Pandora Papers Painting Trusts with a Tainted Brush…
On Sunday, Oct 3rd the International Consortium of Investigative Journalists (“ICIJ”) released the “Pandora Papers.” More than 600 journalists from around the world released confidential documents and dealings of political elites, government officials, celebrities, and the wealthy. This group of documents is said to exceed that of the “Panama Papers” – which exposed 11.5 million documents in 2016 to expose dealings in offshore entities. Like the Panama Papers, the Pandora Papers are said to contain some illicit dealings of the aforementioned people. Many articles and commentaries are already seeking to name prominent persons for hiding their wealth and avoiding paying taxes. In doing so, offshore entities, shell companies and Trusts, are listed as the vehicles by which the activity is taking place. While some of the persons and vehicles named may have been used improperly, most are believed to have followed and complied within legal requirements.
South Dakota has been named along with Alaska, Nevada, New Hampshire and Delaware in several articles as primary US jurisdictions for Trusts. South Dakota was singled out since it had the most exposure in the Pandora Papers. There is no hiding the fact that it is possible to use shell companies and Trusts for illicit purposes. These vehicles have been around for decades and will continue to be. The shame is, that in order to garner eyeballs and play up the “us vs. them” standpoint to explain wealth disparity, Trusts are being painted with a tainted brush.
Trusts have been utilized for hundreds of years and are created for very legitimate and honest reasons and purposes. First and foremost, they can enable the ongoing care and well-being of loved ones beyond one’s time on earth. They can be made to take care of family members who are unable to take care of themselves. Trusts are established for a multitude of charitable purposes, to protect and preserve parks, forests, and land. They are used to encourage and foster productive lives. They enable foundations and scholarships to aid those in need. And yes, Trusts can make best use of the tax laws to help preserve wealth and benefit future generations. Who wouldn’t want that?
Unfortunately, in the articles and commentaries, Trusts are being cast as an option only for the ultra- wealthy just to hide assets. This part is simply not true. Trusts can be created at any amount and administered by friends or family if desired and inclined. For full disclosure, Trust administration and management is not easy, which is why professionals are often necessary. Generally, more options are available to those with more assets, but at the end of the day, they can be used by just about anyone.
Another sad thing about the Pandora Papers is the disclosure of legitimate and personal relationships. In the current environment of Cyber crime as well as traditional crime, these journalists just exposed confidential information for the world to see and now target them.
At First State Trust Company, we follow the laws and rules of the US Government, the IRS, the State of Delaware, FINCEN and other regulatory bodies to make sure we are performing our fiduciary duties within the full scope of the law. We also have robust Anti-Money Laundering, Know Your Client and Bank Secrecy Act processes to ensure compliance within the law. “Trust” is not a dirty word nor should it be. Trusts perform a legitimate and honest service for peace of mind, wealth preservation, wealth sharing and taking care of real people. Recently, one of our Trust beneficiaries thanked their Administrator for helping them with their drug treatments and overcoming their addiction. They said they would not be alive without our help. If that is what a Trust can do, then paint me all day long.
For more information, please feel free to contact me:
James Okamura, President
Phone: 302-573-5819 / Email: firstname.lastname@example.org
The posts expressed are views of FSTC and are not intended as advice or recommendations. For informational purposes only. FSTC does not offer tax or legal advice, professional counsel should be sought for tax or legal advice.