Best jurisdiction for an offshore trust?
More than 30 foreign jurisdictions now have asset protection trust statutes. The Cook Islands was the first to adopt an International Trust Act for asset protection purposes in 1989, and many other jurisdictions have based their statutes in whole or in part on Cook Islands' law. A number of other jurisdictions have traditionally relied on court cases (rather than a statute) to provide asset protection for trust beneficiaries. The leading example is the Isle of Man (used by many wealthy individuals long before any offshore asset protection statutes were enacted).
Offshore laws vary widely, and there is no one jurisdiction that will automatically meet the needs of all clients. There are varying statutes of limitations relating to fraudulent conveyances; differences in whether a U.S. judgment will be recognized or whether a new trial will be required; differences whether contingent legal fees will be permitted; and a variety of other variations.
Beware of anyone who is simply trying to sell a particular kind of trust, like a "Cook Islands Trust", or a "Cayman Islands trust". There is no way someone can know the best choice for you without a careful analysis of your particular situation. Whether an offshore trust is even a good idea for you in the first place requires careful analysis.
The bottom line is that there is no foreign or domestic asset protection trust that automatically meets the needs of all individuals. Each situation must be analyzed on its own.
Excellent website! I absolutely agree that there is no single solution for every situation & that each situation needs customized analysis. I also believe that it is a very rare skill set that is required for asset protection planning. It requires knowledge of corporate laws, trust laws, tax laws, bankruptcy laws, contract law, real estate law, divorce law, and some civil procedure & criminal law, across many jurisdictions. Thus, it requires a specialist in certain areas, not necessary a license from a particular state. Do you agree that this is a multijurisdictional practice by nature? Do you think there is much risk of disciplinary issues for serving clients outside of your licensed jurisdiction? What about all the non-lawyers giving legal & tax counsel in this area?
Some excellent questions raised by Lee S. McCullough. I think asset protection planning does tend to be a multi-jurisdictional practice by nature. Asset protection planning involves possible formation of trusts, limited liability companies and other entities in more than one jurisdiction. Moreover, many clients have assets in several states -- and may own property in Canada, Europe and other foreign jurisdictions. So asset protection planning frequently involves more than one jurisdiction.
With respect to non-lawyers giving asset protection advice -- this can be a problem. Among other things, a client's communications with anyone other than an attorney are not privileged. And only an attorney should be drafting trusts and other documents..
Lawyers need to be licensed in a particular state to practice law in that state. So any time you perform work that involves entities or issues outside your own jurisdiction there is a potential problem. But I think good asset protection attorneys tend to involve local counsel where necessary. Some of it is just common sense. Not too long ago I was working with a client who owned several pieces of real estate in Canada. So I consulted with a Canadian lawyer with respect to several issues. On the other hand, I do not think you necessarily need local counsel each time you form a Delaware LLC. That action does not constitute practicing law in Delaware. But I do agree there are unresolved issues in this area when you are working with someone who resides in a state where you are not licensed.
The bottom line of all of this is that client need to choose a qualified, reputable asset protection attorney when they need help in this area.