Most people are content to use traditional insurance policies provided by old-fashioned insurers. If not, then at least they resign to the fact that there is no other option.
However, there are other choices for insurance that may appeal to certain people seeking insurance policies that better suit their needs, or offer additional value. Captive insurance could fall into this category. It is for anyone interested in going off the beaten path.
If you have already made wise financial decisions like setting up accounts with a reputable trust company in Anguilla, perhaps you are the type of go-getter who seeks captive insurance. You just need to understand the potential risks and rewards before you make a decision.
What is Captive Insurance?
The first thing you need to know is that this type of insurance exists when the insured owns the company. In other words, every policyholder is an owner of the insurance company. They grant some measure of control and decision-making ability, and able to share in profits. Unfortunately, they also share in any loss.
This is opposed to commercial insurance, where the company sells a product (i.e. policies). The clients choose the product that most closely suits their needs, and the company earns profits. Captive insurance allows those it insures to tailor policies to their particular needs as long as the captive operates within sound actuarial and regulatory guidelines.
Potential Rewards
Perhaps the best thing about captive insurance is that it offers the opportunity for the insured to create policies tailored to their personal needs. Since traditional insurance companies offer only policies that are ill-suited and overpriced, captive insurance could be the best solution.
There is also potential for greater earnings. Captive insurance companies have far fewer expenses than traditional providers. Price stability is achieved over time as the captive matures and expands risk retention capability. Therefore, even though they often start with less capital, they have greater latitude to invest and earn. Plus, underwriting profits go to owners, which in other words, is you.
Potential Risks
Captive insurance has many potential rewards, but there is also a risk factor. Those insured under its policies are owners of the insurance company. This is based on investment. If there are no claims against these policies, a surplus will grow and owners will earn money through underwriting costs.
Significant claims can put investment funds at risk. On the upside, captive insurance companies generally start by reducing underwriting costs before dipping into a surplus. In addition, the inherent obligation to limit losses means that the companies generally have a greater focus on safety and risk reduction than the average commercial insurance company. However, the old adage “no risk, no reward” aptly applies to captive insurance.
In short, captive insurance is about professionals e.g.Investors, lawyers, doctors, nurses etc. pooling together to sustain or dampen the effects of losses mainly due to litigation.
For more information on Captives and how to form them, ask us today at First Anguilla Trust Company Limited.
Many people are considering starting a business overseas or expanding their domestic operations to international shores. If this is the case, there are several reasons to consider incorporating in Anguilla.
In addition to offering temperate climes and a beautiful, tropical setting, this Caribbean island offers favorable tax incentives for businesses that incorporate there. However, perhaps Anguilla’s most attractive feature is the ACORN system that gives you access to these tax advantages within 24 hrs.
What is ACORN?
ACORN stands for Anguilla Commercial Online Registration Network. It is an online system designed to facilitate the process of incorporating in Anguilla, allowing for the formation of business entities around the clock and from anywhere in the world.
How Does it Work?
ACORN provides a fast and efficient means of incorporating in Anguilla. Although businesses should always proceed under the advice and supervision of trusted attorneys, a qualified offshore banking and trust establishment, and perhaps overseas agents familiar with the ins and outs of doing business in Anguilla, the ACORN platform is the most expedient way to create and/or form LLCs, limited partnerships, and other types of corporations.
Once you gain access to the system, all you have to do to form your business entity in Anguilla is sign up through the website, select your company type, and proceed to fill in all applicable information through online forms. Once you’re finished and you’ve paid any associated registration fees, you’ll be issued a certificate, articles of registration and your company will be entered instantaneously into the ACORN database. Afterwards, you can access ACORN resources including company name searches, certificates of Good Standing and information on legislation etc.
Who Can Use ACORN?
There are two ways to gain access to the ACORN system:
- As a licensed Company Manager or as a licensed Trust Company in Anguilla.
- As an Overseas Agent to one of the existing local Registered Agents.
How to Register As a Company Manager or Trust Company
The registration for Company Managers and Trust companies are guided by legislation see link to Financial Services legislation here.
Both Company Managers and Trusts require the submission of an application to the Director of Financial Services for approval. For additional information, interested persons and businesses should contact the Anguilla Financial Services Commission using this site.
How to Become an Overseas Agent
ACORN allows businesses located overseas to have a virtual presence in Anguilla. As an Overseas Agent you can serve your clients needs directly with the Registry.
To become and Overseas Agent:
You must first contact a licensed Company Manager or Trust Company and establish a commercial agency agreement, as this will satisfy the requirement for a registered office in Anguilla.
You will need to apply to the Anguilla Financial Services Commission (AFSC) for approval and authorization to use the ACORN system. This is done by means of a simple application which can be downloaded here. (*$250.00 USD)
Once you have completed all the initial documents First Anguilla Trust Company Limited can help progress the application on your behalf.
It is important to note that the application form should be submitted to the Financial Services Commission through the locally based Company Manager or Trust Company that you wish to work with. Once all application and registration fees are satisfied you will be granted access to a full range of company registry services 24 hours a day, 365 days a year.
For More Information
The ACORN system is merely a platform that makes it easier and more expedient for businesses like yours to benefit from advantageous tax incentives and reach your goals of operating in Anguilla faster than ever.
If you would like more information on the ACORN system, Company Managers or working with First Anguilla Trust Company Limited as an Overseas Agent we are more than happy to answer any questions you may have.
Foundations are generally non-profit organizations that are funded with the goal of philanthropy. There are just about as many foundations as there are causes that need funding. Foundations could offer scholarships to students that meet certain criteria or help to fund hospitals; they could provide aid to underprivileged groups or poverty-stricken regions. The goal could be replanting areas of deforestation, working to save endangered species, or educating the public about global warming. Whatever the cause or philanthropic goal, you could create a foundation to fund it.
There are also different structures for foundations. For example, many corporate entities elect to start corporate foundations as a means of better directing their philanthropy and ensuring all applicable tax incentives.
Many wealthy individuals, families or small businesses seeking to gain similar benefits decide to form private foundations. What makes them unique is that they tend to have a single, primary donor and they are managed by their own board of directors or trustees.
What separates private foundations from public ones is that they seek no additional donations. Instead, they earn money to continue funding the foundation through investing the initial donation, after which earnings may be distributed annually via charitable or commercial activities, preserving the initial donation for further investment.
But why would a family or business want to participate in forming such a foundation? How would one go about setting it up? Here are a few things you need to know.
Why Form an Offshore Private Foundation?
There are several good reasons to form a private foundation. First and foremost, it provides an opportunity for targeted philanthropy. The funds generated by a private foundation can either be funneled into charitable activities directed by the foundation or they can be gifted to other charitable organizations that are already doing the type of philanthropy the foundation supports.
For families or businesses that wish to retain some measure of control over how the foundation’s money is directed, a private foundation can offer more opportunities than its public counterpart. There are also financial benefits to be gained, of course.
Individuals, families, and businesses with excess wealth may be interested in philanthropy not only because it makes them feel good to help others, but also because there are potential tax incentives to be gained in the process. Instead of giving money to the government for taxes, many would rather see those funds go to those in need.
Notably, not all foundations engage in philanthropy. Frequently, foundations are used for estate planning and asset protection purposes. Creating a foundation makes smart financial management sense, entrepreneurs take advantage of foundation benefits such as minimizing estate taxation liability, creating sustainable employment for family members as well as, ensuring the continuity of their business after death.
There are other ways to protect wealth. One need only to seek out a trust company in Anguilla to learn about viable options. However, forming a private foundation serves two goals. It can offer both financial and spiritual benefits to founders.
How to Get Started
Just like forming an offshore company, a foundation begins with doing some research. You’ll probably want to start by hiring an experienced Trust Manager such as First Anguilla Trust Company Limited to guide you through the process and make sure you set up the foundation appropriately.
You’ll need to decide on the amount of the primary donation, how the money will be invested, and the vehicle for fund disbursal (either through directed activities or gifts to other charitable organizations). In addition, you must create bylaws, select a board of trustees, and set award criteria. You’ll also need a plan for managing funds.
Before you create a trust to protect your money, you have to find a reputable trust company in Anguilla to help you. The same principle applies to starting a private foundation. With proper guidance, you can ensure a successful undertaking.
Why Choose Anguilla?
One good reason to form an offshore private foundation in Anguilla is the relatively low costs. There could be any number of costs associated with forming and maintaining an offshore private foundation, depending on where you choose to set it up.
Foundations established in Anguilla require government registration fees of $500-700 US, plus annual $500 fees. You’ll also need a minimum of $10,000 to fund the foundation, as well as whatever fees are required by the agent handling the formation of the foundation.
Of course, you could pay a lot more to form and manage a private foundation elsewhere. In the U.S., for example, private foundations must pay an annual excise tax of 1-2% of earnings, which could amount to a lot more than a few hundred dollars.
Additionally, in Anguilla, you have the option of creating a Registered or Deposited Foundation. Foundations that pursue commercial trade and/ or have by-laws which provide for this are called Registered Foundations and details including purpose, assets, beneficiaries etc.must be entered in a public register. However, foundations that do not engage in commercial activity simply deposit the deed at the registry. Consequently, a high degree of privacy is provided.
In addition, those who form foundations in Anguilla can expect the same flexibility, confidentiality, security, and protection they receive from their trust company in Anguilla. This is good news for any individual, family, or business looking to ensure that their endowment is properly managed and that funds are granted according to their wishes.
There’s a lot to love about the Caribbean island of Anguilla, which boasts the beautiful, white sand beaches, warm waters, and temperate climes typical of the region. What some are more interested in, however, is the fact that Anguilla lacks direct taxation on either individuals or corporations (aside from the Interim Stabilization Levy introduced in 2011).
This makes Anguilla a popular choice for those seeking ways to protect wealth for future generations, whether they choose to put money into trust structures, or opt to pursue investments. For those seeking both investment opportunities and security, mutual funds can provide an attractive solution.
Of course, any time you elect to perform financial transactions outside your country of origin, it’s best to understand the process, including your rights and obligations, as well as the benefits you stand to gain. Before you move your money into mutual funds in Anguilla, here are a few basics that should help you to make a wise financial decision.
The Mutual Funds Act
Introduced in 2004, the Mutual Funds Act is designed to govern the setup and administration of mutual funds operating in Anguilla. Whether you’re interested in starting a mutual fund or simply investing in one, the fund must abide by the rules set forth in this act.
The Mutual Funds Act not only dictates rules and regulations related to managers and administrators, but also to the different types of mutual funds operating in Anguilla. The types of funds covered by this act are private, professional, and public funds.
Private Funds
Before you engage in offshore banking and investing in Anguilla, you need to understand the different types of mutual funds available to you. The first type is a private fund, and there are two main characteristics that differentiate this fund from other types.
First, shares in a private fund cannot be offered to the public, as implied by the name. This doesn’t necessarily limit the amount that investors can put into this type of mutual fund, only the number of investors included.
This brings us to the second point. A private mutual fund is limited to 99 investors. If there are more than 99 investors, it is no longer considered a private fund and is therefore subject to different rules.
There are exemptions granted for family trust funds that fall into this category, but you should speak with your preferred trust company to make sure you understand all the ins and outs of these special circumstances before you make a commitment.
Professional Funds
This fund is characterized by the type of investors included, which is to say, professional investors only. Unlike private funds, there is no limit to the number of investors that can join, but each investor must contribute a minimum of $100,000 (US dollars, or equivalent in other currency) to the fund.
There are two ways to be considered a professional investor for the purposes of joining a professional fund. Members must either manage investments professionally or they must have a net worth (single or jointly, if married) of over $1 million (US dollars, or equivalent in other currency) and agree in writing to be treated as a professional investor.
If you’re not sure what being treated as a professional investor entails, speak to your offshore trust company in Anguilla to make sure you meet all requirements and you are prepared for the differences (as opposed to being treated as a private investor).
Public Funds
This type of fund is easily the most inclusive, with no limits on the number of investors or set minimums for investment amounts under the Mutual Funds Act. Further, shares in public funds are offered to the public.
Public funds must file a prospectus detailing the name and the nature of the fund in order to avoid misleading information and gain recognition by the Anguilla Financial Services Commission. In addition, they must maintain account records and submit annual audits of accounts to the Commission.
How to Get Started
Investing in mutual funds in Anguilla should begin by finding a reputable company management company to handle your business. The professionals at these companies can help you to understand all you need to know to choose suitable mutual funds in Anguilla to meet your investment needs.
MUTUAL FUNDS REGULATIONS OF ANGUILLA
MUTUAL FUNDS ACT
For more information regarding mutual funds, get in touch with us at 1-264-461-8800 or crgumbs@firstanguilla.com.
Family trusts are an excellent means of passing along wealth and assets to loved ones after your death, as well as protecting your estate from outside threats during your lifetime. Here are a few major advantages you’ll enjoy when you create a family trust.
1. No Probate
Bequeathing your wealth and assets through a last will and testament means your family has to go through a protracted an expensive probate process. In addition, when a will goes through the probate process it becomes public record.
This might not seem like a problem, but if the deceased had a lot of debt, it’s reasonable to assume that creditors will come after assets as soon as the contents of the will become a matter of public record. In other words, beneficiaries could end up dealing with contestations and lawsuits that deplete any wealth and assets left to them in the will.
Family trusts are not subject to probate because the wealth and assets held in trust no longer belong to the grantor/settlor (the person who created the trust). Instead, the trust owns them until such time as they are passed along to beneficiaries so that claimants can’t disrupt the wishes of the grantor.
2. No Estate Tax
This is a biggie. Not every country has an estate tax, but for those that do, passing wealth and assets through a will could leave your loved ones holding the bag for serious estate taxes amounting to half (or more) of the value in some cases.
3. Separation of Assets
If you have a business, incorporating is a great way to ensure that business creditors don’t come after your personal assets for payment. Family trusts simply add another layer of protection against outside claims, not only from business interests but from personal relationships as well.
4. Asset Control Without Ownership
It’s natural to balk at giving up ownership of assets to a trust and a trustee, but at the time you create your trust you can make stipulations concerning the use of assets during your lifetime, generally leaving you with control of assets even as you protect them for beneficiaries.
5. A Structure for Your Needs
There are all kinds of trust structures you may enter into, but there are two main types to be aware of: income-earning and non-income-earning trusts. When you place assets that earn income (stocks, for example) into trust, there are ongoing expenses associated with paying annual income tax on earnings.
You may, therefore, want to separate out non-income-earning assets like a family home or heirloom furniture and jewelry into separate trusts that require little upkeep or administration costs following initial creation.
For more information regarding offshore accounts and banking, get in touch with us at 1-264-461-8800 or crgumbs@firstanguilla.com.
