An offshore trust is a typical trust set up under the laws of an offshore jurisdiction. Here also a grantor transfers properties on the trustees to hold these for the benefit of the designated beneficiaries.
Two civil law jurisdictions in the European Union, Switzerland and Liechtenstein have borrowed the trust concept from common law jurisdictions and have passed laws recognizing trust entity.
Many offshore jurisdictions provide tax and other incentives to encourage offshore trusts on their soil. They also permit the setting up of offshore trust for non charitable purpose as well.
The rule against perpetuities, which restricts the time for disposal of all the trust properties to the beneficiaries, has been relaxed in many of the jurisdictions. These allow the grantor or settler to provide for lengthy periods for appropriation of the trust assets.
Some jurisdictions have provisions for offshore asset protection trusts, which make it difficult for a creditor to recover his dues from such trust properties, by prescribing extremely short time limits for commencement of legal action for realization. However, mostly the grantor’s domestic state has bankruptcy or divorce laws in place that invalidate transfer of assets to offshore trusts designed to defeat creditors.
| 
