How to Move Assets Offshore: Legal Ways to Protect and Diversify Your Wealth

Quick Summary

This guide explains how to move assets offshore legally using offshore trusts. You’ll learn about the benefits of offshore asset protection, the types of assets you can transfer, choosing the right jurisdiction, and how to stay compliant with IRS reporting requirements.

What Are High-Net-Worth Individuals Doing to Stay Protected?

When you think of offshore trusts, images of shady corporations stashing their money away to avoid taxes or commit financial crimes may come to mind. Although offshore trusts sometimes are portrayed negatively in movies and the media, they actually offer a legitimate and legal way to protect your assets from creditors, divorce, and other entities that want to get their hands on your hard-earned money.

That’s why many high-net-worth individuals are exploring offshore strategies to protect their assets. In this step-by-step guide, we’ll show you how to move assets offshore legally to protect your wealth from risks.

Find out how to move assets into an offshore trust the right way below.

Why Listen To Us? 

At Blake Harris Law, we have in-depth experience with offshore and domestic asset protection, guiding clients through the creation and maintenance of trusts in top jurisdictions like Nevis and the Cook Islands to protect wealth and achieve long-term estate or privacy goals.

Advantages of Moving Assets Into an Offshore Trust

Setting up an offshore trust can seem overwhelming initially, but it’s a fairly straightforward process that offers many benefits.

• Asset Protection from Lawsuits: If you are a high-net-worth individual, you may become an attractive target for lawsuits that can drain the assets you’ve worked so hard to build. When you store assets in an offshore trust, however, the cost of litigation against you can become prohibitively expensive. This can dissuade plaintiffs from coming after your assets through pricey and time-consuming lawsuits.
• Asset Protection from Creditors: Transferring assets into an offshore trust shields your money from creditors, too. If a creditor wants to come after you, they would need to hire a foreign attorney and file the suit in a foreign jurisdiction. This creates a complicated situation that many creditors would prefer to avoid.
• Expanded Investment Portfolio: An offshore trust enables you to open certain financial accounts or make investments that were previously unavailable to you in the U.S. If you’re interested in expanding your investment portfolio, an offshore trust may make sense for you.

How to Move Assets Offshore: Step-by-Step Guide

If you’re ready to learn how to set up an offshore trust, proceed carefully. Thorough preparation is key to ensuring you don’t run afoul of local laws or choose an offshore trust that’s not right for you.

1. Choose an Offshore Structure

Your first step is to decide what kind of legal structure will hold your assets. The three most common options are:

• Offshore Trusts: These provide strong asset protection and privacy, especially when irrevocable.
• Offshore LLCs: Ideal for holding operational assets or managing investments while preserving control.
• Foreign Bank or Investment Accounts: These may be used for diversification or financial planning but typically offer less legal protection than trusts or LLCs.

Each option has unique benefits and reporting implications, so your choice should align with your asset protection goals.

2. Pick the Right Jurisdiction

Next, you will need to choose a jurisdiction for your offshore structure. Not all countries offer the same level of legal protection. You need to select a jurisdiction that offers strong protections for your assets as well as one that’s politically stable. If you don’t, you could put your assets at risk of seizure.

Two foreign jurisdictions that offer strong asset protection include Belize and the Cook Islands. Belize grants immediate asset protection upon the formation of a trust. In the Cook Islands, trusts receive stronger legal protections than in most other jurisdictions. Other places that provide robust asset protection include St. Kitts and Nevis, Cyprus, and the British Virgin Islands.

3. Appoint a Trustee or Offshore Service Provider

Once you choose a jurisdiction, you’ll need to select a trustee. Normally, this is a non-U.S.-based company or financial institution that’s located in a foreign jurisdiction. The trustee must:

• Follow the terms in the “Deed of Trust”
• Act impartially among beneficiaries
• Invest the trust appropriately
• Defend assets against debtors
• Not personally profit from trust transactions

You can choose a foreign individual to serve as your trustee, but this carries greater risks. Individual trustees typically don’t have access to a team of lawyers and accountants like corporate trustees do. They may also not have liability insurance, putting your assets at risk if something goes wrong.

4. Create the Legal Agreement

In this step, you’ll work with an asset protection attorney to set up the trust. This part of the process involves drawing up trust documents and setting the rules for how assets in your trust will be managed and distributed.

5. Transfer the Assets

Next, you’ll need to transfer assets into the control of the entity you’ve chosen as your trustee. This involves:

• Transferring property titles or account ownership
• Assigning ownership of an LLC to a trust
• Assigning ownership of an LLC to a trust

Some clients create an LLC first and then place that LLC into an offshore trust to maintain both control and protection.

6. Ensure Ongoing Compliance

The IRS has strict reporting requirements when it comes to paying taxes on assets in offshore trusts. The IRS requires a U.S. person (settlor or beneficiary) to file Form 3520 when they:

• Transfer assets to a foreign trust or make a loan to a foreign trust
• Receive distributions, loans, or uncompensated use of property from a foreign trust
• Receive certain large gifts or bequests from foreign persons
• Are treated as the owner of an offshore trust under grantor trust rules

The trust itself must also file Form 3520-A. This form includes information about the trust, its assets, investment structure, and income or losses on the trust. Note that failure to file these documents could lead to steep penalties.

What Assets Can You Move Offshore?

Part of understanding how to move assets into an offshore account is knowing which assets you can move. You can put almost any asset into your offshore trust, including:

• Investments in your portfolio
• Movable, immovable, or intellectual property
• Cryptocurrency
• A life insurance policy
• Cars and boats
• Shares or securities
• Real estate

How to Fund an Offshore Trust

When you initially set up an offshore trust, you’ll need to pledge assets to it right away. Depending on the trust structure, however, you can start by pledging a minimum amount of assets and add more to the trust over time.

You can fund your trust with cash, cryptocurrency, stocks, bonds, real estate, and many other types of assets. It’s also possible to loan money to the trust rather than gift it.

Regardless of how you fund the trust, remember that you’ll need to file IRS Form 3250 to report your funding. If you file late or not at all, the IRS can subject you to heavy penalties.

What Are the Risks of Moving Assets Offshore?

Jurisdiction Change: One of the biggest risks of offshore trusts is that, unlike domestic trusts, offshore trusts are subject to foreign laws and rules, which can change at any time and potentially affect your trust’s stability.

Fraudulent-Transfer Challenges: A U.S. court may demand the return of assets in your trust if it determines that the transfer of assets was fraudulent. If a defendant refuses to comply, the court may issue fines or jail time until they return their assets to the U.S.

Reporting and penalties: Falling short of the strict reporting requirements from the IRS including, form 3520, 3520-A, or 8938, can trigger steep penalties. Offshore does not mean tax-free. 

Transfer of Legal Ownership: By putting assets into a trust, you no longer legally own them. You may feel uncomfortable allowing someone else to manage your assets for you, which is why you should work with a highly reputable attorney who has personal relationships with the offshore trust companies.

Where Blake Harris Law Fits

At Blake Harris Law, we set up domestic and offshore trust structures and liaise with independent trustees in jurisdictions such as the Cook Islands and Nevis to protect our clients’ assets. We cover trust formation, funding steps, and ongoing U.S. reporting coordination. 

If you want to learn more about how to move assets offshore, contact Blake Harris Law by filling out our contact form or by email at Info@BlakeHarrisLaw.com.

Frequently Asked Questions

Is It Legal To Move Assets Offshore?

Yes. It’s legal when properly reported. A foreign asset protection trust is a common, lawful strategy.

What are the tax implications of moving assets offshore? 

You may still be taxed on foreign income, even though most are treated as grantor trusts for U.S. purposes and tax-neutral.

Do I Need To Report Offshore Accounts To The IRS?

Absolutely. You must file IRS forms like 3520, 3520‑A, and possibly FBAR to stay compliant with U.S. tax law. Depending on your total foreign assets and filing status, you may also need Form 8938 with your tax return. 

What Is The Minimum Amount To Move Offshore?

There’s no legal minimum, but most providers recommend at least $250,000 to make an offshore trust financially sensible. 

Can I Move Assets Offshore While Living In The U.S? 

Yes, many U.S. residents use offshore strategies, such as trusts or LLCs, legally. Explore how hybrid structures work in our article comparing trust vs. LLC.