A useful option for offshore investments is an asset manager located in an offshore jurisdiction. The need for such a person or company may arise as a result of the successful selection of offshore vehicles in tax-advantaged jurisdictions. Individuals and corporations commonly use offshore banking in one jurisdiction, an offshore company in another, and a holding vehicle such as an offshore trust or Panama Private Interest Foundation in a third. An individual may, in fact, live in a country separate from any of these. A person may choose to establish an offshore trust or foundation for the benefit of his or her heirs. Upon his death, the corresponding procedures will be carried out and the designated heirs will become beneficiaries of the trust or foundation. However, these people are likely to continue to live in their country of birth, or perhaps elsewhere abroad. So who manages the assets?
This is a common situation in many countries where an individual sets up a trust for children and grandchildren who may not have practical experience in managing wealth and investing for their growth. Typically, a bank will act as trustee in such situations. When the person has chosen an offshore asset protection and privacy solution, they typically do not want to return the assets to a bank in their home country.
This is where an offshore asset manager comes into play. Such a person or company may either be an offshore bank or an offshore company specifically designed to protect and increase offshore wealth. An offshore asset manager will be appointed by a written contract between the person directing the investment program, an international business corporation, an exempt company, an offshore trust or an offshore foundation.
The terms of the agreement with the asset manager are flexible and fully dependent on a negotiated agreement. Payments can be based on performance, commissions for each action taken, or a flat fee based on a percentage of managed assets.
An offshore asset manager may be associated with an offshore bank where a trust has an account for one of its international business corporations. As such, all paperwork is likely to be kept “in house.” This is often the wish of anyone who has taken the trouble to set up a comprehensive offshore solution for asset protection and privacy. Integrating the asset management arm of the offshore solution into the suite is more likely not to disrupt the original purpose than seeking an external investment management solution.
There are many offshore jurisdictions that offer banking, company incorporation, foundations and trusts. Many of these will also offer reliable and competent investment management. The best time to include an investment manager or asset manager is when the entire offshore solution is conceived. When the principal is alive, he can certainly be directly involved in the investments. However, having an asset manager before the person dies or becomes disabled by age or illness is a good solution abroad.
