I’m talking about those Panama papers by the way. For you time-pressed traders, I’ve gathered some useful information for you about what happened and how you too can be part of the secret.

What happened?

A law firm which helps to set up companies in these tax haven countries, had their computer servers hacked. The amount of data which was leaked amounted to 2.6Gb! This comprised of information from 214,000 entities which are companies, trusts and foundations. The information was very detailed, including many individuals' personal information.

Why are these documents so important?

Company information at these tax havens are extremely confidential and that kind of secrecy is one of the major reasons people like to set up their companies there. Some of these records show companies which were set up to launder money and avoid sanctions and taxes. And it so happens, some of these companies were set up by people who are prominent leaders of some countries. (*Gasp*)

But it's no secret that the rich have always utilized tax havens to lower the taxes which they're required to pay.

Thankfully in Singapore capital gains are not taxed, so as traders, we don't need to have anything to do with such companies.. right?

Hang on, is there any other use for setting up a company in a tax haven?

What can we use this structure for legally?

( Apart from paying lower taxes *ahem* )

Here's a little I'd like to share about this.

We can actually set up trusts. Which would likely be cheaper to maintain than maybe in singapore itself.

What can we use trusts for?

1. Avoid probate.

Probates are the procedure where the court decides the validity of your will and execution of it.

This means avoiding the legal procedures after your death to carry out your will. Probates can cost as much as 5% of the wealth you leave behind and require a long period of time to process, during which time your assets are essentially frozen.

2. Keep assets safe from bankruptcy.

Once your assets are in a trust, they are technically no longer your assets. You may have control over the company directly or indirectly, but those assets are no longer actually yours. So if creditors come after you, they can't touch the assets in the trust.

(Side note: Did you know, there are no pre-nuptial agreements in Singapore and the Singapore law has 2 sets of laws to protect women? Just saying.)

3. Perpetuity

The trust does not have an expiry date, so it will be able to execute your instructions indefinitely into the future.

4. Hard to contest

The structure of the trust also makes it more difficult for dissatisfied family members to contest your instructions. This usually happens when you have seemingly disproportionate division of your assets. Sometimes it's unavoidable, but that's where TV drama serials get some of their good material for the storyline.

5. Ability to execute unique distribution of assets.

Trusts will be able to execute difficult or complex instructions. Such as, assets distributed only to your grandchildren while skipping your own children. Or indefinite periodic donations to charitable causes. Just to name a few uses.

Just to draw your attention to an interesting vehicle to manage your wealth. As always please Do Your Own Due Diligence and consult the professionals.

You can get creative with the use of such a vehicle, but remember to pay your taxes!

Good trading folks!

The post Secrets Leaked! Would You Like To Be Part Of The Secret? appeared first on The Systematic Trader | Trading Courses | Collin Seow.