|
|
|
|
What about foreign trusts and other off-shore entities?
For people who have larger estates, and thus larger potential creditor exposures (running into millions of dollars), "offshore" foreign Trusts can be used to provide a high degree of asset protection. Common destinations for these Trusts, such as the Bahamas, Bermuda, the Turks and Caicos Islands, the Cayman Islands, the Cook Islands, Gibraltar, and the Isle of Man, have laws that tend to insulate and protect the people who set up the Trusts (Grantors). In establishing a foreign Trust, you transfer ownership of your assets from yourself to a Trust that has only foreign Trustees, who manage and administer the Trust property from the offshore sites.
When your creditors begin looking for your assets, even if they discover the offshore Trust, they will still have to deal with the foreign Trustees in order to reach Trust assets. The creditors may then find that they have no remedy against an uncooperative foreign Trustee. This is because the courts here in the United States have no jurisdiction over foreign Trustees, and therefore are unable to provide any relief to creditors. For this reason, it’s important that the foreign Trust or Trustees have no offices or agents in the United States that would be under the jurisdiction of the US courts. The actual geographic distance between the creditor and the foreign Trustees also poses significant real barriers to creditors.
However, care must be taken prior to establishing and funding a foreign Trust. The Grantor should execute a statement of solvency with a balance sheet (or other appropriate financial statement) showing a positive net worth. This is essential in order to establish that you are not entering into this transaction in order to defraud creditors. Such a statement of solvency will also help those who assist you, so that they will not be attacked on the basis that they were co-conspirators in a fraudulent scheme.
Further, not all of your property should be placed into the foreign Trust. You should keep assets sufficient to sustain your lifestyle in the United States, and then you can transfer the remaining bulk of your estate to the offshore foreign Trust for protection. Remember, though, it may be nearly as difficult for your family to recover your money from a foreign Trust as it would be for your creditors to do so. So be careful and get advice before you do this.
It is also possible to put foreign Trusts, corporations, and other entities together into a limited partnership. In this case, creditors may be forced to wade through several layers of protection before they can get to your assets. Multiple entity structures serve to dissuade casual creditors, as only the most sophisticated and well-financed creditors have the knowledge, resources, and time to penetrate multiple entity structures. While the cost to you to establish multiple entities is increased, the level of protection afforded is often exponentially increased. |
|
|
|
|
|
|
|
|
|
|
FREE CASE REVIEW |
|
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
State Law Center
|
Legal Resource Directory
|
Legal Articles
|
Insurance Advice and Quotes
|
FreeAdvice Answers
|
Community Forums
