Even the strongest asset protection tools in the world can have an Achilles heel if it is not drafted and maintained properly. In order to maximize the benefits of any asset protection vehicle you must ensure that the legal details have been scrutinized and that they have been structured in your favor and that it is maintained throughout the years.
Drafting an Asset Protection Trust Deed
When setting up a trust to protect your wealth, the protection comes in the form of legal provisions that comply with the trust jurisdiction’s laws. This means that how your trust is written will determine how much protection and from what it will shield you. For example, your trust deed sets forth the management of the trust assets. The deed will contain default provisions as well as custom provisions.
The custom provisions are where you are able to maximize the personalized benefits of an asset protection trust. This requires in-depth knowledge of and experience with the legal framework as well as the trust jurisdiction’s laws. The drafting of a trust must also account for state and federal tax laws related to income, gift, generation skipping and estate planning. Drafting an asset protection trust is more complex than provisioning other trusts due to fraudulent transfer considerations, bankruptcy, banking and tax laws. When drafting these types of trusts one must account for case law in both jurisdictions, that of the trust and the domiciles of the beneficiaries and/or settlor is necessary.
In the case of offshore asset protection trust drafting other critical issues are provisions for the possibility of legal duress against the trust settlor, protector or trustee. This is where your trust language is carefully selected in order to protect against future exertion of court duress against the trust stakeholders. The sizable weight in your favor is that the trust’s primary supervision is under a foreign jurisdiction’s court, the jurisdiction of your trustee, and not the jurisdiction under which your assets are being attacked.
Your trust instrument requires these special provisions in order to maximize the protective benefits and legal barriers. In absence of carefully drafted trust provisions, a “court test” in your home jurisdiction could land you in an ominous situation. Your legal enemies may evaluate where the majority of the trust is administered, the tax home of the beneficiaries and other simple checks provide for trust governance decisions. An experienced asset protection planner specializing in these types of trusts knows this and already has appropriate language for drafting your trust.
If your trust is ever challenged, it will be the trust deed and language thereof that will determine substantial decisions that could affect whether the trust protects you or not.
Privacy isn’t protection, however it adds a layer of deterrence to a legal opponent looking for a payout. The first level of protection comes in the form of (the appearance of) insolvency through privacy of ownership. Before a major lawsuit seeking a payout, your legal opponent will look for your pot of gold. By implementing financial privacy techniques you remove your assets from the public radar, which means that even in the event of a judgment, your new creditor has nothing to target.
Building privacy can be done in both your home jurisdiction (select states) as well as the top offshore business jurisdictions. At home you can own real property in land trusts which removes your name from public property records. Privacy of ownership of a business corporation or company is also available to you through nominee member laws in some jurisdictions. This means that when you form a new business entity you can hire nominee officers and directors whose names will appear on records and publications, including annual officer and director filings, internal business documents or agreements such as bylaws, amendments or operating agreements. This can also divvy up management responsibilities, financial control, and power and signature authority of business transactions to those nominees, will act under your sole direction.
By privately owning a business entity, your personal name will not appear on any filing or public document. This requires an additional agreement to be signed when the business is formed and your officer/director is solely employed to act as a nominee for that purpose.
Over the last 10 years it has been increasingly difficult for Americans to open offshore banking accounts, and it’s not getting any easier. With the foreign accounts tax compliance act (FATCA) staring us down in 2013 as well as previous anti-terrorism and money-laundering initiatives post 9/11, banks have tightened their requirements on new and existing accounts.
Most people who attempt to open offshore accounts on their own end up empty-handed. Opening a foreign account is a lengthy and complicated process that still may not award you with the privacy and protection you’re looking for. With decades of banking relationships and the title of “eligible introducer,” such as our company, we can assist you in opening a new account relatively quickly as part of your asset protection plan. Very few asset protection planners specialize in banking relationships.
Accounts opened easily, a reasonable initial deposit amount and less red tape is the benefit of asset protection experience available to you here.
To get the most protection available, the highest level of financial privacy and a bank account that meets your needs requires careful selection of your planning professional. The right legal language, business entity formation and a properly established bank account is still the best you can do to prevent your wealth from being jeopardized in a legal battle. For more information on planning, protective vehicles and banking worldwide, call for a free asset protection consultation.