Asset Protection Trusts

Using an Asset Protection Trust

So long as it is not used to defraud legit­i­mate cred­i­tors (Fraudulent Conveyance Law) whose claims have already matured, a Domestic or International ASSET PROTECTION TRUST (APT) can place your assets well beyond the reach of presently-unknown future law­suit adver­saries. The Asset Protection Trust may be set up in domes­tic cites such as Alaska or Nevada, or for greater pro­tec­tion in juris­dic­tions such as Bahamas, Turks & Caicos, or the Cook Islands.

DOMESTIC ASSET PROTECTION

A typ­i­cal Domestic Asset Protection may be set up by you as the Grantor (the per­son who starts the trust) as well as you as the ben­e­fi­cia­ry (the per­son who receives ben­e­fi­cial enjoy­ment from the trust).  It is impor­tant to note that in most U.S. juris­dic­tions, you CANNOT set up a trust where you are both the grantor and the ben­e­fi­cia­ry, and receive asset pro­tec­tion. It is only in recent years (since 1997) that cer­tain U.S. states have changed their laws to allow asset pro­tec­tion in trust that the Grantor is also the Beneficiary. One such juris­dic­tion is Alaska.

In 1997, Alaska changed its laws to allow asset pro­tec­tion in trusts that meet cer­tain require­ments. It present­ly pos­si­ble for a Grantor to receive ben­e­fits from a trust, while the cred­i­tors of the trust may not attach the assets of the trust. Some of the require­ments are as follows:

1. The trust is not set up to avoid U.S. fraud­u­lent con­veyance laws
2. The Grantor does not make her­self insolvent
3. The trust is not set up to avoid, spousal or child support
4. The Grantor is NOT act­ing as the Independent Trustee (The Grantor May act as the “invest­ment” trustee and have com­plete con­trol of the invest­ing that shall occur)
5. The Grantor MAY have VETO powers.

INTERNATIONAL ASSET PROTECTION

The con­cept of International Asset Protection is the same as Domestic Asset Protection. The dif­fer­ence is that instead of apply­ing the lax cred­i­tor laws of the United States, the strict laws of for­eign juris­dic­tions are used. For exam­ple, the APT is reg­is­tered in a domi­cile out­side the United States which by law will not rec­og­nize for­eign (i.e. U.S.A.) judg­ments nor can the APT trustee accept the orders of a U.S. court. Furthermore, the laws of that juris­dic­tion will require any attack on the trust to be made in that coun­try and the claimant will have to prove her case “beyond a rea­son­able doubt” (as opposed to the eas­i­er “pre­pon­der­ance of the evi­dence” in the U.S.). Finally, most for­eign juris­dic­tions have a short­er statute of lim­i­ta­tions (i.e. 2 years) than that of the United States. The sim­ple fact that an adver­sary would have to attack your trust in a for­eign juris­dic­tion, a U.S. order will not be rec­og­nized, a high­er stan­dard of proof is required, and a short­er time to attack the trust will be rec­og­nized, could force your adver­sary to set­tle with you out of court on more favor­able terms or spend much more mon­ey try­ing to fol­low the APT assets being moved from coun­try to coun­try by the Trustee.

Requirements for an International asset pro­tec­tion trust are as follows:

1. The trust is not set up to avoid the Fraudulent Conveyance Laws of the Jurisdiction in which the trust is being settled.
2. The Grantor is NOT act­ing as the Independent Trustee (The Grantor May act as the “invest­ment” trustee and have com­plete con­trol of the invest­ing that shall occur)
3. The Grantor MAY have VETO powers.

Offshore trusts — alleged dis­ad­van­tages and some solutions

Many myths exist regard­ing International Asset Protection Trusts. Some include 1) Irrevocability, 2) Loss of Control, and 3) pro­hib­i­tive costs. Learn More about these International Asset Protection Myths, and their realities.

How is the Asset Protection Trust (APT) configured?

Asset Protection Trusts may be tax neu­tral or tax advanced.  One great com­bi­na­tion is using an ASSET PROTECTION TRUST to own 99% of a Family Limited Partnership, where you act as the (Managing) General Partner, with full con­trol over the assets. The APT would own the lim­it­ed part­ner­ship inter­ests, allow­ing for a flex­i­ble, pri­vate, and asset pro­tect­ed struc­ture. Your APT can also be a mem­ber of a Limited Liability Company or be a stock­hold­er in a domes­tic or inter­na­tion­al CORPORATION (or a series of such legal enti­ties) so that while own­er­ship in held inside the APT, assets remain under your control.

How do we get started?

Take a few min­utes now to decide which assets you can least afford to lose. These are the assets that you have worked hard to build and war­rant a struc­ture to pro­tect them. Then call us to get start­ed. It is imper­a­tive that any asset pro­tec­tion plan­ning is done before a law­suit or con­tro­ver­sy has risen, so as not to “hin­der”, “delay”, or “defraud” cred­i­tors and trig­ger the Fraudulent Conveyance Laws.

What’s your next step?

To learn more, or to deter­mine the ben­e­fits you will receive you can (1) request a pri­vate con­sul­ta­tion, attend one of our upcom­ing sched­uled Conferences, pur­chase Literature on the sub­ject , or have an Estate Valuation done for your needs.