For my subscribers last week, I wrote details on one way to properly structure an offshore trust to maximize asset protection. Trusts are one of the oldest (if not the oldest) forms of legal ownership for property dating back to the Roman times. While they are a bit abstract and difficult to understand, they are perfectly legal and one of the best ways to completely insulate yourself and your assets against the many threats to your wealth.
I have many clients inquire about trusts, but the number one question is “what happens if the trustee runs off with my money?” This is a legitimate question, however the way our trusts are structured using LLC’s or IBC’s, it is impossible for the trustee to make decisions about your assets without your consent. Let me illustrate a simple example;
Your stock trading account is owned by an LLC. You are the manager of the LLC giving you full control of the use and allocation of these funds. However, the trust is the legal owner of the LLC, thus eliminating your ownership of the funds held by the LLC. The trustee is unable to make decsions without the settlor’s approval and you are the settlor. In this scenario, you are the LLC manager and the settlor of the trust, but not the owner. The trustee maintains title to the property until your demise, which at that point, your beneficiaries become the legal owners of the property.
As John D. Rockefeller said “own nothing and control everything”. This is the ultimate goal and can easily be accomplished using an offshore trust. By using an offshore trust, it keeps the trust assets outside the reach of US courts. Unless there is a major crime or terrorism at play, countries like Belize and Cook Islands won’t recognize a US court ruling and thereby fully protecting your assets held within the trust.
Offshore trusts aren’t for everyone. You must report ownership of any offshore trust to the IRS or risk severe legal penalties. This reporting is not difficult, but it does create additional administration and for some, it isn’t worth the effort. But if your assets have significant value and you want the ultimate in asset protection, offshore trusts are the ultimate tool.