If you’re looking for a way to guard your assets against lawsuits, business disputes, and creditors, setting up an offshore trust can be a smart choice.

You may wonder, “How much money do you need to have for an offshore trust?” The short answer is that it depends.

Some jurisdictions, trusts, and offshore trust service providers are more affordable than others. It’s important to do your research to ensure you’re choosing the right offshore trust for you.

Factors Affecting the Cost of Establishing an Offshore Trust

You’ll need to consider several factors when establishing an offshore trust. These factors affect how much you’ll pay to set up and maintain your trust, so review each carefully before making a decision.


One of the most significant factors affecting cost is the jurisdiction in which you set up your trust. Some foreign jurisdictions have stronger asset protection than others.

For example, Belize, Nevis, and the Cook Islands don’t recognize legal judgments from a foreign country, such as the U.S. This means that local judges can’t order you to release assets to a judgment creditor in the U.S. or any other country.

If someone wants to sue you, they’ll need to initiate litigation in the jurisdiction where you’ve set up your trust. This is usually expensive and time-consuming, which may dissuade legal opponents from coming after you. The more obstacles you can put between your assets and your opponent, the better.

Some popular jurisdictions for offshore trusts are:

  • St. Kitts and Nevis: This island nation has robust privacy laws and charges no income tax, gift tax, estate tax, or inheritance tax. However, taxes in your home country would still apply. It costs between $15,000 and $45,000 to set up a trust here. Expect to pay $5,000 to $10,000 in maintenance fees.
  • The Cook Islands: This jurisdiction has strict privacy protections, favorable tax policies, and flexible trust structures. It strongly favors the defendant in foreign court-ordered asset seizures. Setup and maintenance fees are comparable to those in St. Kitts and Nevis.
  • Cayman Islands: The Cayman Islands have no personal or corporate income taxes, making this an appealing choice for both individuals and companies. Setup fees range from $30,000 to $100,000, and maintenance costs as much as $30,000 annually.

Other jurisdictions that offer robust asset protection include:

  • Jersey
  • Cyprus
  • Barbados
  • Marshall Islands
  • Trinidad
  • Switzerland
  • Bermuda

Types of Trust

two people handshaking while sitting

The type of trust you choose matters because it impacts how much tax you or your beneficiaries will pay. It also affects who has ownership of your assets, which is important if a creditor or other entity tries to come after you. Types of trusts include:

  • Irrevocable trust: For asset protection, you need an irrevocable trust. However, irrevocable does not mean inflexible as some irrevocable trusts can be amended or dissolved.
  • Revocable trust: Also called a living trust, you can change the terms of a revocable trust at any time before your death. The assets in a revocable trust still legally belong to you, which means they’re not shielded from lawsuits.
  • Discretionary trust: This trust is flexible because you don’t need to set any fixed beneficiaries. You can decide on the distribution of assets for different classes of beneficiaries.
  • Fixed trust: This type of trust requires you to set fixed beneficiaries, and you can’t change them once they’re set.

Assets Held

When answering, “How much money do you need to have for an offshore trust,” it is crucial to consider assets.

Your assets’ value and complexity also affect the cost of setting up an offshore trust. If you only want to protect a few simple assets, such as a bank account or home, you’ll likely pay less in setup fees. However, if you have a complex asset portfolio, it will take an attorney longer to draft the trust documents, which increases the setup fees you’ll pay.

Legal and Professional Fees

You will need to pay professional and legal fees to set up and maintain your trust. Exactly how much you pay depends on several factors, such as your assets’ value and the jurisdiction you choose. Fees cover:

  • Legal services, such as the use of nominees and signatories
  • Trustee fees
  • Trust protector fees
  • Registration fees
  • Tax reporting fees
  • Maintenance and modification fees

Tax Implications of Offshore Trusts

calculator and a gavel

An offshore trust will not avoid taxation by the Internal Revenue Service (IRS). The primary reason to set up an offshore trust is asset protection, not tax savings.

The IRS treats most offshore irrevocable trusts as grantor trusts. Essentially, the IRS disregards the trust for tax purposes. This means you will need to report all capital gains from assets in the trust as ordinary income on your personal income tax return.

When a U.S. beneficiary receives distributions from the trust, the IRS will tax the distributions as capital gains. The beneficiary must report these gains via Form 3520. If the beneficiary files the form late or not at all, they may face heavy penalties from the IRS.

The trust itself must also file Form 3520-A. If the foreign trust fails to file Form 3520-A, you will need to file a substitute form on its behalf to avoid penalties.

Maintenance Costs for Offshore Trusts

Your offshore trust service provider will charge an annual administrative fee, which is usually around $5,000. Additionally, you’ll pay fees for a trustee to take certain actions such as making a distribution. Your trust must be managed by a trustee company that’s registered in the jurisdiction where it’s set up. The trustee will administer the trust according to your wishes.

Is There a Minimum Investment Required for Offshore Trusts?

How much money do you need to have for an offshore trust before you open one? This depends on the jurisdiction and your offshore trust service provider.

In general, most trust companies do not have a minimum. However, for it to make economic sense, you should generally have at least $250,000 of assets to place into the trust.

Are There Any Risks Associated with Establishing an Offshore Trust?

a stack of wood near to fall

Are offshore trusts safe? When established with guidance from an experienced asset protection attorney, yes. You’ll enjoy much stronger protection for assets in a foreign trust compared to a domestic one.

However, offshore trusts aren’t entirely without risk. If you transfer assets into a trust and fail to report the trust to the IRS you could face hefty penalties.

You may have heard that offshore trusts have a higher risk of an IRS audit. As long as you set up the trust properly with the help of a knowledgeable asset protection attorney, though, you should not increase your risk of an audit.

Is It Worth Opening an Offshore Trust?

Although you’ll pay fees to set up and maintain your trust, many people find the asset protection an offshore trust offers to be well worth it. Unlike domestic trusts, a foreign trust offers much better safeguards for your assets from creditors, lawsuits, divorce, and other U.S. entities that try to come after your money.

Offshore trusts are ideal for high-net-worth individuals, such as doctors, attorneys, and entrepreneurs. If you have a few hundred thousand dollars or a few million dollars and want to ensure its protection for you and your beneficiaries, opening an offshore trust can be a very smart choice.

If you want to learn more about IRS reporting requirements, contact Blake Harris Law by filling out our online form or via email at Info@BlakeHarrisLaw.com.