Asset Protection Through Isle of Man Companies and Trusts
Owning a business can be fraught with pitfalls and risks of third party claims and law suits and the goal of a comprehensive asset-protection plan is to prevent or significantly reduce risk by insulating your business and personal assets from the claims of third parties and/or creditors.
A business owner must therefore consider the most appropriate structure through which to own a business or to hold business assets (including fixed or indeed intellectual property) where flexibility and protection from business risks as well as protection for the owner’s personal assets are key factors. This must be done before a law suit or claim arises so that it provides the desired asset protection whilst acting as a deterrent to potential claimants, right at the outset.
It is universally accepted that companies and trusts generally provide the greatest asset protection.
A company is a separate legal entity or ‘person’ that provides limited liability for shareholders. By using the company, the personal assets of the business owner are not at risk in the event that the business is sued by third parties, except for where the business is trading as insolvent. In corporate structuring, the assets of the business are often held in a separate entity to the operating/trading company and this allows an even greater degree of protection from third party claimants and/or trade creditors.
A Trust structure provides asset protection as there is a separation of the business assets from the individual. Although a Trust is not a separate legal entity, the business will be held in the name of the Trustee (which would usually be a company). Here the Trustee does not actually own the business as it is merely held in trust for the benefit of the beneficiaries. This creates a legal separation of the business from the individual.
Elizabeth Grayton LL.B (Hons), Advocate – Managing Director
Elizabeth qualified as a Manx Advocate and specialised in Company, Commercial, Trust, Employment and stock market listing work. She has provided legal advice and assistance in respect of product development, compliance, due diligence and regulatory matters to fiduciary providers, insurers, other lawyers, accountants and their clients both here on the Isle of Man and Worldwide. Elizabeth has provided day to day client support and advice on company and trust matters and was Managing Director of a regulated Insurance Company based on the Isle of Man. As well as her high level of technical legal expertise, she has a proven management track record in respect of both large and small businesses, marketing, sales and product development.
Beverley Martin, TEP, MInstLM – Director
Beverley started her corporate and trust service provider career as a Junior Administrator when she first moved to the Isle of Man and her career advanced over a period of 13 years to Senior Manager. She was first approved by the FSC as Key Staff in October 2004 and as Deputy MLRO in November 2009. She has gained a wide-ranging knowledge of company and trust structures through experience and has managed a varied portfolio of company and trusts structures in various jurisdictions, mainly the Isle of Man and provided client company Directorships. She has also provided operational and compliance support to a team of administrators and a corporate and trust service provider.
Jon Allen ACA, Chartered Accountant – Non-Executive Director
Jon Allen is a Chartered Accountant. Jon is a current Commissioner of the Isle of Man Gambling Commission, prior to which, he was Managing Director of Domicilium (an Isle of Man internet service provider). Jon has active roles with the Chamber of Commerce and is a member of the Finance Committee and ICT and e-Business Committee.
Matthew Bruce, MICA, Assoc CIPD – Compliance Office & MLRO
Matthew has been employed within the islands financial services industry for over 10 years, working for private banks and trust & corporate service providers that provide high end corporate and trustee management services to a diverse portfolio of clients. Prior to joining Sanctuary Trust Ltd he worked in the compliance department for one of the largest trust and corporate service providers on the Isle of Man where he assisted with providing a compliance service to support the company’s business areas in their duty to comply with relevant AML legislation, regulations and internal policies and guidance.
Emily Garrett, Accountant – Chief Financial Officer
Emily has over 4 years’ experience in a CSP environment and 3 years’ experience as manager of a professional services company, specialising in both personal and corporate tax matters. Her experience includes completing tax returns for individuals and the submission of accounts, corporation tax and VAT returns, both for internal companies & external client companies. She was also responsible for the management of cash flow and reported directly to the Board of Directors with monthly management reports and accounts. During her time with the professional services company, she made many improvements to operational processes, ensuring efficiency and accuracy and headed the implementation of new products and services.
Asset Protection Trust Case Study
A client inherited a property and decided they wanted to protect the family home for future generations.
Having first sought independent tax advice and given their concerns as to protecting this valuable asset, they approached Sanctuary Trust Limited after researching asset protection structures.
Sanctuary Trust Limited were able to create a bespoke asset protection structure involving an Isle of Man (IOM) asset holding company and IOM discretionary trust.
The IOM company acquired the legal title to the property. The client then settled the shares of the company into an IOM discretionary trust.
The Trustees of the IOM Discretionary Trust entered into an agreement with the family members to reside in the property, in accordance with the tax advice received.
The details of this structure and its operation are provided for information purposes only. You should not place reliance on the efficacy of this structure in relation to your own circumstances as the type of structure which may be adopted may be different in your case. The decision as to how to structure your affairs, depends upon your personal situation and we recommend that you obtain both independent tax and legal advice.
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Advantages of Using Sanctuary Trust
I would like to thank Sanctuary Trust for their professionalism and friendly customer care they have helped me establish a trading company with a bank account and I look forward to many years doing business with them.
I have used the services of Sanctuary Trust for over a year now. During that time I have had occasion to consult with them on a number of complex transactions, which has involved them conducting extensive due diligence on potential customers, reviewing contracts etc. I have always been pleased with their pragmatic attitude and professionalism and would have no hesitation in recommending their services.
The advantages to using Sanctuary in the Isle of Man are plenty fold and include, inter alia, the following:
Sanctuary is licensed by the Isle of Man Financial Services Authority (‘FSA’) and, as such, is subject to intense vetting, scrutiny and oversight by the FSC.
Sanctuary provides a professional service performed by professionally qualified individuals.
Using a corporate and trust service provide to administer the company instead of a law firm means that the client is billed at the lower hourly rate.
Unlike law most firms, Sanctuary is specifically licensed to provide professional trustee services to clients.
Sanctuary trust will act as directors on the asset holding or trading companies, thereby taking care of the day to day administration of the company, drafting of accounts and statutory filings.
Sanctuary has existing banking relationships on the Isle of Man and this can streamline the bank account opening procedure for corporate entities.
The Isle of Man, unlike the UK, maintains confidentiality of the beneficial owner’s identity, provided that the appropriate holding structures are put in place.
Holding intellectual property in an offshore company provides you with a gateway in which to license/trade the intellectual property in future and thereby allows you the potential tax benefits that come with utilising offshore royalty routing structures.
Holding intellectual property in an offshore company allows client an easy method of transfer in the event of a sale by way of transfer of shares in the company itself.
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