Shannon L., a medical doctor practicing in Minnesota, has made some tough decisions in her life. Working in a high-risk profession, she is concerned about protecting her assets from civil judgments. She and her estate planning lawyers discussed setting up an offshore asset protection trust. First, she had to learn a little more about this useful estate planning tool.
A Typical Trust
To form a trust, an individual (the settlor) signs a trust document and transfers assets to the trust. The trustee, who in some cases may be the settlor, manages the assets of the trust. And the trust document names at least one beneficiary, which can be a person or an entity.
Asset protection trusts are irrevocable, which means the terms of the trust cannot be changed easily. The assets used to fund the trust are protected from most creditor claims and, in some cases, from the beneficiaries themselves.
An Offshore Asset Protection Trust
This irrevocable trust is established under the laws of another country. For example, the Isle of Man, Cayman Islands and Cook Islands have all been favorable places to set up an offshore asset protection trust.
Just establishing a trust in another country does not mean the trust will offer asset protection. The trust must be established in a country that does not recognize judgments from other countries. So, an offshore asset protection trust might be established in the Cook Islands by someone who lives in the United States.
A judgment or claim against the trust settlor may be entered in the jurisdiction in which the settlor lives. The courts in the offshore trustee’s country do not have to honor that judgment.
Discuss Trusts with Your Estate Planning Lawyers.
Dr. Shannon was able to safeguard her hard-earned property by using an offshore asset protection trust. However, you should discuss your own situation with your lawyers before establishing any trust.
The attorneys at Virtus Law have experience with estate planning tools that may help you. Contact Virtus Law at 612.888.1000 or send us an email at info@virtuslaw.com. Our main office is located in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.