The Fourth Pillar of Asset Protection is that creditors cannot force you to choose between freedom or use of your assets. For those looking to guard their assets and possessions, an offshore trust is one way to go about it. However, offshore asset protection trusts have sometimes resulted in the grantor going to jail. Navigating the complexities of setting up a trust in another country can be tricky. If you don’t do it correctly, you may find yourself facing severe consequences. This includes having a court hold you in contempt of court and even throwing you in jail.
Before you consider setting up an offshore trust, make sure to learn all of the ins and outs.
If you are considering setting up an offshore trust, it’s essential to learn all of the ins and outs beforehand Make sure to research the laws and regulations of both the country in which you plan to set up the trust and where you reside. Additionally, double-check with a lawyer or expert on tax laws to make sure all of your assets are accounted for and are legally protected.
Also, keep reading because some people with offshore trusts have ended up going to jail for years. The U.S. Courts do not favor the idea of American citizens sending money and assets outside the country so the person’s creditors can’t get them. A U.S. court cannot order a trust company in another country to turn over assets. (That’s one of the supposed advantages of an offshore trust.) So, the court sometimes takes a different approach and holds the creator of the trust in contempt. That is a justification for ordering the creator of the trust (the grantor) to go to prison. The court’s reasoning is that after enough time in jail, the grantor will plead with the offshore trust company to turn over the trust assets. However, the typical offshore asset protection trust strictly prohibits turning over assets even when the grantor is under duress (or in jail).
This is why offshore asset protection trusts fail to comply with the Fourth Pillar of Asset Protection. They may protect the assets. But the grantor of the trust can end up losing his or her freedom. To us, that doesn’t make much sense.
What Is An Offshore Trust?
An offshore trust is a type of financial arrangement in which a trust company in a foreign jurisdiction manages a person’s assets. The purpose of offshore trusts is to provide asset protection. The idea is that no court in a foreign country will enforce a U.S. judgment. And by the time your creditors sue you here in the U.S., the statute of limitations in the foreign country will have expired. However, a major problem is that these are typically “Self-Settled Spendthrift Trusts.” In other words, you create the trust and name yourself as a beneficiary. The majority of U.S. states (including Arizona) do not permit this sort of trust.
Offshore Trusts Fail to Comply With the Fourth Pillar of Asset Protection.
Establishing an offshore trust carries a number of risks that should be carefully considered. One of the most important risks is the potential for being held in contempt of court. If a judge determines you are using the trust to avoid complying with the legal system, they can order you to repatriate assets held in the trust. The judge could may even throw you in jail. Additionally, there is also a risk that the other parties involved could act dishonestly and use your assets without prior approval.
Lawyer Accused of Hiding Assets In Offshore Trust Serves 14 Years in Jail.
In 1995, the U.S. District Court in Pennsylvania sent businessman H. Beatty Chadwick to prison for an indefinite period of time for hiding $2.5 million in assets from his wife during their divorce proceedings. This case was a wake-up call for many. It made people more aware of the consequences of hiding assets through offshore trusts and other structures. Sure, offshore trusts can make it difficult to ensure compliance with court orders related to divorce proceedings or other reasons. But as long as the person is still physically located in the U.S., the court can throw the person in jail.
Married couple jailed in the 1990s for refusing to return funds from their Cook Islands trust.
The Anderson case helped shape the limitations and consequences for not disclosing funds held in offshore trusts. Before fleeing to Panama, the couple refused to disclose their Cook Islands trust account, which contained up to $4 million. Ignorance was not a valid defense. As a result, the couple found themselves in her Majesty’s prison, where Denyse eventually served 18 months and Michael served 9 years before returning home in 2001 with a criminal conviction.
Don’t Let Your Asset Protection Plan End Up With You In Jail!
Our asset protection plans would never result in you going to jail. We are careful to make sure we comply with the law, and do not put you in jeopardy. If you want strong — and safe — asset protection, give us a call at 602-443-4888.