There are a number of different types of trusts for estate planning purposes. For asset protection, the only concern should be with one point, specifically the legal (and tax) geographic classification of the trust.

Trusts are classified as either Foreign or Domestic. Foreign Asset Protection Trusts (FAPTs) are frequently preferred for asset protection purposes because they provide a higher level of protective measures than domestic trusts by the nature of the statutes governing them. Because the foreign asset protection trust is an offshore entity (i.e., "person"), it is generally not answerable for judgments handed down by U.S. courts. For a U.S. creditor to collect a judgment against a foreign asset protection trust, it generally would have to bring a new action in the foreign jurisdiction. While there are many specific issues which determine how immune the trust assets may be from creditor attack, in general there are formidable barriers for all but the most determined and well-funded creditors.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.