Maritime International Advisor

OFFSHORE ASSET PROTECTION TRUSTS MADE SIMPLE - Part 1

October 4, 2011 - In today's uncertain world, having an Offshore Trust is essential for the protection of assets, securing your wealth from creditors' lawsuits, an ex-spouse, and even the governments of unstable and/or corrupt countries. It is also important to keep your wealth out of the hands of minors, incompetents and/or spendthrifts; and leave a lasting legacy to incentivize deserving heirs. Think of the Trust as a safety deposit box for uncertain times.

ASSET PROTECTION TRUSTS (APT)

Forming a Trust may sound expensive and complicated but they are not really. At its most basic, a Trust is a contract, that allows one person (the Trustee) to take title and possession of cash or property and hold, use or manage those assets for one or more other persons (the Beneficiaries).

The person who creates the trust (the Settlor), decides what he/she wishes the Trust to do and donates assets to it. The Trustee structures the Trust in consultation with the Settlor. Information is then updated periodically via a Letter of Wishes from the Settlor to the Trustee. These changes can be done at any time.

As noted by Laura Mouck, Maritime International Ltd's Director of Wealth Management: "It is very important to start early, as the longer a Trust is in existence, the less vulnerable it is to attack." Large funds do not have to be deposited into the trust to establish it. In most cases it can be funded with only a few hundred dollars. Assets can be added to the Trust at any time and if the Trust has an already existing bank account, funds can be quickly moved into the trust in an emergency. A Trust and Trust bank account can be viewed as a rock of stability in an unstable world.

It is interesting to note that jurisdictions with strong conditions on the implementation of Section 26, such as Singapore has done, have typically averaged only a few successful inquiries per year.

"The future depends on what we do in the present" - Mahatma Gandhi

The Offshore Asset Protection Trust (APT) is a powerful wealth preservation structure.

• It offers an ideal means to protect your assets and ensure your heirs and chosen beneficiaries get what you want them to have after you're gone.
• It defends your wealth and can be the key to strategically sound and successful estate planning.
• It adds a significant layer of asset protection - distance. A domestic trust in your home country may serve your needs, but an offshore APT places your assets outside the jurisdiction of the courts in your home country. It also avoids the public and lengthy probate process, which is required in many countries when the deceased has only a last will and testament.
• It can hold title to, and invest in, real estate, cash, stocks, bonds, commodities, negotiable instruments and personal property. An APT is an excellent vehicle for investing in offshore funds, currencies and other investment possibilities around the world.
• It can provide care for yourself, minor children or elderly parents; pay medical, educational or other expenses; provide legal and financial support in an emergency, or basically anything you want it to do.

Many offshore financial centers specialize in the creation and administration of Offshore Asset Protection Trusts but Malcolm Nickerson, Managing Director of Maritime International Ltd states: "Our recommendations are based on 21 years of experience in serving Trust clients. We are now serving the children of our original clients." Based on our long experience we recommend certain Offshore Trust jurisdictions with the following unique characteristics, as well as the usual criteria:

TAXES

The jurisdiction of course must be tax free.

SETTLOR

The jurisdiction must specifically allow a Settlor to be the beneficiary of the Trust, if so desired.

FOREIGN JUDGMENTS

Foreign judgments should not be enforceable against a Trust settled under the laws of the recommended jurisdiction. Any claimant must commence new proceedings in the jurisdiction, subject to its laws.

HEIRS

A disinherited heir should not be able to challenge a Trust on the basis that it interferes with his or her right to succeed to assets or property.

BANKRUPTCY

A Trust should not be void or voidable in the event of bankruptcy.

FRAUD

The Courts of all jurisdictions have the power to declare a Trust invalid, but should not have the power to vary or set aside the Trust where there is a claim by a creditor upon insolvency. This should apply even in the face of legislation such as the Statute of Elizabeth and Reciprocal Enforcement of Judgments.

The result of the foregoing is that once a Trust is settled under the laws of our recommended jurisdiction, it is deemed not to be fraudulent. There is no waiting period as in most other jurisdictions, it is immediate.

GOVERNING LAW

The term of a Trust, expressly selecting the laws of our recommended jurisdiction to govern the Trust, is valid, effective and conclusive regardless of any other circumstances.

COMMENCEMENT OF LEGAL PROCEEDINGS AGAINST THE TRUST

Any proceedings to set aside the settlement of the Trust, or dispositions to such Trust, should be required to be commenced in the Supreme Court of the recommended jurisdiction. This is not easy for litigants, as local legal representation must be hired, local laws and customs must be followed and what might be deemed illegal by a court in another country is quite conceivably not so in the recommended Trust jurisdiction.

CAN THE TRUST BE SUED?

Yes it can. It is a legal entity all by itself. If the Trust loses a lawsuit all the assets of the Trust can be attached to satisfy the judgment. However, this is why it is best for the Trust to operate as a "holding entity" for the purpose of holding ownership of another offshore company that will be owned by the Trust. The litigant would have to have court action taken against it first in its jurisdiction (and win) long before the Trust could be attacked.

In the event that this action looked like it could be successful, the Trust could then be redomiciled to another jurisdiction making it much harder for any action to be taken against the Trust.

CONCLUSION

In a statement by Laura Mouck: "It is just as crucial to safeguard your wealth as it was deciding how to make it, save it and invest it." You can leave a real, lasting and useful legacy to your heirs, but the process needs to begin early. You do not have to settle major funds into your Trust at the beginning but you need to have it immediately available for an emergency, and for long term planning.

FOLLOW-UP

If you would like more information on Trusts, please contact us on our Secure Information Request Form and address your enquiry to Laura Mouck. Click here for your secure connection.

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