Protect Your Assets With an Offshore Trust

In the United States, Suze Orman is a popular financial guru on public television. Typical of her advice: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”

One of the best ways to minimize the “what-ifs” and the worry that goes with them is with a trust. With an inventory of your possessions, a few hours’ planning, and the help of a good attorney, anyone with wealth and assets can create one and they are among the most fool-proof, ironclad legal entities known to man.

One popular trust form, the offshore asset protection trust (APT), can place your wealth beyond the reach of claimants, creditors, irate ex-spouses, and even the government of your home country. That “offshore” distance creates an added layer of protection that thwarts attacks and promotes compromise.

How a Trust Protects Wealth

In modern times, asset protection has become a major goal of trust creation.

Through taxation and regulation, government excels in attacks on wealth. In the U.S. and Europe, there is now official talk of wealth and retirement-plan confiscation. Last year a large chunk of every bank account in Cyprus was subject to “bail-in” tax overnight.

The judicial system also has become a threat to prosperity. Especially in the U.S. and the U.K., courts are clogged with thousands of civil suits demanding enormous sums for sometimes-imagined injuries.

With TV commercials seeking plaintiffs, contingent-fee lawyers whip up billion-dollar class-action suits against persons or corporations they see as ripe targets, seeking outrageous jury awards and fat fees for attorneys.

These real threats have increased the popularity of the offshore asset protection trust.

The offshore asset protection trust (APT) is especially useful because it is, in fact, based in a foreign nation. That shields your assets better than any domestic trust ever can, simply because it is located outside the jurisdiction of your home country. Distance makes the trust grow stronger. The offshore APT shields business and personal assets against creditors, litigation, and disputed financial liabilities.

With the help of an experienced trust attorney, an offshore APT can be accomplished by little more than the signing of formal documents, transferring property, and opening a trust account managed by a local trustee in a bank in a foreign country you choose. Offshore multinational and local banks provide experienced trust officers and staff. For example, a simple trust registered in the Cook Islands (which I recommend) can cost less than $5,000.

Offshore APTs have proven so effective because: 1) courts of some foreign “asset-haven” countries will not recognize U.S. or other domestic court orders, so a plaintiff must re-try his case in a foreign court at great expense; 2) claims against a trust in such countries must be brought within a limited time. In the Cook Islands, the statute of limitations can be one or two years from the time the APT was created; 3) foreign trust laws allow a “duress clause” that allows the foreign trustee to shut down the trust if it is threatened legally in any way.

The key to creating an APT is simple: planning. The trust must be created long before it is needed, at a time of personal financial calm. As a belated response to a pending financial crisis, trust creation creates more problems. Last-minute attempts to create an offshore trust can lead to civil liability for concealing assets. So if you think you may need a trust, act now.

Editor’s Note: Learn more about offshore trusts and other expat advice in our daily postcard e-letter. Sign up for IL’s free daily postcard here and we’ll send you a FREE REPORT: The World’s Top Ten Retirement Havens.

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