What factors need to be considered before establishing an Offshore Trust?

The reality is that asset protection planning is more costly to implement than other estate plans. In addition, you’ll spend more each year to maintain it but keep in mind the savings it can also generate. You may be able to reduce considerably the malpractice or business liability insurance premiums you now pay once most of your assets are protected offshore. Furthermore, you can save the enormous cost of defending yourself in a lawsuit, or worse, losing it all in court. With proper asset protection in place, you may never have to experience either. The peace of mind alone afforded by this planning option is often well worth the modest investment.

If an Offshore Trust makes sense to you, the time to implement it is now before it is too late and a legal crisis is already upon you. If you wait until action against you is “pending, threatened, or expected,” the measures you take to remove wealth from your estate will be deemed a fraudulent conveyance and invalidated by a court of law.

Moreover, don’t think that an Offshore Trust will lessen your tax liability. If you remove assets offshore, you are required to notify the IRS.
One final note is also in order. In an attempt to capture some of the Offshore Trust business, a few states recently enacted laws which promise to provide trusts created under their jurisdiction with some of the same protections offered by trusts created in foreign jurisdictions. While it’s possible that these trusts may work for those who live, work, and own all their assets in one of these states, those in other states may be exposed to creditor action just as before because each state’s courts are required to give “full faith and credit” to the judgments of other states’ courts. A judgment against you in one state would be honored by the other states, even if the trust you’ve created seemed to promise you complete protection.

If you think that asset protection may be for you, sit down immediately with your trusted estate planning attorney. It is your attorney who can evaluate your individual situation and determine the most effective strategy to help you meet your asset protection goals.

Despite its promises to “simplify” the tax code, Congress’ never ending changes to our nation’s estate and gift tax code have made it too complicated for most people to understand. Nonetheless, a review of its basic details is essential to understanding how to protect your estate.