ADVANCED INTERNATIONAL PLAN
In addition to the financial planning and asset protection features
of the Family Limited Liability Company, there are a few International
opportunities you should consider to further enhance your overall
planning objectives. The International arena provides the highest
level of asset protection, and it can also provide significant income
tax saving opportunities for someone in your position. This section
of the memorandum will introduce some of the primary vehicles and
techniques used in international planning.
A. International Limited Liability Company
Similar to the above FLLC analysis, we also recommend that you
consider implementing a mirrored structure in an international jurisdiction
that offers even greater asset protection advantages. Whereas charging
orders have been pierced in the U.S. (although infrequent and under
bad facts), we are unaware of any piercing in an offshore jurisdiction
like Nevis or Anguilla.
B. International Asset Protection Trust
One of the most important pieces to any sophisticated asset protection
plan is the international asset protection trust (IAPT). An IAPT
can offer the highest level of asset protection available under
current law, and enables an individual to establish a “start-over”
fund in the event of unforeseen misfortune.
This level of asset protection is achieved through a variety of
components found in certain foreign jurisdictions. In particular,
certain foreign jurisdictions:
- Mandate secrecy regarding client information, with a significant
criminal penalty for any violations;
- Have more lenient fraudulent conveyance rules and will bar
any claims in which a creditor failed to bring the action within
1-2 years from the date of the transfer; and,
-
Allow flight provisions which permit the
trustee, and the “Trust Protector,” to monitor the trust assets
and immediately move them to a similar protective foreign jurisdiction
in the event it appears that the assets are threatened in any
way.
Consequently, a judgment creditor has little hope of ever actually
attaching to the assets placed in an IAPT. We recommend that you
consider establishing an IAPT as a repository for a portion of your
assets. The IAPT can be effectively funded with almost any type
of asset.
The IAPT can be effectively funded with almost any type of asset.
For simplicity of transfer and reporting, we recommend that it be
funded with cash, securities, and/or insurance. As a general rule,
we recommend that this be funded with an amount substantially less
than fifty percent of the individual’s net worth. This will increase
the likelihood that the IAPT will be upheld as a legitimate means
of providing for your family as part of a well-developed estate
plan, as opposed to a device designed to deter future creditors.
Nonetheless, the IAPT may not be a practical alternative for you
as an IAPT is usually more costly to set up and maintain than its
domestic counterpart, and may trigger withholding requirements under
the Foreign Investments in Real Property Tax Act (FIRPTA) and other
Code provisions upon a transfer of U.S. real property.