Offshore Asset Protection Trusts (OAPT) can be effective barriers against future creditor’s claims because the laws of certain offshore trust havens make it much more difficult for such creditors to obtain jurisdiction over, or to levy against, an OAPT, even if the Settlor retains an interest in the trust income or property.  Such barriers frequently result in a negotiated settlement, and sometimes produce early and inexpensive settlements.

A clear advantage of an Offshore Asset Protection Trust over other structures is the fact that in certain foreign jurisdictions local law specifically prohibits the enforcement of foreign judgments that are inconsistent with their law.  Such impediments typically do not exist in the case of domestic asset protection trusts.

However, an individual desiring to protect assets must take a reasonably moderate approach, rather than attempt to protect all assets.  That is, to set aside in an asset protection structure only those assets which, if they were taken in a law suit, would materially change their lifestyle.  Further, a client can not leave himself insolvent, under both state and federal law, as a result of funding an Offshore Asset Protection Trust.

Overall, the advantages of a timely, properly drafted and operated Offshore Asset Protection Trust over other asset protection structures include:

1. OAPT’s are governed by the laws of the offshore jurisdiction;
2. Narrow definitions of what may constitute a fraudulent transfer;
3. Very short statute of limitations period in which a creditor may bring a claim;
4. Higher burden of proof required to prove a fraudulent transfer claim;
5. The refusal of the OAPT country to recognize a U.S. judgment that is inconsistent with the OAPT jurisdiction’s law;
6. Contingency fees are prohibited in certain offshore jurisdictions;
7. The daunting effect when plaintiff attorneys realize that they will need to employ a large U.S. law firm as well as an offshore law firm to even begin any action against the OAPT.

A key issue when it comes to establishing an Offshore Asset Protection Trust is the credibility and experience of the attorney.  Unfortunately, it appears that certain attorneys who may have attended one continuing legal education (CLE) class on asset protection are now claiming to be qualified to engage in this highly complex practice of law.  In truth, unless an attorney can PROVE that he has specialized in this unique field of law for at least 15 – 20 years (like Merric and Sullivan), then it is doubtful whether he has the expertise’ to design a viable protective structure.

More recent judicial decisions have exposed the inexperience, incompetence and dishonesty, as well as certain “hucksters”, engaged in asset protection.  See,  William Reed of Asset Protection Group in Nevada (2013), who we warned against as early as 2001;  Schwartz v. Bloch (2012); Rush Univ. Med. Center v. Sessions (2012); U.S. v. Wasson (2012); Henry v. Rizzolo (2011); In re Smith (2011); and Battley v. Mortensen (2011).

Does anyone really think a CD  or a book authored by someone they do not know and have not met can design a comprehensive asset protection plan for them and their family?

As our law firm has maintained for 19 or so years, Offshore Asset Protection Trusts DO provide extensive protection for a significant portion of an individual’s assets, PROVIDED THAT:  (1) the OAPT structure is timely implemented; (2) the documents are drafted by a highly qualified and experienced OAPT attorney; (3) the structure is properly implemented in one of the very few viable asset protection jurisdictions; (4) the structure is properly operated at ALL times; and (5) the Offshore Asset Protection structure has viable independent trustees and a protector.