Offshore Asset Protection Trusts: Having Your Cake and Eating it Too

Abstract

This article seeks to compare U.S. and offshore trusts systems to identify and discuss ways in which Offshore Asset Protection Trusts undermine U.S. trust policies. Part II of this article lays the foundation for this comparison by setting out conventional U.S. trust law from the standpoint of creditor access to assets held in U.S. trusts. Part III maps out the structure of Offshore Asset Protection Trusts and examines how they offer creditor protection. Part IV sets forth a methodology by which to compare the two systems. It examines ethical and policy considerations raised by the greater protection, flexibility, and control offered Offshore Asset Protection Trust settlors versus settlors of domestic trusts. Part V concludes that in substance, if not in form, some Offshore Asset Protection trusts defeat well-settled U.S. trust doctrine.

Keywords: Offshore Assets, Trusts

JEL Classification: K33, K36, K33, K22, K34