What are offshore annuities?
There are several types of offshore annuities and some significant tax and asset protection advantages can be achieved if the annuity is properly structured.
In general, an annuity is a product offered by an insurance company which allows for a deferral of current taxes on the interest accumulated on the policy. These tax deferred annuities are marketed by U.S insurers as an attractive investment vehicle for compounding income without current taxation. The law in several states provides that these annuities cannot be reached by a judgment creditor. That would make these policies a useful asset protection technique.
In most states an annuity can be legally seized by a creditor. In response to the demand for protection of these assets, several offshore insurance companies have created a product which combines the advantage of tax deferral with the asset protection features of a trust. When this arrangement is designed with the necessary safeguards it is a sound and efficient investment and asset protection strategy.
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