The use of offshore trusts for asset protection planning has significantly increased recently mostly due to the massive growth of risk factors adversely affecting the preservation of wealth. Among these risk factors are civil litigation, expropriation or nationalization as a result of political instability, marital or family disputes, contingent creditors, mismanagement of investment or asset portfolios, and punitive estate or wealth taxes.
Especially in the United States there is an increased need for asset protection over the last years mainly due to the nature of the society and the lack of legal reform. American business and professional individuals have witnessed a dramatic increase in their exposure to:
- Business creditors
- rofessional liability
- Judgement creditors
Business and professional individuals are often targets of pointless and disputable lawsuits that are brought in the hope of an easy settlement. The United States legal system has dramatically expanded the theories of liability against potential defendants, which can place those defendants in a very precarious position, often exposing them to large legal expenses and possible adverse judgements, not to forget years of uncertainty and stress.
We should have in mind that the society of the United State is the most litigious society in the whole world, since statistics show that a lawsuit is filed every thirty seconds; and that ninety four percent of the world's lawsuits are filed in this country.
On average, all professionals in the United States can expect to be sued every three years, while internet related lawsuits have been also rising recently. The system of the United States has recently been implemented into the United Kingdom through legislative changes.
OFFSHORE TRUST JURISDICTION
The Trust, in order to provide effective protection, must be offshore in a tax-free jurisdiction and out of the reach of the courts in the client’s country of citizenship, residence and/or domicile. It must be established in an English common law jurisdiction that will not recognize the judgment of a foreign court.