An offshore asset protection trust sounds good on paper to lots of people. It’s a trust that is formed in a foreign country to protect assets from creditors and lawsuits. Sounds great right? After all, who wouldn’t want to protect their assets from lawsuits and greedy lawyers seeking to take everything for a big contingency fee?
However before you open up accounts at banks overseas to start setting up these trusts, there are some things you need to know first. From start to finish they are misunderstood by much of the population. Instead of jumping in with both feet, you’ll want to do your research first. In this article, we will give you some words of caution about these trusts, and help you decide if they’re right for you.
They Are Not Foolproof
All trusts are not created equally. These offshore asset protection trusts are different from local state laws, and the laws of the country where they are formed. So make no mistake about it. If your affairs are complex, you will need an attorney working in asset protection who is certified in that particular offshore jurisdiction to ensure your trust is set up properly. Otherwise, you could end up in a situation where your hard-earned money ends up in the wrong pockets like many people who have lost their fortunes by using scams instead of reputable attorneys to set up their trusts. An experienced lawyer will ensure you are protected and save you money in the long run. They will also help you understand your rights and fight on your behalf if necessary.
The Law Isn’t Always Clear
No two laws are ever exactly alike, and these offshore asset protection trusts are no exception to this rule. Your lawyer must be experienced in this particular offshore jurisdiction to make sure all of the intricacies of the law are satisfied with your trust. Otherwise, you could end up in a situation where your trust is not recognized under the law, and you’ve lost all of your money because of it. You simply can’t assume that just because you have an offshore trust everything will be okay. Proper legal advice is always necessary when it comes to protecting yourself and your family with these trusts. Additionally, make sure that your documents are valid in the offshore jurisdiction that you choose so that you aren’t exposing yourself to unnecessary risk from those around the world who are looking for victims.
They Are Not Cheap
If you want trust, it’s going to cost you. That is true whether you seek a domestic or offshore asset protection trust. Expect to pay anywhere from $5,000 on up per year for your trust with its accounting and legal fees. Before hiring an attorney make sure they are well established and have been working in this particular area for several years. Otherwise, they may not be qualified to set up your specific type of trust properly because it can vary greatly depending on where you live and where you open accounts for these trusts locally overseas. If you choose to use a tax haven it can be much more expensive and may require you to open up several different accounts in these jurisdictions. After all, the point of an offshore account is to keep your money safe from high taxes and judgment creditors under the law where you live. As such, it’s not going to be cheap or easy to set up so don’t get it twisted.
They Are Not All the Same
Just because you open an offshore asset protection trust doesn’t mean your financial problems are going to disappear overnight. You still have to follow all of the laws of both jurisdictions where you live and where this trust is set up. And remember, no state or country in the world has laws that protect those who break the law from being sued for their misdeeds. Additionally, if you have a legitimate claim against you as an individual, it belongs to you no matter where you choose to open your account or what type of trust structure is drafted. And finally, if the authorities have a legitimate reason to investigate any criminal activity on your part they will do so and come after you. If this happens don’t expect these kinds of trusts to save your ass because they won’t.
It Doesn’t Protect You From Creditors
If you have a legitimate debt to pay to somebody, they can petition the court in most jurisdictions around the world to reach out and grab your offshore assets. As such, no matter where you choose to put these types of trusts they won’t provide any protection for this situation. You have a legal obligation under international law to repay what you borrowed so don’t get it twisted. And if you do set up a trust in a tax haven, be aware that there still may be mechanisms implemented by that nation’s government that allow creditor rights from countries outside their jurisdiction. if you aren’t willing to pay, don’t borrow, and certainly don’t expect the people you borrow from to simply forgive your debt. That’s not how life works so keep it real.
It Potentiates Your Current Problems
If you already have a large number of assets that could be targeted by creditors or victims in lawsuits, offshore trusts can become a problem because they are very expensive and probably exceed the value of the commercial property at risk, to begin with. For example, if you own $3 million worth of property and set up an offshore trust valued at $5 million your creditors may see this as a red flag and try their hardest to attack both your assets and those placed under foreign law through these types of structures. The bottom line is that these offshore asset protection trusts can potentiate your current financial problems rather than alleviate them, so think long and hard about how you will structure these types of accounts before moving forward.
In conclusion, many think that setting up an offshore asset protection trust is going to keep them safe from everybody but this couldn’t be further from the truth. These accounts can potentiate your current problems rather than alleviate them so you need to be very careful before moving forward with your plans. Whatever you decide to do, make sure you have a reputable lawyer and accountant on your side at all times to ensure that you remain protected under the law and don’t get it twisted.
