Far Better than Bankruptcy

Bob Bauman (January 13, 2010)

Offshore Asset Protection Trusts Offer a Far More Hospitable Alternative…

“The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.”

So says the Wall Street Journal…

“And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.”

During this Bush-Obama Recession, the housing crisis and high unemployment have forced more people to file for bankruptcy who may never have considered the option before, experts say.

But isn’t there a better way?

Filings from 2008 showed more people with high income and high education levels resorting to bankruptcy petitions, according to an annual survey of consumer-bankruptcy filers’ demographics. Those demographic trends appeared to continue in 2009.

Some experts think bankruptcies reached their peak sometime last year, but bankruptcy attorneys from across the country told the Journal there was no sign that business was slowing. The 113,274 filings in December 2009 alone were a third higher than the same month a year earlier.

No one likes to contemplate bankruptcy.

Not only because of the financial problems it evidences, but because of the social stigma attached to financial failure. But for many Americans bankruptcy offers a fresh chance to start over, but sometimes from almost scratch, with only a few personal possessions and maybe some home equity left over – if they’re lucky.

But for the “well heeled and well advised,” as one bankruptcy lawyer calls them, having to file bankruptcy still can mean millions of dollars stashed, safe from creditors, in a traditional asset protection trust (APT) beyond the grasp of claims and creditors…

A Better Way to Protect Your Wealth

Five U.S. states (Delaware, Alaska, Nevada, Rhode Island, Utah) and most offshore tax/asset financial centers authorize APTs that potentially can shield the person who creates the trust from his or her creditors, at least to some degree. That’s because assets donated to a valid trust are no longer the property of the donor, but belong to the trust.

But understand that bankruptcy is always a last resort…

Most importantly, an asset protection trust must be created well before any financial problems arise. Trying to conceal or transfer away assets when bankruptcy may be looming is a criminal felony under U.S. law known as “fraudulent conveyance.”

This sort of asset protection trust also has been a favorite for rich persons seeking a safe way to distribute wealth to chosen heirs. And if a U.S. domestic APT gives you strong protection, that strength multiplies many times over when the APT is located offshore away from U.S. courts’ jurisdiction.

When tangible assets are transferred to another nation, (as when cash, stock shares or precious metals are moved to an offshore trust account, or an offshore trustee’s safe deposit box), a home country creditor will have a hard time reaching them, even if the existence of your offshore trust is known.

Shrink that Target

Even with the much greater financial privacy in offshore havens, there’s often a tactical advantage to letting a harassing party know your assets are beyond their immediate judicial reach…

The cost and difficulty of pursuit may discourage legal action against you or encourage compromise.

In litigation crazed countries such as the U.S., (and more recently the U.K.), it makes no sense to wait for a disaster before creating an asset protection plan that may include an offshore APT…not to mention you can lessen some U.S. and state estate taxes with a properly drafted APT.

Sincerely,

Bob Bauman, Legal Counsel

Editor’s Note: To find out how you can receive Bob’s special report Offshore Trusts: The Key to Flexible Asset Protection FREE of charge, just click here…