Posts Tagged ‘Indemnity’
Once an International Business Corporation is formed, it requires a fool proof plan to protect its wealth and properties. This wealth may be in the form of cash, marketable securities and liquid assets. For protection, these assets can ideally be transferred to a Trust that is formed after consulting a law firm that is well versed in local law. In legal terms, ‘A trust is the right, enforceable solely in equity to the beneficial enjoyment of which another holds the legal title’.
It is now customary to form an Asset Protection Trust in a foreign jurisdiction which amounts to infinite protection of the properties of the offshore enterprise. Once the assets are assigned to a trust, creditors cannot retrieve them directly from the trust simply because that which is not in the name of the debtor cannot be retrieved from him.
Such an offshore trust is called an FAPT [Foreign Asset Protection Trust]. By virtue of being formed in an offshore jurisdiction it enjoys legitimate immunity from specific law procedures and is designed to ward off unnecessary and wealth depleting interference from the original area of business [unlike the offshore haven]. Even the law courts in the offshore jurisdictions are inclined to protect the Corporation in its haven, or else the raison d’etre of an offshore unit is lost.
Thus, indemnity from being forced to pay off creditors from the quantum of the Offshore Corporation’s wealth has made off shore Trusts a sure shot method of Property Protection and most tax havens are in the running to provide more and more debtor friendly regulations with a view to attracting more and more companies to avail of the haven provided by their respective jurisdictions.