Advantages of Offshore Trusts – Alper Law

The main advantage of an offshore trust is asset protection. In addition, an offshore trust provides people provide financial privacy and flexible estate planning options.  

What Is an Offshore Trust?

The term “offshore trust” refers to a trust agreement that is formed in a jurisdiction outside the United States. The trustee of an offshore trust is also located in a foreign jurisdiction in most cases. Your offshore trust may hold U.S. assets, and the trustee may invest funds in U.S. financial institutions. The trustee may also open financial accounts in other countries.

An Offshore Trusts Protect Assets

Most of our clients are interested in offshore trusts for strong asset protection. We establish our clients’ offshore trusts in jurisdictions with laws that make it difficult for creditors to reach trust assets.

The Cook Islands and Nevis are currently the most popular offshore trust jurisdictions. These countries have strong barriers against creditor collection while offering financial and political stability. These two countries do not recognize U.S. court judgments. U.S. creditors have to relitigate their claims in the foreign trust jurisdiction.

By placing assets in an offshore trust, our clients create a legal barrier, making it harder for creditors to reach their wealth. Offshore trusts may not make you “judgment proof,” but they are a substantial barrier to creditors that usually result in a favorable debt settlement.

Privacy of Offshore Trusts

An offshore trust adds a level of privacy that is difficult to obtain with domestic trusts. The principle offshore jurisdictions do not require public disclosure of the names of beneficiaries, the assets held, or the settlor’s identity. Our clients’ trust assets are not disclosed to the public.

Avoiding Probate

Offshore trusts can be transferred to your heirs without probate. Probate is the process of transferring your assets to your family after death and after paying creditors.

Your beneficial interest in an offshore trust passes directly to successor beneficiaries outside the legal system and according to the directions you specify in your offshore trust agreement.

Diversification of Investments

Offshore trusts offer options to diversify assets across multiple countries. Foreign trustees can spread financial assets among institutions in multiple countries.

This diversification can limit exposure to economic downturns or currency changes in the United States. Your U.S. real estate can be pledged to offshore lenders to secure loans made to your offshore trust.

Flexibility

The laws of the principal offshore trust jurisdictions Cook Islands and Nevis, provide flexibility to combine asset protection and control. Offshore trust laws permit “flee clauses” that automatically change the trust location if the trustee is attached by your U.S. creditors.

Some jurisdictions permit the offshore trustee to act as a mere custodian of assets while you retain primary control over investment decisions.

About the Author

Jon Alper is a nationally recognized attorney specializing in asset protection planning. He graduated with honors from the University of Florida Law School and has practiced law for almost 50 years.

Jon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.