A foreign trust is simply a trust that is governed by the laws of another country and generally speaking, affordable to almost anyone who has assets and a desire to protect those assets.
Under U.S. law, a trust is a foreign trust unless both of the following conditions are satisfied:
- A court within the U.S. exercises primary supervision over the administration of the trust.
- One or more U.S. persons have the authority to control all substantial decisions of the trust.
Foreign asset protection trusts are usually established solely for asset protection purposes, and almost never for tax purposes.
Generally, when contrasted with a domestic trust, a foreign trust offers the following benefits:
- Increased ability of the settlor to retain benefit and control
- Less likely to be pursued by a creditor
- Foreign jurisdictions usually are more beneficial to the debtor statute of limitations, burden of proof and other important provisions
- No full faith and credit, comity or supremacy clause issues
- Favorable to the debtor spendthrift provision laws
- Confidentiality and privacy
The rules which apply to foreign trusts are extremely complex; therefore, it is important to speak with an attorney about any questions or concerns you may have. The Law Offices of Justin M. Gilbert are happy to assist you.