Offshore advisers could be putting their clients at risk of being hit with higher tax charges by not recommending trusts, according to Skandia International.
Only 5% of 250 offshore advisers surveyed globally for the firm's research say they use trusts for the majority of their clients.
Approximately three quarters of advisers say they use trusts for just 10% of their clients, the research found.
However, Skandia International warns investors face higher tax charges by not writing assets into a trust.
"Trusts are viewed by many to be complicated which perhaps is why few offshore advisers use them," says Rachael Holland, head of product law and financial planning at Skandia International.
She believes trusts do not have to be so complex and are relevant to the majority of clients.
"Most people are able to use a trust for some form of protection and trusts could be used more often as they can add real value to investors' financial plans in many cases."
There is a case to consider writing offshore policies into trust even if tax reasons do not apply, says Holland.
"For example, if a client is resident and dies in a jurisdiction different to the residency of the offshore bond provider - it may be necessary for probate to be obtained both in the country where the client has died and also in the country the offshore bond provider is resident - involving a potential delay which could be avoided had the bond been put in trust," she says.
Inheritance tax planning is the top reason to use a trust according to 40% of advisers, with asset protection from creditors being a close second, says Skandia International.
Trusts can also be used to cover many types of assets including direct investments, life assurance policies and property.IFAonline
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