The short answer
Offshore structuring can make sense where a family has a genuine cross-border need, such as succession across countries, neutral ownership of international assets, family governance or access to an established fiduciary jurisdiction. It does not make sense when it has no clear non-tax purpose, depends on secrecy or adds more cost and complexity than value.
Legitimate reasons families use offshore structures
A neutral jurisdiction can provide continuity when family members, assets and advisers are spread across countries. Trusts, foundations and companies may also separate ownership from day-to-day benefit, preserve a family business, organise decision-making and provide professional administration through generational change.
What offshore does not mean
Offshore is not synonymous with hidden. Modern structures operate within beneficial-ownership, anti-money-laundering, CRS, FATCA and local reporting regimes. Legitimate privacy means appropriate confidentiality, secure data handling and controlled access, not concealing information from authorities entitled to receive it.
When it may add little
An offshore structure may be unnecessary where the family, assets and objectives are entirely domestic and local arrangements solve the problem more simply. It is also unsuitable where the expected saving relies on an assumption that reporting will not occur, or where the family is unwilling to maintain proper records, governance and professional administration.
The substance test
The more a structure conducts business, earns mobile income or claims residence in a jurisdiction, the more important real substance becomes. Depending on the entity and activity, this may include local direction, qualified people, expenditure, premises and documented decision-making.
The conclusion
Begin with the family problem, not the jurisdiction. If there is a genuine cross-border purpose, obtain advice in every material country and choose a provider with real people and systems where the structure is based. If the purpose cannot be explained clearly, the structure probably needs to be reconsidered.
Questions to take to your advisers
What problem is the structure intended to solve?
Which countries could tax, regulate or require reporting from the structure?
Who will make decisions, maintain records and retain responsibility over time?
Sources and further reading
Relevant local legislation and regulator guidance should be checked before implementation.
Editorial note: Review before publication if law, regulation, tax guidance or the family facts have changed.