Offshore Trust: Protecting You From a Litigious Society
Anyone who has property or assets valued over $300,000 should consider protecting them from a possible lawsuit. Litigation, or “Who can I sue today?,” has become a popular means for the accumulation of wealth. We see it on television every day; people “recover” exaggerated sums of money for just about any reason. Today, if a person believes there is any possibility of obtaining money by means of a lawsuit, they will file a lawsuit. Defendants in a lawsuit settle without ever doing anything wrong because a defense attorney usually charges on an hourly basis. It is less expensive to settle than to litigate and defend yourself against the claim. Plaintiff’s attorneys, on the other hand, are likely to take the case on a contingency basis. Many times claims are filed because the plaintiff has nothing to lose.
When an attorney discusses a possible lawsuit with a prospective client, the lawyer will look at the probability of success. If probability is low, he or she will not take the case; if the probability is high, the next thing the attorney does is investigate whether the defendant’s assets are large enough to justify investing his time in the lawsuit. If the assets are small, the amount recovered would probably be small. As a result the attorney will probably decline the case.
One way to protect your assets is through offshore trusts. Trusts originated in medieval times when English nobles entrusted their lands and wealth to friends and other close relations before they went on crusade in order to ensure that their families were provided for during their absence. Over time the Trust has developed into the legal entity we know today. In the last few decades, the offshore trust has become popular. However, its improper and illegal use by some has given it a bad reputation as an asset protection tool.
There are many reasons why an offshore Trust can is an effective asset protection vehicle. The main reason to go offshore is because the countries that cater to asset protection don’t enforce U.S. judgments or liens. As a result, a creditor must litigate their claim within the foreign jurisdiction. For practical and economic reasons it is unlikely that a creditor will pursue the claim outside the United States.
The misconception about offshore trusts comes about because many falsely believe that an offshore trust will avoid having to pay income taxes. They have tried to unlawfully evade U.S. income taxes by using “secret” offshore accounts. Recent IRS measures are making it increasingly difficult to keep these accounts secret. There is nothing inherently wrong with offshore accounts. However, they cannot be used for tax evasion. Failing to report income and paying the appropriate tax can have devastating consequences.
When an offshore trust is part of an advanced plan it can legally and ethically safeguard your assets. Let’s assume that a prospective defendant has a high net worth and that the danger of losing it in a lawsuit exists. The assets can be protected by placing them in an offshore trust before a suit is brought. As with any legal matter, advanced planning is of vital importance. While few people ever imagine they will be sued and lose their assets in a lawsuit, however, in the current litigious society, advanced planning is necessary. An offshore trust is one of many alternatives that exist to protect your wealth.