A well-known method of asset protection is Offshore planning. What is involved in Offshore planning is the establishment of legal entities in favorable foreign jurisdictions that are under the control of trustees who are neither citizens of the U.S. or persons having a business presence in the U.S. The purpose of offshore planning is the removal of legal battles with creditors to jurisdictions that are beyond the reach of U.S. courts. Offshore planning works foremost, because there are some offshore jurisdictions that do not recognize judgments rendered by U.S. courts. In order for judgment creditors to be able to reach assets which are located in such jurisdictions, a creditor must begin again and reinstitute the lawsuit against the defendant in order to establish a new judgment in the foreign court system.

Another advantage of offshore planning is that favorable offshore jurisdictions have relatively short statutes of limitation on fraudulent transfers. Domestic asset protection is frequently vulnerable to a creditor’s charges that the debtor has transferred assets, or has converted one type of asset to another asset, in order to defraud or delay the creditors’ collection. The majority of states have four-year statutes of limitations, which means that a creditor’s attorney can pursue asset transfers up to four years after the transfers took place. People who delay putting an asset protection plan into place until they are sued will often find their efforts challenged as fraudulent transfers if they are done four years or less prior to a judgment being entered. However, in preferred offshore jurisdictions the courts have statues of only two years of limitations on fraudulent transfers. The shorter statute of limitations thereby makes it easier for debtors to delay judgments until after the statute of limitations has expired to challenge asset protection transfers.

The offshore asset protection trust is the primary legal tool involved in offshore planning. In simple terms, the offshore trust resembles a typical U.S. trust except that the offshore trust is a “self-settled trust” where the settlor and the beneficiary are both one and the same. The trustee is a person who is nominated by the settlor and is either an individual who is not a U.S. citizen or a business having no U.S. offices or affiliation. Most often, an offshore asset protection trust has additional people who serve as trust advisors or trust protectors. These individuals are not under the settlor’s control, but they have certain powers in the administration and protection of the trust and its assets. However, who have no beneficial interest in trust property.

In addition to asset protection benefits, offshore trusts provide a method of transferring assets between generations, probate free. Upon the settlor’s death, the trust will usually provide that assets will automatically pass to named successor beneficiaries. Offshore planning will also provide investment flexibility because offshore trustees are able to make certain investments not permitted by trustees of domestic trusts.

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