OFFSHORE TRUSTS
International Trusts and Asset Protection
Creating an offshore asset protection trust involves the establishment of legal entities in favorable foreign jurisdictions.
One very typical arrangement is for someone to establish the offshore asset protection trust utilizing an offshore trustee. The trust would then set up another entity or an offshore limited liability company which would be entirely owned by the offshore trust. The manager of the other entity or LLC could have direct signature control over bank accounts and securities accounts.
While this may work for privacy or asset protection, it is not adequate to modify or eliminate taxes.
The primary advantage of offshore planning is simple: Creditors, attorneys, and courts are less likely to pursue assets that are domiciled overseas. This may in itself be enough of a roadblock to prevent creditors from filing suit.
Choosing an offshore jurisdiction that does not recognize judgments handed down by U.S. courts forces a creditor to bring and win a suit in the U.S., and then file another suit in the foreign jurisdiction to enforce the U.S. judgment. As long as fraud was not involved in the planning process and the proper foreign jurisdiction is chosen, this is unlikely to occur.
Another advantage is that the foreign asset protection trust legislation of many jurisdictions establishes a statute of limitations for challenging asset transfers that begins from the date of transfer. This is contrary to U.S. law, where the statute may begin on the date the transfer is “discovered” by someone with a claim against the trustor. Additionally, the statute of limitations of many foreign asset protection trust jurisdictions is much shorter – usually two years — than the typical four-year statute found under U.S. law.
NOTE:
This is NOT worthwhile for assets that are located within the United States, especially real estate. If it is locally available, it can be locally attacked or claimed. A foreign involvement may actually create problems or additional expense.
|
|
