In an earlier post we outlines the structure and advantages of the Umbrella Remuneration Trust (URT), which is a very effective method of tax mitigation and asset protection.
In this post, however, we will be discussing the sister of the URT, known as the Umbrella Asset Trust (UAT). While the Umbrella Remuneration Trust is designed to allow account holders to protect a designated amount of their monetary income on a regular or irregular basis, the Umbrella Asset Trust is designed to protect valuable assets and possessions. These assets are typically in the form of mortgages and real estate investments, but they can also be collectible items, valuables other possessions that are owned individually or jointly.
Because the structures of the URT and UAT are very similar, they can be used to achieve the same benefits of asset protection and tax mitigation.
WHAT IS THE UMBRELLA ASSET TRUST?
The Umbrella Asset Trust is an offshore trust-based and tax-free fund that has been used by UK residents over the past 20 years as an effective means of asset protection and tax mitigation. The UAT can be owned jointly or independently, by individuals, sole proprietors, companies, or partners. There is no Capital Gains Tax, Income Tax, or Inheritance Tax liability associated with contributions to the fund or its growth.
UK residents who own an Umbrella Asset Trust compile a Portfolio of investments that they own, either individually or jointly, that can take advantage of the many befits that the UAT has to offer. These assets are typically properties/mortgages, but they can also range from other capital valuables, like bonds, shares, collectibles, and other items of value.
How does the Umbrella Asset Trust work?
To get set up with an Umbrella Asset Trust, a specialty tax consultant can guide you on how to open an offshore UAT (like the Minerva Asset Trust), while upholding all legal regulations. Once the trust is established, the account owner(s) will determine how many assets to contribute to the fund. This decision can be made based on the guidance of your company’s professional consultant, or your individual preferences.
In order to receive the tax benefits and other advantages of the Umbrella Asset Trust, it is essential that you open a Personal Management Company (PMC) in the UK. A PMC is essential a UK Ltd Company that lists you as the director and shareholder of the company with a corresponding UK bank account in your name. Once the PMC is in place, you can use a Fiduciary agreement to authorise the PMC to manage and control all the funds/assets in the offshore UAT account. Once this Fiduciary agreement is in place, the PMC will have legal domain over the content of the offshore fund, with the following conditions and benefits:
- The PMC does not own anything in itself
- The PMC has complete control over the funds in the offshore account
- The funds in the offshore account are not subject to tax
- Using this structure grants you total privacy
- You cannot be sued for assets protected in the offshore account
- You have total control over the funds from the convenience and legality of a UK bank account
Once the assets are securely protected in the offshore account, the account owners or other authorised fiduciaries, such as partners or company representatives, can manage the funds, selling them, loaning them, investing them, or making any other management decisions, all tax-free with only a small annual trustee management fee.
Some of the features of the Umbrella Asset Trust include:
- Over 20 years of effective and legal use by UK residents
- No ‘tax avoidance’ involved
- Follows UK legal requirements and upholds full transparency to the HMRC
- DOTAS reference not required
- Professional tax specialists on hand to provide any legal guidance or assistance in the event of enquiries by the HMRC.
- No tax liability for current or future growth of the fund
- No Capital Gains Tax incurred on sale of investments
- Profits from investment sales can be re-invested in the offshore trust
- Offers an exit strategy for business directors
- Statutory reliefs
- Asset sales do not fall under Inheritance Tax
- Asset protections from divorce, creditors, or legal mitigation
- Interest and Rent earned is tax-free
- Inheritance Tax deductions following the death of the account owner
- Tax-free growth of funds from within the UK
- No Stamp Duty fee from the transferring of assets
- You can control your assets from a UK bank account
You can store any asset in the Umbrella Asset Trust, including:
- Property/Real Estate
- Collectibles, such as antiques, art, or jewellery
- Interest on jointly owned mortgages
- Shares (including private, quoted, or foreign)
- Insurance policies
- Trust assets
- Loan notes
This is just a short list, but you can store any assets in your UAT fund.
Clients who live overseas but have ties to a UK company can also qualify for this offshore structure.
If your accountant is unfamiliar with the offshore structure of the Umbrella Asset Trust, this is probably because accountants do not typically deal with trust law. In fact, this structure was developed by barristers and lawyers who have extensively studied the UK legal system and the various applicable trust laws. Because this structure was developed by an elite group of experts, it is carefully designed to allow account holders to reap the most benefit, while still clearly abiding by legal obligations. This effective offshore trust strategy has already been effectively utilised by countless UK residents with significant tax saving and asset protection advantages.
The main benefits of this structure include:
- It allows you to preserve and retain your wealth
- It provides you with a tax-free environment that is conducive to future growth
- It offers maximum asset protection
All of these great benefits can be achieved with an Umbrella Asset Trust, while still upholding complete transparency to the HMRC, and abiding by the laws of the UK. The owner of this type of trust can conveniently operate their account and manage their funds from within the UK, using a UK bank account. This structure has been effectively used for the past two decades by UK residents, because of its mixture of the best offshore benefits and onshore advantages.