Advantages of an Offshore Asset Protection Trust

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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 an offshore limited liability company which would be entirely owned by the offshore trust. The trustor could function as the manager of the LLC with direct signature control over bank accounts and securities accounts.

The primary advantage of offshore planning is simple:  creditors 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.

If you are interested in learning more about offshore asset protection trusts, contact our California estate planning law firm.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

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