Already Have A Trust? How To Upgrade Your Asset Protection

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The best way to protect assets today, is by using a trust structure. There’s no better situation to be in, than if you already have formed a trust. But the overall quality of protection all comes down to how everything was actually formulated, the drafting of the trust document, and how the setup works as a whole.

Here are a few ways you can upgrade your asset protection trust:

Offshore

By taking your trust and assets offshore, they are no longer under your home country’s legal system. A local judge doesn’t have any power over a foreign jurisdiction, and can’t automatically enforce laws in other countries. Meaning it won’t be possible for a domestic court to pressure a trustee to hand over your assets. On the other hand, with a domestic trust you have literally no protection of your assets, because domestic asset protection trust’s don’t work.

Already Have A Trust - How To Upgrade Your Asset Protection - Infographic

Trust Deed

To determine if you have optimal protection, it’s necessary to have a closer look at your asset protection plan.

First of all, let’s take a look at the trust document itself. A trust is essentially an agreement, which lists different rules that govern how the assets owned by the trust can be managed. Drafting a trust is a complex process, and is therefore not something I should explain at length here.

What you have to keep in mind though, is to make sure at least the following provisions are included in the trust:

  • Flee clause – Allows your trust to be moved to a new jurisdiction, if it’s under legal attack.
  • Anti duress clause – You can ignore advice that is the result of legal or government duress.
  • Spendthrift clause – Prevents creditors of any beneficiary from touching the trust assets, as long as they remain a beneficiary.
  • Contest clause – If a beneficiary tries to challenge the trust, in order to receive more benefits, they can be removed.
  • Excluded persons clause – You can name the persons that are formally completely excluded from the trust.

Belize LLC

Usually when an asset protection plan is structured, it includes a company owned by the trust. This is what’s called a holding company, and is then the entity that will own all your investments.

Companies can be registered all over the world, in many jurisdictions with an established reputation. Usually when you sit down with a consultant that represents the legal services of any one jurisdiction, they will tell you to set up everything there. But the truth is, that isn’t necessarily in your best interest. It’s better to combine vehicles and entities from different jurisdictions, to come up with a better solution.

Therefore, when possible I would recommend using a Belize LLC to hold your assets. At a first glance, it might look like a company from any of the many other places you can register an offshore company.

What’s interesting about Belize, is what section 37(7) of the Belize International Limited Liability Companies Act states: “Every creditor, before bringing an action or proceeding against any LLC property, must first deposit with the Supreme Court Registry an amount equal to half of the amount claimed or $50,000, whichever is greater, for securing the payment of all costs as may become payable by the creditor.”

In other words, if someone tries to sue you, they will have to deposit in cash at least half of their claim. If the claim is $1 million, the requirement is then to deposit $500,000 with the supreme court.

What you are seeing here is the strongest asset protection law for an LLC in the world.

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About The Author

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Fredrik helps high net worth individuals with creating international asset protection strategies. To keep anything from currency, real estate, precious metals and any other kind of investment protected from an unexpected lawsuit.