Offshore Asset Protection Strategies
The strongest Asset Protection you can establish is an offshore strategy involving an LLC and a Trust. What offshore asset protection 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, the offshore Trustee can step in to protect you. The Trustee is not subject to your local court orders. So they can refuse to comply with demands to bring back the funds. A trust protector,who you designate to supervise the asset management, can oversee the trustee. Meanwhile, you can advise the trustee as to how you want the trust company to invest your assets.
Why Go Offshore?
Establishing an offshore trust in the Cook Islands or Nevis is one of the strongest asset protection strategies. When you have an offshore asset protection plan, it ties the hands of the local judge. They do not have jurisdiction over foreign trustees. Plus, a legal opponent must then get through tremendous legal hurdles to threaten your wealth. Your assets are located in another jurisdiction. This means that if your legal enemy pursues them, they must pursue them in that jurisdiction and through its legal system. Now your legal enemy has to post tens of thousands of dollars so that a committee will review the case. The committee assesses if they will even allow their courts to hear the case.
This means that they first have to pay a sizable deposit, up to $100,000 in Nevis. Then they have to hire local representation and cannot have their attorneys work in the foreign jurisdiction. This is generally enough to deter most legal pursuits. However if the case does go to court, there is a statute of limitations. The case is either opened and closed in 2 years, or it is thrown out. These are huge legal hurdles to overcome and the time. The costs and odds of winning are so steep that your assets are likely to avert the attack. We have never seen assets seized from an offshore asset protection trust that we have established.
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 the trust owns 100%. 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. At that point they 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 Asset Protection 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 there is no transfer of assets. Only the change of LLC manager occurs which does not involve asset transfer.
- If assets are transferred after legal issues arise, the statute of limitations on fraudulent transfer is 2-years. Moreover, a plaintiff must prove this in offshore jurisdiction’s courts beyond a reasonable doubt. This is a very high legal hurdle, especially when one can offer legitimate international investing and diversification reasons.