How Does an Offshore Trust Really Work

How Does an Offshore Trust Really Work?

Many people looking for a way to protect their assets are asking, “what is an offshore trust and how does it work?” An offshore trust is a trust that a settlor establishes in a jurisdiction that is different from the one in which they live. An offshore trust can be located in any country as long as that jurisdiction recognizes the legal concept of a trust. But only a few jurisdictions offer solid asset protection statutes that are specifically written in order to protect the assets of the trust’s beneficiaries.

For wealthy individuals and their families, an offshore trust is one of the strongest options when it comes to protecting assets from creditors, divorce, and judgments. In addition, today’s asset protection trusts are “self-settled” which means that the beneficiary and the settlor are one and the same. The benefit of self-settled trusts is that the person that establishes the trust retains access to it.

Practically any type of asset can be transferred into an offshore trust. This includes cash, real estate, securities, businesses, gold, and art.  The way in which assets are transferred into the offshore trust depends upon the type of asset.  If the asset is titled, such as real estate or vehicles, a title change may be the only requirement. Untitled assets such as equipment and furniture require that the assets be listed on a sheet of paper that is then attached to and referenced in the trust.

When considering an offshore trust for asset protection, selecting the proper jurisdiction is crucial because not all jurisdictions offer strong asset protection benefits. Since 1990, the Cook Islands have been considered to be the premier asset protection trust jurisdiction in the world. 

Protecting Your Assets

Asset protection services start by first assessing the threats that you’re facing and then taking a look at the assets that you want to protect. The goal is to determine which legal options offer the appropriate level of protection for your individual needs.  

The fundamental basis for the legal options that are used in asset protection planning is to shield your assets from unforeseen attacks from creditors or unexpected legal disputes. For a creditor to remove assets from a Cook Islands trust, for example, the case must be re-tried within the country, not a friendly jurisdiction toward creditors.

Plaintiffs in legal disputes must prove their case “beyond a reasonable doubt” vs. the weaker “by a preponderance of the evidence” which is more common in the U.S.  And the loser of the case will more than likely have to pay for their own legal expenses as well as those of the winner.

Is It Right for You?

Once you understand how an offshore trust works, you may find that it is the structure that works best for your specific needs when it comes to protecting your assets. If you’re interested in creating an offshore trust, it’s important that you set it up long before any legal action is taken against you.

For the best possible legal advice regarding offshore trusts, speaking to an attorney that is experienced in the areas of estate planning and trusts is a must. For over 30 years, Jeffrey M. Verdon Law Group has been providing comprehensive estate planning and asset protection services to ultra-high-net worth individuals. Contact Jeffrey M. Verdon Law Group today.

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