"Are there any tax advantages in offshore structures if the beneficiary is a non-US..."
- Details
- Category: International Planning Q&A
- Published on Tuesday, 15 November 2011 10:00
- Written by Terry Coxon
Question from a US-based IM Member:
Q: "Are there any tax advantages in offshore structures if the beneficiary is a non-US charitable organization? Say a foundation trust."
A (by Terry Coxon): I assume that you are a U.S. taxpayer.
If you establish a foreign trust that has no U.S. beneficiaries, the trust can invest whatever assets you've given it without any income tax consequences to you. The trust can earn interest, dividends and gains on its investments without adding a dime to your personal income tax bill. If the foreign trust is exclusively for charitable beneficiaries, there will be no gift tax on your contributions to it. However, unlike contributions to a qualified U.S. non-profit organization, your contributions to the trust will not be income-tax-deductible.
Whether or not a foreign trust is the best vehicle for your charitable purpose depends on the size of the gift you are contemplating and on how soon you want the gift to reach the hands of the charity and also on what else is going on in your financial life. It is possible to establish a foundation in the U.S. that would be authorized to support non-U.S. charities, and you could receive an income-tax deduction for your contributions to the U.S. foundation. You may achieve further tax-planning advantages by using a charitable remainder trust in connection with the U.S. foundation, especially if you plan to give away assets that are highly appreciated. Needless to say, the tax advantages would come with the disadvantages of greater complexity and higher legal costs.
About Terry Coxon: Terry Coxon is the president of Passport Financial, Inc., a publishing company specializing in international financial planning, and a senior editor for Casey Research. Terry is the author of Keep What You Earn, Using Warrants and the co-author (with Harry Browne) of Inflation-Proofing Your Investments. He edited Harry Browne’s Special Reports for its 23 years of publication and all of Harry Browne’s investment books since 1974.
PLEASE NOTE: The information contained within this article is based on the best research we could find as of the date of publication. However, the world changes fast and information can become out of date relatively quickly. So, two points... First, before undertaking any action described in this material, please conduct your own due diligence and verify all facts. Second, if you happen to spot an out of date fact or figure (or even suspect something is out of date or false), simply get in touch with us and we'll look into it. International Man is a network made up of some very smart people - tax specialists, accountants, lawyers, analysts and many other talented individuals. As a group, we can create and maintain a very accurate and highly actionable resource for internationalization.
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