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Estate planning - offshore trust

Estate planning - offshore trust

Old Jun 16th 2023, 10:11 am
  #1  
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Default Estate planning - offshore trust

Hello,

I am a EU citizen living in the Philippines, not married, no kids, living with my long time FiIlipina girlfriend. I work rotations in Saudi Arabia on gas drilling rigs. I am approaching my target retirement age and my retirement plan is to live from the dividends of my investments without ever touching the capital, which is all invested in Irish-domiciled dividend yielding ETFs via my international broker. As a foreigner living in the Philippines, I enjoy my salary and dividends free of tax since they are foreign-source income.

While I am happy with my current situation, I have started looking into estate planning. Establishing a will in the Philippines and having my heirs go through probate is pretty much out of the question. First, probate court costs 2% of the estate. Second, it would take years. Yes it is possible to go through probate while I am living, but then if my circumstances (and my heirs) change, I would have to do it all over again. Besides, a will would give complete control of the assets to my Filipina girlfriend who has no clue about investing.

Therefore I have been looking into other solutions such as setting up an offshore trust and/or offshore holding company. The purpose would be mainly efficient estate planning, with hopefully tax efficiency and asset protection as side effects. The inheritance tax is 6% in the Philippines, so that is reasonable, but if there is a legal way to dodge it, so much the better. The goal would be for the capital to remain invested forever as it is (or in equivalent instruments should the current ones disappear), and for my heirs and the heirs of my heirs to receive the dividend distributions only forever after.

So my question is: has anyone on this forum done this or something similar? Does anyone know an offshore trust lawyer / firm who doesn't charge an arm and a leg to set this up and maintain it? I am well-off but not rich. If this was going to cost $10k per year to maintain, that would be too much...

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Old Jun 16th 2023, 7:14 pm
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Default Re: Estate planning - offshore trust

the inheritance tax in the philippines only applies to assets in the philippines as you are a foreigner.

which ever country you are domiciled in will probably take the IHT . Suggest you approach a stock broker from there and ask the question .
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Old Jun 16th 2023, 7:48 pm
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Default Re: Estate planning - offshore trust

Originally Posted by mikemike
the inheritance tax in the philippines only applies to assets in the philippines as you are a foreigner.
"The citizenship of the deceased determines which country's inheritance law applies to his estate. Thus, if he/she is a citizen of the United States or Japan, the distribution of his estate in the Philippines will be according to the laws of his home state. It is in the absence of proof of the foreign law that Philippine laws on inheritance will apply."

However, the law of my country of citizenship states that I can choose via a will which inheritance law should apply: the one of my country of citizenship, or the one of my country of residence.

In this case I would choose Philippines law because the inheritance tax is much less than the one of my country of citizenship.
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Old Jun 17th 2023, 9:23 am
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Default Re: Estate planning - offshore trust

Maybe one way for the gf would be for you to open a bank account in both names but withdrawals can be on one or other name ... fill it with as much as money as you think she would need in the event of your untimely demise and not tell her.
But do tell her where the envelope is with the piece of paper of account details in the event of untimely death etc.....Sadly there are many expats who despite having wealth take no steps to take care of their gf and when the bf leaves Earth they literally have no money and no ideas where the money of the bf is or what to do about claiming any of it.
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Old Jun 17th 2023, 9:44 am
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Default Re: Estate planning - offshore trust

Originally Posted by freebie
Maybe one way for the gf would be for you to open a bank account in both names but withdrawals can be on one or other name ... fill it with as much as money as you think she would need in the event of your untimely demise and not tell her.
But do tell her where the envelope is with the piece of paper of account details in the event of untimely death etc.....Sadly there are many expats who despite having wealth take no steps to take care of their gf and when the bf leaves Earth they literally have no money and no ideas where the money of the bf is or what to do about claiming any of it.
Yes this is exactly what I want to avoid. Filling a bank account for her immediate needs after my death is good, but not sufficient for comprehensive estate planning. The more I look into it, the more establishing a will in the Philippines and/or my country of origin is simply not a good solution. Probate takes years and is very costly, and even after probate is granted, you still have top prove that the will is in accordance with the law of your country of origin. Proving another country's law in a Philippines court is a daunting process. And even then, she would inherit an investment account that she has no idea how to manage.

Why I am looking at setting up a trust.
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Old Jun 17th 2023, 12:28 pm
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Default Re: Estate planning - offshore trust

And shes going to know what to do with said Trust. ? or you will rely on a Trust adviser to tell her to what shes entitled. Dont let a Philippines lawyer anywhere near THAT.


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Old Jun 17th 2023, 12:38 pm
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Default Re: Estate planning - offshore trust

Originally Posted by freebie
And shes going to know what to do with said Trust. ? or you will rely on a Trust adviser to tell her to what shes entitled. Dont let a Philippines lawyer anywhere near THAT.
She doesn't need to know much. I would arrange with the trustee that dividends be sent to her Ph account every three months, and set up the trust so that she can in turn nominate her own heirs who will then receive the income when she dies and so on. And I will give instructions to the trustee/protector that the capital is to remain invested for perpetuity in the same instruments they are invested now (or equivalent should the current ETFs I am using disappear).

No definitely not doing that with a Ph lawyer.
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