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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 (32) done for your needs.

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