These factors, among others, will assist in determining the most appropriate trust structure, or alternative investment vehicle, which is suited to an individual in the context of their specific estate planning needs. Can you explain the benefits and potential drawbacks of incorporating offshore trusts into estate planning for Irish residents, particularly regarding asset protection? Benefits A primary driver and advantage of implementing an offshore trust structure, is that they can help to defer and / or minimise exposure to Irish tax, such as CAT. In many offshore jurisdictions there is often specific legislation which is advantageous from an asset protection perspective. They can also be an effective investment vehicle for wealth preservation on a dynastic basis for high net worth individuals, in the same way as an Irish tax resident trust. Drawbacks Despite the potential tax benefits referenced above, Irish tax legislation contains targeted anti-avoidance provisions that can attribute the income and capital gains of offshore structures to an Irish resident settlor, or an Irish resident beneficiary in receipt of a benefit. Other anti-avoidance provisions restrict the ability to shelter income or capital gains with the offset of losses. The application of these rules therefore requires careful scrutiny on a case by case basis, in order to determine if they may apply. WWW.LAWYER-MONTHLY.COM 57 charge does not apply to fixed interest trusts, so this should also be considered when weighing up the most appropriate trust structure be utilized in Ireland to achieve specific estate planning goals. What key factors should individuals in Ireland consider when choosing the right trust structure for their estate planning needs? Important factors include the ages and circumstances of the beneficiaries i.e. are they minors, do they require funds to be available for maintenance, education and / or other specific needs, do they have capacity to manage their own financial affairs, do they have the financial maturity to manage substantial assets? Depending on the outcome of those questions, the trust may be appropriately structured in relation to the passing of income and/ or capital at different times / events. Tax is a relevant consideration not only in the context of how the trustees are going to be taxed but also the tax outcome for the beneficiaries which may vary significantly depending on their tax residence profile. For example, a trust with exclusively Irish resident beneficiaries, will have different consequences than one where there is a beneficiary living abroad where the trust is considered non-Irish resident from that jurisdiction’s perspective. The relevant considerations are as much practical as they are legal and tax-related, in this context. Another important practical consideration is how much the individual(s) establishing the trust are willing to pass into the trust structure, given they will effectively be relinquishing direct ownership and control of the assets passing into the trust. The individuals should consider how much value they want to retain in their personal free estate, for the purposes of maintaining their own lifestyle and upkeep, especially if approaching retirement, for example. Family limited partnerships allow families to pass assets to a structure whereby the general partners (typically parents) retain a degree of control over the partnership assets... and where Wills are suitably structured, this control can continue after the death of the surviving general partner.
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