Benefits and Formation of an International Business Trust
or Offshore Business Trust
      Dating back in origin to the early Eighteenth Century England, a business trust is a business organization or entity created and formed in a written trust contract (agreement) that sets out the purposes, terms, and conditions of the trust. The business trust is a legal entity and an artificial individual, with rights almost equal to a natural person (a human being), able to own property and conduct business like a natural person. 

       An international business trust or offshore business trust is a business trust or Massachusetts business trust that is organized and domiciled in an asset haven or tax haven such as Belize, Vanuatu, or the Seychelles, but the international business trust may be managed from anywhere in the world, and the business trust can serve and service customers and clients anywhere in the world. The offshore business trust is a specific type of the offshore trust.

        An international business trust or offshore business trust is ideal for operating an international business in a private and confidential manner and for doing profitable international trading of both goods and services with businesses and other customers located inside or outside the United States, Canada, the Caribbean, Central America, South America, Asia, Australia, New Zealand, Africa, the Middle East, and Europe

        An international business trust or offshore trust is created in an asset haven or tax haven and it is funded by one or more persons, known as the creators or transferors, who transfer the legal title of property, capital, and/or a business to the trustee or trustees of the international business trust, with power vested in the trustee or trustees to manage and control the property, capital, and/or business and to pay the profits of the enterprise to the creators/transferors of the trust and/or their heirs, assigns, and successors.

        The international business trust, in essence, is invested capital or a business vested in one or more trustees who manage the entity profitably for trust certificate holders. The trustee(s) accept such trustee responsibility as a fiduciary acting on behalf of, and for the benefit and profit of, persons who hold or may acquire transferable (or in "bearer" form) trust certificates that are comparable to the stock certificates of a corporation, Trust certificates from the international business trust provide individual holders evidence of ownership interest in the trust estate (assets/income), and the certificates convey to the holder the limited rights to receive their pro-rate share of any distributions of income or assets that may be made by the trustees.

        The trust certificates are personal property which convey neither legal title to the trust property nor any voice in the management of the business trust or the selection of trustees. "The owner of Beneficial Certificates is not an owner as a stockholder is an owner; the Certificate Holders have no ownership whatever in property held by the Contract Trust, nor do they have any voice or control over the Trustees." - Becker v. St. Louis Union Trust Co. (a U.S. Supreme Court case) 296 US 48, 50; 80L ED 35:56 S CT 78 "Certificate holders are devoid of legal rights, have no officers, are and must remain forever mute as to the selection, approval or disapproval of the trustees and their methods of conduct of business affairs would make the trustee absolute owner," stated the court in the case Bourchard v. First People's Trust, 253 Mas 351, 148 NE 895. "The Contract Trust owns the property and is a distinct legal entity. Beneficial Certificate Holders are not treated as co-owners of trust property." - National City Finance v. Lewis (Cal App) 3P 2d 316 (Rehearing denied) 4P2d 163: Beilin v. Krenn & Dato 350 III 284, 183 NE 330: Hemphil v. Orloff 238 Mich 508, 213 NW 867, 58 ALR 507, aid 277 US 537, 72 L Ed 978. 48 S Ct 577, Annotation 156 ALR 32; Goldwater v.Oltman, 210 Cal 408: 292 P 624

        Read judicial decisions that definite and explain the Massachusetts business trust.

Top Twelve Benefits of Establishing and Utilizing an International Business Trust
or Offshore Business Trust

     1. In sharp contrast to a corporation that is created by the state as a privilege (and therefore subject to having its corporate benefits diminished, limited, eliminated, or heavily taxed by the state government}, the existence and operation of a business trust are controlled by its contract, not by ever-changing state corporation laws, regulations, and court decisions.

     2. An international business trust is a powerful entity by which individuals may combine their resources to operate a business for profit without the inherent liabilities of a partnership or the double taxation of corporations.

     3. Like the initial funding of a new corporation, there is no income or transfer (gift) tax to put initial assets into a business trust (structured to be like a corporation in the initial funding process) because the transferor of the assets receives back a proportionate share of the trust certificates. "A trust certificate, while valuable, has 'no determinable value' when exchanged for assets, and thus there is no taxable event because of this exchange, as determined by the U.S. Supreme Court." Burenett v. Logan 283 U.S. 404), also (Stern v. C.I.R., 747 F. 2d 555 (1984)  "The Unites States Circuit Court of Appeals for the First Circuit has long held that full and adequate consideration is met by issuance of trust certificate units in exchange for real and personal property invested in a "pure" trust organization." Carpenter v. White, CIR, 80 F 2d 145

    4. If so established in the trust agreement, the trust certificates become void upon the death of the holder and, thus, have no value to be subject to inheritance tax, estate tax, or probate administration and expenses. Interests which terminate 'on' or 'before' death are not a proper subject of the Federal Estate Tax." - Knowlton v. Moore, 178 US 41, 20 S Ct 747, 44 L Ed 969 (1900): YMCA V. Davis, 264 US 47 (1924), 44 S Ct 291, 68 LED 564: Goodman v. Grander, 243 F 2d 264 (1957): Babb v. US 349 F Supp 792 (1972)

    5. Because the international business trust assets do not go through the probate nightmare at the death of trust certificate holder, a business trust and the decedent's trust certificates cannot be challenged by persons falsely claiming to be heirs or by creditors of the deceased person.

    6. Whereas corporate officers and directors (and sometimes shareholder names) and financial dealings are a matter of public record and detailed annual reports, international business trust affairs are private and not a matter of public record. International business trust privacy and confidentiality are very enhanced when the trust is created and domiciled in an asset protection haven such as Belize, Vanuatu, or the Seychelles.

    7. International business trust property cannot be seized by creditors' attachment nor sold upon creditors' execution for the trustees' personal debts. Personal liability of a trustee cannot be enforced against the trust property. "Trust property cannot be held under attachment nor sold upon execution, for the trustees' personal debts. Personal liability of a trustee cannot be enforced against the trust property." - Mayo v. Moritz, 24 N. E. 1083 (1890)  But if a trustee personally owned any trust certificates registered in his or her personal name (in contrast to the wise use of "bearer" certificates that are unregistered and are owned by whoever possesses the physical trust certificate papers), these trust certificates can be attached and executed upon (sold) by the trust certificate holder's creditors. "If the Trustee owned personally any amounts of beneficial interest, these Certificate Units can be attached." - Hussey v. Arnold, 70 N.E. 87 (1904) International business trust asset protection is extra strong against creditor problems when the trust is created and domiciled in an asset protection haven such as Belize, Vanuatu, or the Seychelles.

    8. Trust certificate holders cannot be held liable for debts incurred by the trust itself. The certificate holders are not personally liable for any obligations incurred by the trustees or by managing agents appointed by the trustees.

    9. International business trusts can provide needed flexibility in arranging lender financing. "In a financing, counsel has a number of alternatives to the corporate form to use when choosing a special purpose entity. These alternative entities have certain advantages over the traditional corporation. The limited liability company and limited partnership forms offer greater contractual flexibility and require less observance of formalities than the corporation. The business trust has these advantages, plus the possible advantage of establishing a favorable tax situs." - Ellisa Opstbaum Habbart and Andrew G. Kerber, attorneys at law, in their article "Getting the right fit: Some suggestions on finding the best way to structure a financing transaction," Business Law Today, American Bar Association, Volume 11, Number 2 - November/December 2001.

    10. An international business trust can be formed by utilizing the basic contract laws of most states, provinces, and nations, including asset protection havens such as Belize, Vanuatu, or the Seychelles.

    11.  A business trust is very helpful as the legal foundation for an effective internet business company, the innovative and new international business organization entity for the management of international business. An international business trust located in Belize, Vanuatu, or the Seychelles is especially ideal as the business structure for an internet business company.

    12. An international business trust can be the transferee/annuity payor pursuant to a private annuity agreement.

For help in forming and operating an international business trust either as an offshore entity or as a domestic company, please contact Certifed Tax Consultant Phillip Fry. An initial consultation (including initial tax planning assistance to you) with Certified Tax Consultant Phillip Fry is US$500, payable in advance by FREE international bank wire (you subtract your bank's wire fee from your payment). To arrange your consultation, please email Phil, or phone him  63-906-510-4000 or 63-919-375-0302 (Philippines) 7 p.m. to 7 a.m. Eastern Time (Canada/USA time).  Also visit Offshore Expert.

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