OFFSHORE ASSET PROTECTION
Aggressive asset protection, in particular lawsuit protection, often involves use of offshore entities. Certain foreign jurisdictions do not recognize the judgments of United States courts. To reach assets held offshore, it may be necessary for the creditor to retry the claim in the foreign jurisdiction. This would require hiring local attorneys and having witnesses, exhibits and other evidence presented in the foreign court. The costs associated with such an action may deter a creditor from pursuing the debtor further.
A very useful method of obtaining asset protection is through the use of a Foreign Trust. Typically, the trust is located in a jurisdiction with laws favorable to judgment debtors. This means a very short statute of limitations for fraudulent conveyance and a very high burden of proof for the creditors to overcome. A duress clause is added to the trust, which makes the trust irrevocable in case of a lawsuit or threatened asset seizure. In the event that a creditor attempts to have the foreign court assert jurisdiction over the trust, a clause in the trust agreement provides the power to move the trust to a new jurisdiction.
Additional protection can be obtained by creating an offshore corporation. This corporation would achieve greater confidentiality and protection through the use of nominee officers, nominee directors and bearer shares. The corporation would hold title to bank accounts, brokerage accounts and other investments. The bearer shares would be controlled by the offshore trust. The offshore corporation would typically be formed in a jurisdiction other than the foreign trust’s site.
Offshore bank accounts provide a safe and confidential method of holding liquid assets. The bank account would generally be opened in a country with strict bank secrecy laws and with modern communications and financial facilities. Many offshore banks offer checking accounts, time deposits, securities accounts and even VISA and debit card services. These accounts can be denominated in U.S. Dollars or any other major foreign currency.
Offshore arrangements are an excellent means of separating assets that would otherwise be exposed to judgment creditors. To avoid the potential loss of one’s wealth, a “nest egg” of assets can be held in an offshore structure for easy access, privacy and protection from seizure. Properly implemented, the above measures provide the creditor with a legal obstacle course, resulting in the most comprehensive asset protection available.
