Foreign Asset Protection Trusts
In 1984, the Cook Islands passed the International Trusts Act, banning the primary Asset Protection Trust from recognizing any remote jurisdictions. Numerous nations went with the same pattern, including Belize, Bahamas, Nevis, and Cayman Islands, making a few Foreign Asset Protection Trust choices. This new law means that a creditor must re-try the case in the island nation (a notoriously difficult process) in order to extract assets. Because there are no contingency fee attorneys permitted, creditors must pay expensive legal fees and other associated court costs up front. The loser of a case likely pays their own legal expenses as well as those of the winner.
In any case, the disadvantages of an offshore trust include higher setup and maintenance costs and a heavier paperwork burden of IRS filings and federal disclosures. A Settler must also be willing to relinquish control to a foreign trustee. This is not including that creditors must deal with the negative perception of illegality that comes with offshore accounts.
Domestic Asset Protection Trusts
After determining that asset protection is a good public policy, Alaska passed its resource insurance trust statute in 1988. Alaska and 15 additional states afterward found asset protection to be legal and a worthwhile measure to take if necessary. Domestic asset protection trusts are designed to provide you with lower maintenance costs, reduced tax filings, fewer federal disclosure forms to fill out, and a number of other benefits. Since Article IV, Section 1 of the US Constitution states that a judgment in one state must be honored by all other states, it’s become apparent that some US judges have broken domestic trusts several times. This cancels out the domestic trust’s effectiveness. At Weatherby & Associates, P.C., we work hard to make sure that you and your assets are protected no matter the challenges that US courts and judges place upon them.