MOST OFFSHORE TRUSTS AREN'T OUT TO EVADE TAXES
There are, admittedly, far too many overseas funds managers and small banks whose operations are ambiguous about encouraging their clients to comply with the U.S. Income Tax code (''Tax-haven whiz or rogue banker?'' Finance, June 1). As the Internal Revenue Service is well aware, thousands of settlers and beneficiaries of offshore trusts have not reported their existence or income on their 1040s and have found little pressure from offshore trustees to do so.
That was the primary impetus for tightening the foreign trust rules in the Small Business Job Protection Act of 1996, which now requires virtually all offshore trusts to file annual reports and appoint U.S. agents with authority to act in connection with tax exams. Today, the bulk of the $2 trillion of offshore trusts in overseas jurisdictions protect assets from fraudulent creditors, adverse matrimonial settlements, forced heirship, and harassment and unwarranted malpractice suits thrust upon medical and legal professionals. Tax evasion is not and never should be a motive behind an asset-protection trust.
Walter H. Diamond
Updated June 11, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.