up the trust was complicated. It meant long conferences with lawyers, and studying lengthy, complex legal documents, AND it was expensive. Legal costs might be $10,000 to $20,000 or even more. And the trustee might charge a fee of $2,000 to $5,000 just to start the trust. Then it was expensive to operate. The annual trustee fee might be as high as 1 ˝% of trust assets, with a minimum annual fee of $3,000 or more.

Then there was the task of finding the right trustee. Many foreign trustees have little understanding of U.S. tax laws. They can protect and invest trust assets, but the Grantor must deal with the tax bill on his own.

The whole business was somewhat mysterious. Most of the books and articles about international trusts are either highly technical works intended for legal and accounting specialists or promotions for hazardous tax-avoidance schemes.

Now, we can offer an affordable, legal asset protection package for you and your family. Get educated so you can make informed decisions about your financial future.

NOTE: Your Prosper Trust is an Asset Protection Discretionary Irrevocable Trust.

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FREQUENTLY ASKED QUESTIONS (FAQ'S) ABOUT THE GRENADA ASSET PROTECTION DISCRETIONARY IRREVOCABLE TRUST

Q - WHAT IS A TRUST AND WHEN DID IT BEGIN?

A - It was originally developed in the English Courts in medieval times. In essence, a trust is an arrangement or an agreement whereby one person, a "Settlor," causes a second person, a "Trustee," to become the legal owner of property which he holds for the benefit of a third person, the "Beneficiary." The trust property may include anything which is capable of being transferred such as land, buildings, money, shares, bonds (including shares of international companies).


Q - WHY WOULD I WANT TO SET UP A TRUST IN AN INTERNATIONAL COUNTRY?

A - If you understand the idea of having a trust, having one in another country could be advantageous to your financial well-being. In the United States, there are so many unclear rules, statutes and codes that people believe are all laws. Everyone seems to believe in different ways when it comes to the laws of income tax reporting, citizenship and sovereignty, to name a few. This creates a host of problems for those who insist on living under Common Law as we do. Even though a Common Law Trust (Domestic Trust) is written to be used as the basis of business dealings and ownership of assets, you may end up dealing with certain uneducated people in the long run causing you much undue hardship and inconvenience. However, with an international trust, if a problem arises, you simply notify the interested parties that they're dealing with an international entity and that eliminates half of the problems they think exist. The other half of the problems will probably go away once they realize they'll have to hire a Grenadian attorney to pursue the matter any further.


 Q - WHY WOULD I WANT TO CHOOSE PROSPER TRUST OVER ANY OTHER TRUST?


A - The Prosper Trust agreement was based on the Belize Trusts Act, 1992 is EXTREMELY CLEAR on what is allowed and what is not. It makes writing an Offshore Trust much more practical. It leaves very little room for uncertainty. In 1992, Belize rewrote their laws to be more clear, concise and above all, more in tune to what people desire of an offshore entity. They have some of the most liberal laws I've seen for Offshore Trusts that give you so much more flexibility in what can be done. They are an English speaking country. They are actively seeking the offshore business, and rapidly becoming one of the best tax havens! Their confidentiality and privacy laws have been recently tested and the Belize courts have stood squarely behind them. The same applies to Grenada, the Country we now chose as the site of the Prosper Trust.

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Please read this important report:


Belize Court Makes Landmark Decision Protecting Privacy

Belize City, Friday, January 20, 1995

In a landmark decision asserting Belize's sovereignty as an offshore financial jurisdiction, the Supreme Court of Belize upheld the country's confidentiality laws by revoking a previous court order set in motion by the Securities and Exchange Commission of the United States requesting that confidential documents, belonging to Swiss Trade and Commerce Trust, Ltd., be handed over to them.

In the case, Securities and Exchange Commission (SEC) vs. Swiss Trade and Commerce Trust, Ltd., Banner Fund International, Lloyd Winburn et al, Supreme Court Justice Troadio Gonzalez ruled that documents held by the Belize court belonging to Swiss Trade and sought by the SEC, be immediately returned to Swiss Trade and Commerce Trust, Ltd.

Lawyers for Swiss Trade said that what this means for Belize is that this aspect of confidentiality, which is an important feature of the offshore industry, has been upheld. "What this means is that any party who seeks to destroy the concept of confidentiality would have to contend with our system, which has demonstrated its ability to uphold the relevant laws," Attorney Oscar Sabido said.

The decision is expected to have major international repercussions as the world financial community looks to Belize and its new offshore services industry. "It is certainly a shot in the arm of the offshore industry because of the fact that it is an industry which is just beginning," Sabido said. A country's ability to assert its sovereignty without the interference of outside forces is a major deciding factor in choosing a place to invest and protect personal property.
When asked for his comment related to the decision, Lloyd Winburn, Director of Swiss Trade & Commerce Trust, Ltd., in Belize, stated, "The Court's decision confirms our reasons for establishing our company in Belize originally. The Law related to confidentiality has been tested and found to be not lacking clarity and strength. Any other ruling by the Court would have sent a signal throughout the financial world that Belize could not be trusted to protect assets, provide confidentiality of transactions or otherwise serve the needs of those who seek to do business away "From their home jurisdiction."
The decision clearly shows that the SEC stepped out of bounds in trying to obtain confidential information, the matter having been urged on both sides by learned Queen's Council.

The case arose after the SEC [bureaucrats] appeared at Swiss Trade's office on March 3, 1994 with the expectation that they would be able to just take the files and leave the country with them, with no regard whatever to Belizean law. The quick reaction of company employees prevented any further disregard for the law on the part of the SEC [terrocrats] and their Belizean lawyer, Eamon Courtenay, who previously had been the lawyer for Swiss Trade.

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Q - ARE THERE ANY HIDDEN COSTS THAT I WILL INCUR IN SETTLING AN INTERNATIONAL TRUST?

A - No! The only additional cost is a nominal annual maintenance fee paid to the Trustee.


Q - WHAT IS MEANT BY AN "EXEMPT" TRUST?

A - It simply means that you are not taxed by the Situs Country (Grenada) on the income that the trust earns. The trust is not taxed on capital gains nor is any duty charged on any estate through the trust.


Q - WHAT DETERMINES AN "EXEMPT" TRUST?

A - The SETTLOR, PROTECTOR and BENEFICIARY may not be residents of the Situs Country (Grenada) for any portion of any calendar year in order to remain an exempt trust.


Q - HOW SAFE IS AN INTERNATIONAL TRUST?

A - The most important factor with any international trust is the country. You want to choose a country that is going to remain stable enough for you to maintain constant access to your dollar account. Grenada has a stable economy and was founded on English Common Law, which is one of the biggest advantages for this location. As a former British crown colony, they adopted the Common Law of England and thereby inherited what some believe to be the greatest and most distinctive achievement performed by Englishmen in the field of jurisprudence, which is the most outstanding creation of equity, the trust.


Q - WHO KEEPS COPIES OF THE TRUSTS THAT I CREATE?

A - The only copy is the one you have.


Q - HOW PRIVATE ARE THE RECORDS?

A - The records are extremely private and confidential and protected by the laws of Grenada. If anyone wants to pursue the trust with a lawsuit, they'd have to rely on information being made available in Grenada. They would have to track down the trustee of the trust, wherever they may be and pursue in the courts of Grenada and be subject to the laws of Grenada. In addition, the jurisdiction may be moved by the trustee and the protector to further complicate the issue.


Q - DO I NEED A TRUSTEE FROM GRENADA?

A - No, that is not necessary. Under the terms of this trust, a resident of Grenada is not necessary to perform the role of the trustee. The trustee can be a resident of any other country in the world.


Q - CAN I STILL USE MY OWN ASSOCIATES TO FILL THE KEY POSITIONS OF THE TRUST?

A - Yes, however, it is not recommended that you take that approach. The Prosper Trust trustee has been selected after years of due diligence and our company endorses his selection.


Q - DOES THE DEATH OF ANY PERSON AFFECT THE TAXES OF THE TRUST?

A - No! The trust is not liable for any estate, inheritance, succession or gift tax or duty by reason of any death in a calendar year.


Q - WHO IS THE TRUSTEE OF THE PROSPER TRUST THAT IS CREATED?

A - Prosper International recommends that you appoint Prosper International, Pierre Gauthier, MBA CFP as managing director. However, you may appoint anyone you wish.


Q - IS THERE A NEED FOR ME TO OBTAIN AN AGENT IN GRENADA?

A - No, Prosper International has already accomplished this.


Q - WHO HAS A VESTED INTEREST IN THE TRUST FUNDS?

A - Only the TRUSTEES, not individually but collectively, as the Board of Trustees.


Q - CAN THE TRUST BE IN EXISTENCE FOR MORE THAN 120 YEARS?

A - No. 120 years is the limit. It can be established for a shorter period of time but the maximum is 120 years, with no exceptions.


Q - HOW DO I GAIN CONTROL OF THE TRUST?

A - You should not be in control, as that is what makes a trust vulnerable. You should only use the "Letter of Wishes" to advise your trustee.


Q - IS THIS AN IRREVOCABLE OR REVOCABLE TRUST?

A - This is an IRREVOCABLE trust, meaning that the SETTLOR cannot change his mind and take control over his property again or withdraw the terms of the contractual agreement between him and the TRUSTEE.


Q - IS THIS TRUST THE SAME AS A PURE TRUST THAT WOULD BE CREATED IN THE U.S.?

A - No, this cannot be compared to the Pure Trust offered in the U.S. because Grenada Laws are written differently and they purposely address new issues that are of concern to modern businesspersons. Grenadian Law was completely revised for the specific purpose of attracting new Trust business that would satisfy those modern requests and situations.


Q - WHAT IS THE JURISDICTIONAL LAW OF THE TRUST?

A - The jurisdictional law of the Trust is the Trust Act of Grenada.


Q - WHAT DOES A "SPENDTHRIFT" OR "PROTECTIVE" TRUST MEAN?

A - In the event that the BENEFICIARY becomes insolvent or any part of his property becomes liable to seizure or sequestration for the benefit of his creditors, the Trust has the right to minimize the BENEFICIARY's interest in trust funds to a degree necessary to prevent such action from hindering the smooth operation of the trust. It is designed to protect the BENEFICIARY against his own incompetence or inability to properly handle money or property.


Q - HOW PROPRIETARY IS THIS INFORMATION IN THE TRUST DOCUMENT?

A - The information contained in the trust minutes is VERY CONFIDENTIAL AND PRIVATE! The TRUSTEE is NOT allowed to disclose this information to outsiders without just cause.

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Q - WHO IS ENTITLED TO SEE THE TRUST DOCUMENTS?

A - Since you have the only copy, you can decide whom to distribute it to.


Q - HOW IS THE "INTEREST" OF A BENEFICIARY CLASSIFIED AND DEALT WITH?

A - The "interest" is classified as "personal property" and can be sold, traded, charged, or otherwise dealt with in any manner whatsoever.


Q - WHO MAY BE THE SETTLOR?

A - Any person who has, under the law of Grenada, the capacity to own and transfer property may be the settlor of the trust. The settlor may also be the trustee, beneficiary, or protector, although this is not recommended.


Q - WHAT ARE THE SETTLOR'S DUTIES ONCE THE TRUST IS FORMED?

A - The settlor is the person who initially wants to settle the trust. He contracts with the trustee to accept his initial contribution of money into the trust. After that, the settlor steps out of the picture and is no longer has any active management duties or ties to the trust funds.


Q - DOES THE SETTLOR HAVE TO LIVE IN GRENADA?

A - No. The settlor cannot be a resident of Grenada to comply with the "exempt" ruling.


Q - WHO MAY BE THE TRUSTEE?

A - Any person, who has, under the law of Grenada, the capacity to own and transfer property, may be the trustee of the trust. The trustee may also be a corporate or artificial entity. The trustee may also be the settlor, beneficiary, or protector.


Q - WHAT ARE THE TRUSTEE'S DUTIES ONCE THE TRUST IS FORMED?

A - Once the trust is formed, the trustee has the daily duty of maintaining the minutes concerning any activity of the trust. If the trust decides to purchase or sell some of its assets, these things must be recorded in the Minutes of the Trust. If the trustee should so choose, he may decide to delegate some of the day-to-day operations of maintaining the trust to another person called the General Director or the General Trust Manager. If no other person is appointed, the trustee retains those duties.


Q - IS THE TRUSTEE LIABLE FOR ANY MISTAKES OR BAD JUDGMENTS OF THE TRUST FUNDS?

A - No, not really. As long as the trustee can show reasonable care in selecting his options and making decisions, he is not personally responsible to the trust for any shortcomings from those bad judgments.


Q - WHAT IS THE MINIMUM AND MAXIMUM NUMBER OF TRUSTEES ALLOWED?

A - At least one (1) and not more than four (4) trustees.


Q - WHO MAY BE THE BENEFICIARY?

A - A beneficiary may be identified by name or by reference to a relationship to some other person, whether living or not at the time of creation of the trust. A beneficiary may also be a certain "class" of individuals. A beneficiary may also be the settlor, trustee or protector, although this is not recommended.


Q - WHAT IS THE BENEFICIARY'S OBLIGATIONS OR RIGHTS ONCE THE TRUST IS FORMED?

A - Since the trust assets are not yet vested in the beneficiary, he has no voice in the management or the day-to-day operations of the trust. This is also because it is a "spendthrift" type of trust, which is designed to protect the beneficiary more than a normal type of trust. The beneficiary does, however, have "Interest Bearer Shares" that can be traded, put up as collateral, sold, or dealt with in any manner whatsoever. This does give the beneficiary some present benefit of being a beneficiary.


Q - CAN A BENEFICIARY BE REPLACED ONCE APPOINTED?

A - Yes. The trustee reserves the right to replace or appoint additional beneficiaries at will. Most international trusts have this stipulation that people are not aware of. The protector may also perform this function.


Q - ARE THERE ANY ADDITIONAL RIGHTS OR POWERS DUE A SHAREHOLDER?

A - The beneficiary may give to the trustee, a letter of wishes with regard to the exercise of any functions conferred on the trustee by the terms of the trust. But, you must remember the trustee does not have to respect those wishes and will not be accountable in any way for his failure or refusal to do so. Without the beneficiaries being vested of trust assets, they have no further obligations or powers until such time as the assets are distributed.


Q - WHO IS THE PROTECTOR?

A - AvantGuard Trust is the protector of the trust.


Q - WHAT IS THE FUNCTION OF THE PROTECTOR AFTER THE TRUST IS FORMED?

A - The protector's job is to watch over the trustee and make sure they perform their role as per the wishes of the settlor. The protector has the power to remove and/or appoint a new or additional trustee. The protector may also be the settlor, trustee or the beneficiary.


Q - CAN THE PROTECTOR FIRE A TRUSTEE FOR NO REASON?

A - Yes. The protector can replace a trustee if this is advisable.


Q - CAN ANY OF THE OFFICERS HOLD MORE THAN ONE POSITION IN THE TRUST STRUCTURE?

A - Yes, as noted above, all the positions: settlor, trustee, beneficiary, and protector can be held by one (1) person or entity.


Q - CAN AN OFFICER RECEIVE COMPENSATION FOR MORE THAN ONE POSITION?

A - Yes, the trust indenture allows for remuneration for a trust officer holding more than one position within the structure.


Q - BECAUSE CERTAIN TRUST OFFICERS ARE VESTED OF THE INTEREST OF THE TRUST ASSETS, DOES THAT MAKE THE TRUST ASSETS A PART OF THEIR INDIVIDUAL ESTATE?

A - No. Under no circumstances are the assets of the trust estate to be included in the estate of the trust officers, individually or separately.

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Q - IF A TRUSTEE BECOMES INSOLVENT OR HIS PROPERTY IS LIABLE TO RESTRAINT, SEIZURE OR SIMILAR ACTION, CAN THE CREDITORS ATTACH TRUST ASSETS?

A - Absolutely not! The trust is a distinct and separate entity, apart from the trustee's personal estate.


Q - CAN A MULTI-LAYERED STRUCTURE BE SET UP WITH A GRENADA TRUST?

A - Yes. There are numerous ways to establish a multi-layered structure. The easiest is setting up a second trust as the beneficiary of the first trust. You can then set up a third trust as the beneficiary of the second trust. You can have one umbrella trust having multiple subsidiaries off of that or have one of the trusts be an underlying umbrella by being the beneficiary of multiple brother-sister trusts. Everybody has his or her own preferences.


Q - CAN THE BENEFICIARIES FORCE A TRUST TO TERMINATE AND DISTRIBUTE THE FUNDS?

A - Normally they could, but since we wanted the trustee to remain in total control, we elected to write this as a "spendthrift/protective" trust that excludes the ability of the beneficiaries to take control with a majority vote.


Q - WE ALREADY ESTABLISHED THAT THE TRUSTEE DOES NOT HAVE TO HONOR A LETTER OF WISHES FROM THE BENEFICIARIES. DOES THE TRUSTEE HAVE TO HONOR A LETTER OF WISHES FROM THE SETTLOR?

A - No. The trustee has total control of the trust estate and does not have to report or justify to anyone, his actions, so long as he does not endanger his fiduciary relationship with the beneficiaries.


Q - CAN I GET A CREDIT CARD TO USE IN MY OWN COUNTRY TO DRAW UPON THAT TRUST ACCOUNT?

A - Yes, we have the ability to allow you to set up a secured credit card account whereby you can transfer funds from the trust to the account and draw upon it throughout the month.


Q - DOES THE TRUST NEED AN EIN OR A TIN TO OPEN THIS ACCOUNT IN ITS NAME?

A - No. There is no identifying information necessary.


Q - IS MY SOCIAL SECURITY NUMBER REQUIRED IN ANY WAY TO OPEN THAT ACCOUNT?

A - Not at all! Your personal social security number is never required on any paperwork whatsoever to accomplish this task.


Q - HOW SAFE ARE THE FUNDS IN THE BANK?

A - Grenada's economy is quite stable and we do not foresee any problems with their monetary system. We continue to oversee the activities of Grenada and if any unforeseen circumstances arise; we have the ability to move to another jurisdiction.


Q - DO I STILL MAINTAIN CONTROL OVER MY FUNDS?

A - Yes, and no! Your trustee has control. Your access is through a "Letter of Wishes."


Q - WHO HAS ACCESS TO THE TRUST FUNDS?

A - Only the trustee of that trust will have access to the funds.


Q - FOR WHAT REASON WOULD I WANT TO "REGISTER" MY TRUST?

A - There are no advantages and every disadvantage to your privacy for doing so.


Q - WHAT IS THE EASIEST WAY TO TRANSFER A HOUSE INTO THE TRUST?

A - The easiest way is to use something similar to a "Quit-Claim" deed. This relinquishes your ownership in the real property but does not remove your obligation to the "note" in which you promised to pay the entire balance. You may also encumber the property by the trust with a mortgage, thus rendering the property without value.


Q - WHAT IS THE EASIEST WAY TO TRANSFER AN AUTOMOBILE INTO THE NAME OF THE TRUST?

A - One of the easiest ways to avoid the minimum tax on the transfer of the title is to go down to the registration / tag office and pay the small fee to "add" a name to the title. Then, you wait about 30 days and go back down and pay the fee again to "remove" your name from the title, thus leaving only the trust name on it. Again, you can encumber the vehicle by the trust with a loan rendering the asset valueless (no equity).


Q - HOW DO I TRANSFER PERSONAL GOODS AND HOUSEHOLD FURNISHINGS?

A - Simply use a "Bill of Sale" form. It clearly states a value and date that the transfer was made. It is made a part of the trust documents and minutes, which become a part of the permanent record of the trust activities. Again, you can also encumber these assets with promissory notes from you to the trust rendering these assets valueless to anyone wishing to seek value in them.


Q - WHAT IS A FOREIGN GRANTOR TRUST AND WHY WOULD I WANT ONE?

A - Foreign Grantor Trusts (FGT) are trusts established by a settlor in a foreign jurisdiction. For purposes of US taxation and possibly other jurisdictions, the settlor cannot be a U.S. citizen, resident or taxpayer. The FGT is created and administered under the laws of the foreign jurisdiction and the trustees are not located in the US or its possessions. The foreign grantor is an attorney in Trinidad.


Q - WHEN CAN I IMPLEMENT A FOREIGN GRANTOR TRUST AND HOW MUCH DOES IT COST?

A - A Foreign Grantor Trust can be established to both new and existing trusts through Prosper International at any time for $300. The trust documents will be issued (or reissued) naming the foreign settlor, and a Power of Attorney will be provided to the member in order that the member may carry out activities in the name of the trust.


Q - AS FOR BUSINESS TACTICS AND STRATEGIES, HOW CAN THIS TRUST HELP ME?

A - A trustee can borrow funds in the name of the trust. The trustee and beneficiary can borrow from the trust. The trustee can designate third parties to hold funds in their name if necessary. The trustee can hire outside agents, etc., without previous permission. The trustee can use trust funds to buy anything he feels is necessary, including real property and the improvements thereon. The trustee can make interest-free loans to people including the beneficiary. The trustee can provide trust property (i.e. real property) rent-free to persons if necessary. The trustee does not have to honor "letter of wishes" from either the settlor or the beneficiary, but he may do so. The trustee may distribute trust funds to any one beneficiary as necessary. Anyone loaning or advancing funds to the trust is not obliged to see the application thereof.

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AN INTERNATIONAL BUSINESS CORPORATION (IBC)

If you're one of the many business people who are frustrated with government dictating how to run your business and constantly creating new laws and regulations, an International Company, or a "International Business Corporation" (an IBC) may be the right solution for you.

An IBC can help you:
  • Develop a secondary income sheltered and unencumbered.
  • Establish a trading account.
  • Open and control an international bank account.
  • Simply do business internationally.
Of course, most everyone is familiar with a corporation. The initial motivation for this form of business had nothing to do with taxes but more with avoiding debts. Business owners and individuals did not want personal liability of their business and therefore wanted to separate business debts from claims against their personal property. A corporation is a "legal person" insofar as liabilities are concerned. This legal person can assume its own debts and acquire its own assets.

Since economic growth required investment by many individuals, and since most people were reluctant to take part if it involved unlimited personal liability, the idea of incorporation became widely accepted. Instead of becoming a partner in the ownership of a business, one owned shares of stock. Stocks are certificates of partial ownership in a corporation. Again, the corporation is a legal person, which owns its own assets and has its own liabilities. Owning the stock of the corporation does not mean owning its assets or being responsible for the liabilities. The corporation has title to these. The stockholder only has title to his stock.

Incorporating internationally provides the same advantages as the domestic corporation but can also create certain opportunities for tax avoidance and tax deferral that the domestic corporation cannot. Corporate flat-rate taxes means that incorporation can be used to reduce personal income tax burdens by shifting personal sources of income to the new corporation. By incorporating in a tax haven that has no taxes, or very low corporate taxes, you can save substantially. An IBC created by a savvy investor can shift returns on investments from personal income, and thus save crippling home country personal income taxes. Many people set up an IBC simply to create a legal entity, not active in any real enterprise, which can operate bank accounts, make purchases and invest without having their personal name tied to it.

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USES OF AN IBC

IBC's are used outside of the place of incorporation for an endless variety of activities including trading, trade financing, holding assets, manufacturing and tax minimization. They are primarily used for holding investments and real estate. Equipment may be purchased and leased by an international corporation. They are also used for the ownership and registration of aircraft and vessels, the holding of patents, trademarks and copyrights, management and administration, and the collection of royalties and commissions (assets like these which are difficult or expensive to transfer can be held by a corporation allowing the owner to transfer the shares in the corporation rather than the asset itself). IBC's are also commonly used as an integral part of a trust structure explained below.

With your IBC, your assets and estate can be legally shielded form lawsuits, claims, overreaching creditors, disgruntled relatives, high taxes and police confiscation of property, also known as "civil asset forfeiture."

Some potential uses for an IBC:
  • Investment Holding Company - real estate, stocks, bonds, precious metals and mutual funds can all be held by an IBC allowing for management under one corporate name.
  • Holding Intellectual Property - royalties and licensing fees for patents, trademarks and copyrights may be held in a tax-free environment.
  • Trading Companies - an organization can trade outside its own country and, depending on the jurisdictions involved, can have taxes minimized or completely eliminated.
  • Consulting Services - setting up a consulting service in an international jurisdiction can increase your earning potential by minimizing taxes and operating expenses.
  • Sales/Re-Invoicing Company - an IBC may act as a middleman selling goods throughout the world and have the profits accumulate in a tax-free environment.
  • Advertising Company - an IBC acting as an advertising agency can retain the 15% ad agency commission in a tax-free environment.
  • Shipping - register your ship or boat abroad for minimum tax and liability. Operation costs are minimized when using personnel from developing countries.
  • Leasing company - capital equipment may be purchased and leased by an IBC, taking advantage of deductible tax write-offs on lease payments.
  • Open your own bank - brokerage and trading accounts.
  • Set Up Corporate Bank Accounts - and obtain international corporate credit cards, no matter what your current credit rating may be. Spend your money anywhere in the world employing your corporate or anonymous credit card and leave no personalized paper trails. Engage in maximum-privacy Internet banking and business. This means you can draw on your IBC bank deposits at any ATM machine in the world, with no transaction records kept in your home country.

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WHERE TO INCORPORATE?

More than 24 nations now have IBC laws. They guarantee total business and financial privacy, require no public corporate records, and allow easy purchase and transfer of stock shares, plus instant creation, dissolution or transfer of a corporate entity. Some international havens are civil law nations, such as Panama, but most administer the traditional English common law used in the UK, the British Commonwealth and the USA.

In Panama, for example, one of several nations with laws especially hospitable to business, 14,352 incorporations were filed in 1996, bringing the national total to over 320,000 companies. Hundreds of thousands of working IBC's exist around the world!

Nations that encourage IBC formation have liberal trust laws, vesting similar broad discretionary powers in trustees. The liberal, up-to-date laws governing IBC's incorporated in the British Virgin Islands are typical of many nations.

The BVI have low start-up incorporation and annual fees, no incorporation stamp taxes or duties, no personal liabilities, no residency requirements and no public disclosure or record officers, directors or shareholders; one-person companies and bearer shares are allowed; no annual audits or financial returns are required.

Minimum government control of legal activities occurs, giving business wide powers, allowing quick mergers and instant change of company domicile. You can obtain the benefits of an IBC instantaneously. Your corporation can be established the same day you phone or fax instructions from any place in the world.

Along with the BVI and Panama, other nations with IBC-favorable laws are the Cook Islands, Belize, Nevis and Grenada. The same considerations in choosing a favorable international trust provider is also true for the IBC provider and we have chosen Grenada to provide the safest, most secure and up to date products for our members.

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FORMING AN IBC

As the world becomes smaller, and fewer businesses are local or even strictly national, there is an increasing need for internationalization. We must think, plan and work with an eye toward expanding our horizons both at home and abroad. Using a corporate vehicle to create this kind of expansion is nothing new. What is new, and what must become second nature, is the idea of foreign or international corporations. No longer will a domestic corporation get the job done. Today's average businessperson is far more sophisticated than ten or fifteen years ago. Corporate structuring has become more complex than ever before, while the need for anonymity remains strong. Entrepreneurs must keep pace and be constantly on the lookout for new ways to profit.

One way is to have a clear understanding of the characteristics of international corporations and how they can be used advantageously. IBC's are often used for trading with or in countries where satisfactory local commercial or corporate law is deficient or absent. Joint ventures often use offshore corporations when the participants are from different countries and prefer to incorporate in a jurisdiction that is neutral to all of the parties.

IBC's can also be used to isolate or separate activities, assets, or profit centers for tax, accounting, or liability reasons. In some cases, an IBC is recognized as a citizen or national of the place of incorporation and can provide a trade advantage or help avoid a disadvantage. Most importantly, it can be used an integral part of a trust structure.

A Grenada IBC is a company incorporated in Grenada which does not carry on business with persons resident in Grenada; nor owns an interest in real property situated in Grenada other than by holding a lease of property for use as an office; nor does it carry on banking, trust, insurance or reinsurance business or provide a register office for companies. A board of directors manages an IBC and consists of at least one director not required to hold meetings with any specified frequency. Incorporating an IBC is a matter of reserving a name, submitting the necessary documents and fees to the Registry.

Every businessman, professional practitioner, entrepreneur and investor should know about and be using IBC's. The simple fact and reality is that properly structured international entities and transactions can give you benefits and advantages you never knew were possible. It can all be created very legally, and it is no longer necessary to be a multi-millionaire to use and take advantage of these structures.

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ADVANTAGES OF AN IBC
  • Confidentiality: Corporation established in a country that can not divulge information about the directors or the owners.
  • Asset protection: Put your car, home, and business assets in this corporation. You personally own nothing. The corporation owns it.
  • Confidential offshore banking account: Set up an offshore bank account in the Corporation's name. Use it to pay bills and buy assets for the Corporation, such as cars, boats, etc.

The attention-getting advantages of tax reductions, minimal regulations, flexibility in operations, international diversification, maximum confidentiality, and bulletproof asset protection all translate into greater net profits for you!

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FEATURES OF AN IBC
  • Complete privacy and confidentiality
  • Single shareholder/subscriber permitted
  • Shares may be held by corporation or trust
  • Single director allowed and may be corporation or trust
  • Non disclosure of Beneficial Owners
  • Bearer shares permitted
  • Low fees for set-up and renewal
  • No statutory accounting or auditing of records
  • No filing requirements
  • No exchange of information agreement with any other country
  • No minimum capital requirements
  • Exemption from taxes for 50 years
  • Meetings not required but if held may be outside country or by proxy
  • Exemption from exchange control regulations
  • Certificate of Incorporation issued and renewed each year

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RESTRICTIONS FOR IBC'S
  • May not carry on business with residents of the country in which IBC is formed
  • May not own real estate in the country of the IBC
  • May not carry on business as a bank or an insurance company, agent, or broker
  • May not provide a registered office for other companies

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HOW CAN AN IBC WORK FOR ME?

An IBC can own your business, corporation, partnership, residential or commercial property, investments or other assets. If you are the managing director, you make the day-to-day decisions concerning the operations of the IBC. As managing director, you will determine how much income to pay to each of the employees (primarily you!). A limited salary drawn by you should result in tax savings to you. The remaining funds earned by the/these IBC's can be held in the international account as profits, unaffected by taxes. In addition, the IBC can pay all of your expenses including living, traveling, etc.

Another example of how an IBC can help you: a product is purchased in another country by an American Broker who has an IBC in Grenada set up to retain the income received in selling the product to another company possibly in another country. The American Broker, through his IBC, contracts to buy the product. All of the paperwork is held by the IBC and the product is shipped directly to the end purchasing company. The IBC then invoices the end purchasing company with the funds going directly into the IBC.

Much more detailed information may be obtained by attending an IBC seminar or a personal counseling session with the IBC attorney.

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INTERNATIONAL TRUSTS AND IBC'S…TOGETHER

The International Business Corporation (IBC) when combined with the trust, can protect the trust by:
  1. Insulating it from potential liabilities.
  2. Allows the trust to more easily trade and do business through an operating company.
  3. Creates another layer of protection.
  4. Helps avoid U.S. income tax liability on most U.S. source income.
Together, your International Business Corporations (IBC's) and Trusts can protect you, your business and your family in four ways:
  1. Reduce the amount of taxes owed.
  2. Ensure that your wealth is passed on to heirs intact.
  3. Prevent seizure by the authorities including the courts acting on behalf of third parties.
  4. Protect you and your heirs from capital gains tax.
The International Community will help you to operate your business and/or personal financial affairs in complete confidentiality via a private and legal International Business Corporation and Trust. We strongly recommend the IBC owned by a Trust.

The IBC may be wholly owned by the trust or vice-versa. (The IBC may be the Settlor of the trust). This will depend entirely on your personal objectives and circumstances, which again will be discussed in detail in a seminar or personal professional counseling.

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CORPORATE BANK ACCOUNT

Anyone wishing to open a corporate bank account whether domestic or internationally in the name of the business, knows of those intrusive requirements. The signing officers must show two forms of ID, usually a passport and a driver's license, utility bill and references of suitability from an existing bank. In some cases, they even want to know where the money came from.

With many international banks, personal interviews are even required and the minimum opening balance is often $10,000 or more. Many tax havens only allow business bank accounts if the business entity was created in their jurisdiction, usually making you pay higher fees for resident IBC's and trusts. In addition to these requirements, authorities in some countries demand that you report all your cash transactions over a certain limit.

The International Community has set up a good working relationship with AvantGuard Bank and Trust and has eliminated most all of these requirements to facilitate corporate banking. There is no credit check or reporting requirements, no taxation and no requirement for resident incorporations/trusts. These accounts are fully electronic and can be managed from your own computer anywhere in the world. You also have access to them through the fax or by phone. They are multi-currency and can be opened in one business day. This bank has very strict banking secrecy laws, which protect the identity of the account holder(s). You only need a photo ID, street address for signatories and copies of the Articles of Incorporation.

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DO I NEED AN IBC?
  • IS YOUR CORPORATION SHELTERED?
  • DO YOU REALLY HAVE A "CORPORATE SHIELD"?
  • HOW SAFE ARE YOU FROM THE RAVAGES OF JUDGMENTS, BANKRUPTCIES, and THE IRS?
Did you ever read the fine print on the "signature card" your bank gets you to sign when you open an account? It reads, "The undersigned hereby agrees to abide by all the rules of the bank." Did you ever see those rules? What you have actually done is agree to abide by all the administrative rules of the Secretary of the Treasury (i.e. the government). You have in fact signed a contract with the government, voluntarily waived your right to privacy, and agreed to be accountable to the state. Do you want a partnership with the government?

While it may not be practical for most people to get out of the banking system altogether, through the use of the trust you can minimize this problem, or even eliminate it entirely by establishing an affordable International Business Corporation (IBC) with a private international bank account. The government then knows nothing of your banking business and has no way to find out.

Many people mistakenly believe that if they have a domestic corporation they are safe from judgments and creditor claims. Even if you have a corporation, your personal assets may be seized to satisfy an IRS judgment against your corporation. You could lose your home, automobile and all your personal possessions. Roughly two-thirds of the owners of U.S. corporations are sitting ducks for this sort of legal action. The sudden seizure of your assets could result in something as simple as failing to keep complete corporate records.

For example, someone brings a frivolous lawsuit against you and your corporation. Their attorney subpoenas your corporate records, or during a routine IRS audit, the auditor asks to see your corporate records. In both cases, your corporate records are not up-to-date or are incomplete. At that point it is too late to "fix them up" as many people try doing under such circumstances. You're in trouble.

Here is another example: The IRS pierces your corporate veil, denies tax benefits, and imposes a huge tax bill. You have no means to pay the bill. The IRS will file a "Notice of Tax Lien." This liens all your property, real and personal.

If you try to borrow money to pay the bill, you will find your credit rating has evaporated overnight because of the tax lien. Your bank account is attached regardless of how many checks you have outstanding, which causes another problem. Next, they levy a lien against your outstanding investments. Bankruptcy does not stop IRS as IRS has precedence over bankruptcy. Your salary and your spouse's salary are garnished. They can obtain a "Writ of Entry" and seize your safety deposit box. The IRA will eventually grab your IRA or other retirement plans and the cash surrender value of your life insurance.

And it continues. Without notice of foreclosure, your real property and liquid personal property could be sold with no minimum bid. If that doesn't pay the bill, IRS will attach your pension. If you are clever enough to die, they will come after your estate.

As with bankruptcy, all asset transfers to a trust and legal or beneficial interest in a trust must be disclosed to the IRS when it attempts to enforce collection. However, even if they know about it, they cannot seize assets, nor can they force you to remove assets in an International Trust under any circumstances. Remember that you no longer own the assets. The Trustee owns the assets and will not allow them to be seized under any circumstances.

Do you need an IBC? Future reports and educational seminars will provide complete education and extensive information on the Trusts and the International Business Corporations which again will provide you with the ability to make educated decisions about your financial future.

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FREQUENTLY ASKED QUESTIONS AND ANSWERS REGARDING IBC'S

Q - WHAT CAN'T AN IBC DO?

A - An IBC may not act as a Trust Company, Bank or Insurance Company. It may not do business (other than banking and related services) in Grenada. It may not own real estate in Grenada and cannot carry on any activity prohibited by the laws of Grenada. It may not act as the registered agent for other IBC's.


Q - DO I HAVE TO TRAVEL ABORAD TO INVEST INTERNATIONALLY?

A - No. International investing does not mean that you have to live abroad, or even travel abroad. International investing can be done from your own home through qualified professionals who will function on your behalf with reputable international banks and professional firms. Investments within your country of residence can be purchase on your behalf from an international location.


Q - WHAT ARE BEARER SHARES?

A - Bearer share certificates do not indicate the name of the owner. The certificate is endorsed in blank such that the person having physical possession of the document is the owner. Bearer shares facilitate the transfer of assets because transfer of ownership is accomplished simply by the transfer of the certificate.


Q - WHAT ARE REGISTERED SHARES?

A - Registered share certificates indicate the name of the owner on the document. The name of the shareholder is also recorded in the internal corporate records of the company. Although the registered owner is recorded in the corporation's internal records, no public registry of shareholders is maintained. The share registry is an internal corporate document available only to directors, officers and shareholders, under conditions specified in the jurisdiction's corporate statue.


Q - WHAT IS A REGISTERED AGENT?

A - A Registered Agent is required to ensure that the corporation has an assigned representative at a known address to receive all service of process (legal notices) on its behalf. The Registered Agent forwards these documents to the address of record of the corporation. Every corporation must have a legally registered agent. This service is provided and is included in your corporate structure costs.


Q - DOES PROSPER INTERNATIONL PROVIDE NOMINEE DIRECTORS?

A - If you wish, nominee directors are provided. An undated letter of resignation is included. Nominee Directors are merely nominated by you and do not have the corporate ability or authority to undertake any acts on behalf of the corporate structure.

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Q - WHAT MAINTNENACE REQUIREMENTS ARE THERE FOR AN IBC?

A - All jurisdictions have at least two requirements:

  1. Maintaining a registered agent or office; and
  2. Paying an annual registration or franchise fee.
Prosper International provides a registered agent and office for your IBC.


Q - ARE THERE OPERATING FEES FOR THE IBC?

A - Once your company is established, you will always have some additional annual charges to maintain it. Just as domestic corporations do. Every international jurisdiction has an annual franchise fee or tax and there may be other fees required by the provider. Beyond these fees, there are no other mandatory fees or costs to maintain the corporation.


Q - CAN I PRESERVE PRIVACY WITH THE IBC?

A - Definitely. If you own nothing, there is nothing to take from you. A wise goal in life is to own little, but control everything, and an IBC can help achieve this. The IBC can hold a mortgage on your home, for example, and your personal property such as a car or RV. You could even give the IBC a "blanket mortgage" on everything you own. This can insulate your assets from predatory litigation. If you have sensitive transactions, be sure to handle them through the IBC.


Q - CAN I DISSOLVE THE IBC?

A - Yes, just about as easily as you created it. You can voluntarily dissolve it by following the applicable statues related to dissolution of corporations in Grenada. You will need to complete and file the appropriate forms.


Q - WHAT HAPPENS TO THE IBC AFTER I DIE?

A - When you die, your international company shares become part of your estate. There are only two legal, straightforward ways under which the shares in your international corporation can pass after your death: by will or by trust. Seek professional advice to learn how to best address this circumstance.


Q - HOW AM I ABLE TO ACESS/SPEND THE FUNDS IN THE INTERNATIONAL ACCOUNT?

A - There are several ways to repatriate funds for use in Canada and the US. If you need petty case for spending, etc., Prosper International offers the Freedom Card, which is a secured credit card issued from Mastercard and can be used at stores and ATM's around the world. If you need to buy an expensive item such as a car, boat, airplane, pay bills such as credit cards, house payments, etc., Prosper International will send a check on your behalf for a $5.00 fee. Prosper International can also wire funds or send bank checks in conjunction with a loan agreement or promissory note from your IBC. There are many different ways, and we will assist in helping you decide on the best possible solution for your personal situation.


Q - WHY IS IT GOOD TO COMBINE THE TRUST AND THE IBC?

A - You decide to set up an IBC to protect your personal assets from business creditors. But, the corporation's stock is a valuable asset that a personal creditor could take to satisfy a judgment. Therefore, the stock of your corporation should be placed within the trust to protect the business's assets from your personal creditors.

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