Asset protection planning using foreign trusts is a growing field and there exists a keen interest among the public in these types of arrangements. However, the professional advisor must be extremely careful when dealing with clients on this type of planning, as the advisor can also find himself or herself in the precarious position of being held liable under civil and criminal statutes for aiding and abetting the defrauding of a creditor. Accordingly, to avoid this type of unsavory exposure, due diligence must be performed on each client requesting such planning, as with tax planning in general-tax mitigation and/or reduction is acceptable and legal, but tax evasion is not. Thus, clients should be prepared to attest that the transaction establishing the asset protection plan is not done with the intent or purpose of defrauding, delaying or evading creditors, past or present; that after the transfer the client will still be solvent; that he or she is not a defendant in any action, and is not aware of any pending or threatened action; that he or she is not contemplating bankruptcy; and that he or she is not in violation of the Money Laundering Act, which, besides drug activity, covers many forms of unlawful acts, such as environmental liability.
Wealth management and Asset Protection Management is a very specialized area were only few major companies can provide truly professional advice. We pride ourselves in having some of the best international specialists with over 15 years of successful experience with major multinational corporations and banks.
- One of the greatest risks in the use of international trusts is an erroneous choice of local professionals. In some offshore jurisdictions, there have been instances of impropriety, including trustees, lawyers, accountants and bankers involved in tax evasion, money laundering, and perhaps other activities that while not necessarily illegal in the host country, are certainly illegal under U.S. and E.U. laws. The most feared report, prepared by the 28-member Organization for Economic Cooperation and Development (OECD) accuses 37 offshore jurisdictions (tax havens) of being "harmful" and identifying another 47 as being "potentially harmful." Shortcomings placing jurisdictions on the harmful list include a failure to enforce transparency by allowing offshore companies and individuals to refrain from publishing accounts and lists of their directors and shareholders; weak or nonexistent rules for exchange of information with international tax authorities; and giving preferential treatment to offshore capital with low or zero tax rates. In another accusatory survey, the Financial Action Task Force (FATF) established by the Group of Seven, the world's leading anti-money laundering authority, has singled out 16 jurisdictions as money-laundering havens because they either were not cooperative about defining money-laundering as a criminal act or they condone serious flaws in their banking systems.
- In summary, selecting the right jurisdiction in which to locate an asset protection trust is extremely important, as trust work requires a jurisdiction that has appropriate laws and experience, as well as a long history of excellence. Although many jurisdictions offer convenient corporate facilities, few can reach the high standards required for the trust arrangement to effectively function. Too often, a jurisdiction is selected casually, quickly, or because it might be a "nice place to visit." Almost every offshore jurisdiction advertises that it has something unique to offer.
- Asset protection management is not something you can put in place when legal proceedings are imminent, or already underway. Any attempt to transfer assets under these circumstances would be considered fraudulent. However, a well-designed asset protection structure, put in place ahead of time, can prove a very effective tool in protecting both wealth and privacy.
- Asset Management organized in international major financial centers are popular solutions for restructuring ownership of assets. Through trusts, foundations or through an existing corporation, individual wealth ownership can be transferred from people to other legal entities. Many individuals who are concerned about lawsuits, or lenders foreclosing on outstanding debts elect to transfer a portion of their assets from their personal estates to an entity that holds it outside of their home country. By making these on-paper ownership transfers, individuals are no longer susceptible to seizure or other domestic troubles.
Unfortunately, for many people when they start thinking about their interest in asset protection management it is simply too late.