The most complex, and successful, asset protection device is the Offshore Trust. As its name implies, this type of Trust has its situs in a foreign jurisdiction, outside of the United States. Offshore Trusts are commonly employed by the Firm to shield client’s assets.
The principal basis of their protected status is that a judgment creditor in the United States cannot reach the assets of a Trust established outside the United States unless a Treaty exists between the two (2) countries that permits the enforcement/collection of civil judgments in the non-US jurisdiction.
Planning possibilities exist in choosing the best (host) country to serve as the Trust’s situs taking into account such relevant factors as political stability, geographic location, currency fluctuation and the like.
And, even though the Trust is established in one country, the assets held by the Trust can be located anywhere in the World.
There are numerous countries with laws in effect which make it extremely difficult for United States creditors to reach Trust assets. Generally, these countries also have favorable tax laws.
Although these Trusts generally do not receive favorable tax treatment from the Internal Revenue Service (amid increased scrutiny), they more than adequately accomplish their main goal of protecting one’s assets from the reach of creditors.