Offshore asset protection trusts are ideal for people in professions that are riddled with lawsuits. Lawyers, doctors, architects, entrepreneurs, contractors, accountants and property developers are often at risk to many charges or the expensive costs of malpractice and liability insurance. These people may want to protect their assets from usurpation by plaintiffs, so it is smart to set off an offshore asset protection trust. These trusts are created using the laws of a foreign country. Normally, Americans who choose to open one of these trusts usually set up their arrangement in the Cayman Islands, the Cook Islands, or the Isle of Man. These islands are a practical choice because they won’t enforce the American laws on the trust.
You can obtain one of these trusts by transferring your assets to a limited partnership. From there, you keep only 1 percent of the shares but retain control of the account. The other 99 percent of the trust shares are put in the foreign trust. You don’t actually have to transfer your assets to the other country unless they are threatened. But if a serious lawsuit comes along, you can send your assets offshore, protecting them from being tapped by greedy litigators. Some attorneys may suggest that you transfer your assets before you are threatened because of the nature of your profession. For example, contractors are commonly held responsible for the accidental deaths of their construction workers. To protect your cash, it may be best to set up your trust offshore and transfer your assets there before you even catch wind of a coming lawsuit.
If you are sued, with your assets conveniently placed in another country, that money will remain untouched. The trial will not apply in the country where your money is, unless the plaintiff chooses to retry the case in that country. This will involve hiring a new local attorney from the island and forcing witnesses to fly to a local court on the island to testify. Most people will never attempt this because of how complicated it is. Asset protection cannot be set up after someone has filed suit against you, so you need to plan ahead. You also can’t set up one of these trusts if you know that a lawsuit is imminent in a particular situation. Acting in this way would merit fraudulent transfer, and you could end up being charged with a white collar crime.
Like insurance, offshore asset protection trust is something that you plan in the event of a lawsuit. The offshore trust won’t affect your taxes at all. Instead, you will pay all taxes as you always have. Sometimes you can save money with these offshore trusts because it may reduce your need for insurance. Offshore assets might also save money by discouraging lawsuits. When offended individuals realize how difficult it is to obtain the bulk of your estate, they may determine to drop their claims. While offshore asset protection trusts are often a great idea, they aren’t without some risks. Remember that you are dealing with a foreign country and their rules. Those rules are subject to change, which could jeopardize your trust.
Still, setting up one of these trusts can help to prepare for your future and the future of your children and heirs after you pass away. Eventually, the money can be recovered and transferred back to the United States, where they will be distributed as a part of your estate. If you are in an occupation with a high-lawsuit probability, then think about creating one of these trusts today. An attorney can help you to set up the trust and protect your children from losing their inheritance because of a plaintiff’s suit.