Offshore Asset Protection
The strongest Asset Protection you can establish is an offshore strategy involving an LLC and a Trust. What this does, is it removes your entire asset portfolio out of the U.S. legal system. You essentially put your assets into a legal system that has the strongest asset protection laws in the world.
With this type of asset protection plan, you are in 100% control of all your assets. When there is time of legal duress, you are obligated by the legal structure of your plan to relinquish control of your assets to an offshore Trustee that controls all of your assets. The offshore trustee is overseen by a trust protector, who you designate to supervise the asset management, and the trust is able to accept advice from you during this time as well.
Why go offshore?
When you have an offshore asset protection plan, any legal opponent must then get through some huge hurdles to threaten your wealth. Your assets are located in another jurisdiction, which means that if they are pursued, they are pursued in that jurisdiction through its legal system. Now your legal enemy has to post tens of thousands of dollars to have their case reviewed by a committee to check if they will even allow it to be heard in their courts. This means that they have to hire local representation and cannot have their attorneys work in the foreign jurisdiction. This is generally enough to detour any legal pursuit, however if the case does go to court, there is a statute of limitations, the case must be opened and closed in 2 years, or it is thrown out. These are huge legal hurdles to overcome and the time, costs and odds of winning are so steep that your assets are safe. So far, we’ve never seen assets in an offshore asset protection plan be taken from a client – it’s never happened that we’re aware of.
How it Works
- Client sets up a properly structured offshore asset protection trust.
- So client can control day to day activities, client establishes an Offshore Limited Liability Company that is owned 100% by trust. The LLC holds accounts. Client manages LLC. (String of control = Manager of LLC.)
- When there is an event of legal duress against the Manager of the LLC, the Trustee is duty bound (under the terms of trust) to protect trust assets and remove the Manager for the period that the event of duress exists. When the event of duress is over, the Trustee can reappoint the Manager.
Offshore Plan Benefits
- So client can control day-to-day activities, client is Manager of the Offshore LLC
- When the Manager is subject to legal duress, the Trustee must remove the Manager for the period of the legal duress and take up active management of the LLC. When the Trustee is the Manager, the Trustee can accept advice from the independent legal advisers of the client (the grantor of the Trust)
- Outside courts do not have jurisdiction over offshore trustee, therefore do not have the authority to enforce seizure of trust assets
- Client can win the fraudulent transfer argument because no assets are being transferred. Only the change of LLC manager occurs which does not involve asset transfer.
- If assets are transferred after legal issues arise, the statue of limitations on fraudulent transfer is 2-years and must be proven in offshore juridiction’s courts beyond a reasonable doubt. (This is a very high legal hurdle, especially when international investing and diversification reasons can be given)