We are an online magazine dedicated to the concept of financial freedom. Through our articles and information, we act as a link between the nomad capitalist and a variety of specific services.
Each tool has its function. Companies are for generating money, banks are for operations, savings, and investment, real estate is a powerful sector in your portfolio, and second citizenship or residency is an outstanding possibility to enhance all these approaches. But what about trust services? Through a trust, financial safety can be achieved.
Today we come back to one of our favorite topics analyzing why trust services are excellent to protect your money and protect your belongings.
Protect your estate through a trust: financial safety is possible
On many occasions we have discussed the Nevis trust as a way to protect your inheritance, or the Panama Foundation as an excellent alternative to Lichtenstein. Although different in structure both the trust and the foundation are based on the same principle: protect your estate by separating yourself from your assets. Today we dive into the essence of trust services through a new perspective.
The motto “divide and conquer”, or its variation “divide and rule”, has been mostly attributed to the Roman emperor Julius Caesar. Nonetheless, he was not the only leader with this mindset. Nicola Machiavelli applied this concept to military strategy and other sovereigns have done the same.
In the Institutes of the Lawes of England, Edward Coke was asked why his party would succeed in Parliament. His answer was (and we paraphrase) that those who are inseparable are invincible. According to him, the summit of authorities is confirmed thanks to the consent of all subjects.
However, Mundo applies the “divide and conquer” motto not to war and not to politics but to what we consider a much nobler cause: the pursuit of happiness through personal freedom. This includes the possibility of achieving one’s financial goals.
This is why we’ve reorganized our view on the essence of trust, financial freedom, and the desire to protect your money.
Protect your belongings, protect your estate through trust services: the essence of trusts in three stages
Separation: protect your belongings by separating yourself from your assets
The first thing to do to protect your belongings through trust services is to separate yourself from your assets. This sounds counterintuitive, after all, why would I want to separate myself from something I want to keep? Nonetheless, sometimes the solutions are hidden in plain sight and where we least expect them.
By legally separating yourself from your assets (the keyword being “legally”) you won't be their actual owner hence, nobody can take them from you. Coming back to what we mentioned above, it becomes clear that trust services and foundations have significant differences but are based on this common separation principle.
Organization: Protect your belongings by organizing your assets
Now, if you're not the owner of the assets, then who is? This is when trust services join the scene. When you create a trust you become the settler, this means you transfer the assets to a custodian, i.e., someone who will look after them.
In the case of a trust, this custodian* will be a person or a company called the trustee. On the other hand, if we establish a foundation, the assets will belong to the entity (the entity is the foundation).
Thus, in the trust deed or the foundation charter the original owner sets the conditions under which the assets will be administered, stored, or distributed.
*Custodian is used here as a word to describe a person who looks after the assets, nonetheless, it should not be mistaken with “the” custodian which is a possible fourth player in the trust services structure being the person who supervises the trustee.
Benefit: protect your belongings by putting them in the right hands
The circle becomes full with the third party in the structure, called “the beneficiaries”. These are the persons who will benefit from the trust services, i.e., who will collect the money or make use of the assets. It's worth noting that they can't choose how or when to use them, instead, they are subject to the conditions stated in the trust deed or foundation charter.
Practical uses of a trust: financial safety for your assets and your loved ones
So how would this work in practice? A person may want to establish a trust for his or her child to pay for college. In this case, the beneficiary will only be able to withdraw money at the right age and for the stipulated purpose. They won't be buying a car with this money. They will be paying the tuition fees and related costs, or else they will be cut off. Sometimes, benefits are distributed in case an event occurs, for example, when the beneficiary gets married or finishes college.
There have been reported cases like the multimillionaire who wanted to teach his children the meaning of hard work. So, he set up a trust stipulating that the beneficiaries could only withdraw the same amount of money they generated by their own means. If in a year they made $50,000, this is the sum they could withdraw, if they made 500,000, then they could withdraw this much.
With this example, we can easily understand what trust services are about and how they help to protect your estate. At the end of the day, you want the fruits of your labor to be used by the people you choose and not others.
In the meantime, the assets are kept safe, and nobody can claim them as they don't belong to the original owner.
Disclaimer: this article presents the opinion of Mundo’s editorial team and by no means it should be taken as financial advice. This article does not replace a professional consultation and should not be used as a basis for making financial decisions.
Access trust services through Mundo and protect your money
At Mundo, we recommend the king of trusts, financial security, and asset protection: Nevis. This jurisdiction is known for not recognizing foreign rulings hence, if somebody should want to attack the trust they will have to do it through the local legal system. It goes without saying that this takes a fair amount of resources, time, and money.
Moreover, we're excited to announce new opportunities for trust services, for instance, in jurisdictions like New Zealand. Therefore, we encourage all readers to check out our trust section regularly as new information about trust services will be available soon.
All in all, we are proud to count on trusts as a way to protect your money and protect your inheritance. Undoubtedly, they are a key figure in a nomad capitalist plan and the pursuit of financial and personal freedom.
