Offshore Asset Protection Trust

When deciding what kind of trust you want to create, you may consider an “offshore asset protection trust.” The idea is that your assets may be safer when under the control of a trust outside the United States.

Is It Worthwhile?

In some limited circumstances, an offshore trust may provide more protection than asset protection trusts in the United States. However, most people do not need such extreme measures to protect their assets.

An offshore asset protection trust

  1. has significant setup fees,
  2. requires annual trustee fees,
  3. takes more time, and
  4. has some unique risks.

For most people, the associated costs do not justify the limited benefits. You don’t need to have an offshore trust for asset protection.

Outside the legal framework of the United States, your assets may be exposed to other risks due to unfamiliarity with local laws or instability/corruption in those countries.

You should also be aware that scammers target people with schemes related to establishing an offshore trust. You should always hire an attorney in your jurisdiction before sending money offshore.

Attributes of an Offshore Asset Protection Trust

An offshore asset protection trust generally has the following characteristics:

  1. the trust is irrevocable,
  2. the trust has a trustee that is not a beneficiary,
  3. the trust only has distributions that are subject to the trustee, and
  4. the trust has a spendthrift clause.

Consider a U.S. Asset Protection Trust

For most people, an asset protection trust located in the United States accomplishes the same goals (i.e. asset protection) without the additional costs and risks. If you are considering an asset protection trust, and you are not sure whether offshore or U.S. trust is better for you, contact an attorney knowledgeable in this area of law.