What Is A Portable Offshore Asset Protection Trust?

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There are many different terms used within the field of asset protection. One of these is what’s called a ‘portable offshore asset protection trust‘.

The question you have most likely asked yourself, and the reason you are reading this article, is what’s the difference between a portable trust and a regular one?

Normally when a trust is formed, it stays and is under the laws of where it was created. If it was set up in a US state it remains there, or if you hired a consultant in Cook Islands it will remain under the laws of where it was formed.

But, what if the trust is under attack, and someone tries to sue you? After all, that is the whole point of an asset protection trust, to protect your assets in case of a lawsuit.

What Is A Portable Offshore Asset Protection Trust - Infographic

If you get sued, there are two ways the lawsuit can play out. Either you lose, or you win. In the scenario of you winning a litigation, all is well and you can continue your life as normal. But what if you lose, what happens to your precious assets? If the litigation is lost, you’ll have no other choice than hand over your assets, unless… you have a portable trust.

A trust being portable means that if it’s under attack, you can legally move it to a different country, which is often called including a ‘Flee Clause’. Not all standard trusts include such a provision, which is because a lot of trust companies can be lazy about including it, even though it doesn’t require that much extra work.

Many times a portable trust is initially formed domestically, and then if needed moved offshore. I would say that is a poor way of creating a solid asset protection plan. It makes no sense to have a trust settled in your home country, if it can be done offshore to begin with.

The whole issue is if your trust will from the start be under the mercy of a local judge, and if someone sues you from the same country, you can find yourself in a rather difficult situation. Compared to if your trust was located offshore in the first place, where a judge in your home country (ex. US) doesn’t have any jurisdiction.

Proper asset protection planning comes down to making careful decisions, which in most cases are fairly common sense.

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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.