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Do we really need a trust for asset protection ?

TheGlobetrotter

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May 23, 2024
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I have invested about 100 h the ASSET PROTECTION topic (research, talked with lawyers and different providers). The more I read, the more I doubt the actual need of a trust for 99% of the cases.

Disclaimer: I do understand that there is a not a one-size-fits-all type of situation!


My conclusions so far:

1. As many other on this forum, I have come to the conclusion that the physical location/ jurisdiction of the assets AND the physical location of the owner are even more important than the juristidiction where one incorporates his asset protection vehicle.

2. It is very very hard to find HONEST advice on this matter. There are not many people who really know this topic (but a lot who say they do). Everyone is trying to sell you whatever they have for sale (if they are specialised in Cook Island they are going to give you all the reasons why Nevis is worse, if you talk to someone specialised in Nevis, they will give you just as many reasons why Cook Island is worse and so on).

3. There is extremely hard to find REAL FULL TRANSPARENT total cost for the construction starting the 2. year . And almost every provider seems to ‘’forget’’ to tell you all about it. They give you a rough estimate which looks good (2-3k) without explaining what other ‘’small fees’’ comes on top.

4. Reduntant (useless?) overinflation of the structures is quite common: it starts with a trust, than you need a Holding under the trust (obviously again in an offshore jurisdiction) and than another company to really hold the real estate / do the business locally. Is this really necessary for more than 1% of us ?

5. There is not much talk about differences in THREATS that one is trying to avoid through this kind of structure. For example , if you live in Europe the risks are quite different than in the USA. Moreover, on the individual level the threats are quite different. Most of the offered constructions are focused on protecting yourself from non-governamental creditors. But isn’t it just as important to be protected by the more and more abusive goverments (talking from a pure legal-earned-money perspective here)?

6. There is not much discussed about what comes after the formation. So you payed X$ and incorporated the trust and Y$ and incorporated the Holding LLC and Z$ and incorporated the local company that wants to let’s say buy a real estate and rent it. Everyone advices you to give a private credit to one of the companies in this chain (ideally the one in the investment jurisdiction). What happens if the court decides to seize the debt ? wouldn’t that defeat the whole purpose of the plan ? (sure, the provide has something else to sell to ALLEGEDLY protect you from this too)

7. In the case of Trust, I feel the risk of the trustee going rogue is being downplayed. Even in old / traditional / not-so-offshore jurisdictions (like Lichtenstein - foundation) have been multiple situations where some fiduciary company took away the money / did not follow the instructions of the founder/settler. Who is to say that when s**t really hits the fan (on a personal level e.g. criminal trial or on a global level e.g. in a World War), they are really going to act as instructed. If you ask a provider, they will just recommend you to ask another layer of protection (like a trust protector)…. so more expenses . Even if the risk would be mathematical 0,1% of this happening, am I really willing to accept this risk to my back up plan . Of course, the provider can give you another trust in a different jurisdiction to spread the risk…

8. Some lawyers that I talked to believed that a holding company can do in most cases just as much as a trust if set up properly (for example with an call option clause in your favour) for so much less money. Why is this not being talked about more ?

9. Almost no one talks about the problems of getting an account for the subsidiary company (as some bank do not open accounts if the local company has an off-shore company as shareholder). Of course you can get some account in another off-shore jurisdiction, but how realistical is it to use that on an everyday operation business? Yes, I know, the provider will just open another company in an on shore jurisdiction or provide u with a swiss account for a ‘’small fee’’….



I would like to hear other peoples honest thoughts on this topic, as there is less likely that an answered here is money-driven as it is with any company provider. Just to be clear: I am absolutely NOT trying to save money here. I am more than willing to pay much more than the normal quoted fees to any provider IF I REALLY GET THE BEST OPTION FOR ASSET PROTECTION. My biggest concern is that everyone is biased and no one is presenting you what YOU need but what THEY want you to buy.

Thanks
 
8. Some lawyers that I talked to believed that a holding company can do in most cases just as much as a trust if set up properly (for example with an call option clause in your favour) for so much less money. Why is this not being talked about more ?
Can this be expanded a bit more, doesn't sit with me quite right.

In case you own 100% of a company, and s**t hits the fan, someone sues you on a personal side.

But then, your son can have warrants to buy all your shares, immediately.

If a court sees that this "transfer of shares" was done after you were sued - can you get away with it?

Seems that this is when Trusts become handy.
 
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I have invested about 100 h the ASSET PROTECTION topic (research, talked with lawyers and different providers). The more I read, the more I doubt the actual need of a trust for 99% of the cases.

Disclaimer: I do understand that there is a not a one-size-fits-all type of situation!


My conclusions so far:

1. As many other on this forum, I have come to the conclusion that the physical location/ jurisdiction of the assets AND the physical location of the owner are even more important than the juristidiction where one incorporates his asset protection vehicle.

2. It is very very hard to find HONEST advice on this matter. There are not many people who really know this topic (but a lot who say they do). Everyone is trying to sell you whatever they have for sale (if they are specialised in Cook Island they are going to give you all the reasons why Nevis is worse, if you talk to someone specialised in Nevis, they will give you just as many reasons why Cook Island is worse and so on).
Right, and hardly anyone wants to sell you cheap and easy solutions but rather profitable ones.
3. There is extremely hard to find REAL FULL TRANSPARENT total cost for the construction starting the 2. year . And almost every provider seems to ‘’forget’’ to tell you all about it. They give you a rough estimate which looks good (2-3k) without explaining what other ‘’small fees’’ comes on top.
This also depends on how transparent you can be with the activities
4. Reduntant (useless?) overinflation of the structures is quite common: it starts with a trust, than you need a Holding under the trust (obviously again in an offshore jurisdiction) and than another company to really hold the real estate / do the business locally. Is this really necessary for more than 1% of us ?
You can indeed find simpler structures
5. There is not much talk about differences in THREATS that one is trying to avoid through this kind of structure. For example , if you live in Europe the risks are quite different than in the USA. Moreover, on the individual level the threats are quite different. Most of the offered constructions are focused on protecting yourself from non-governamental creditors. But isn’t it just as important to be protected by the more and more abusive goverments (talking from a pure legal-earned-money perspective here)?
yes, by all means, its best not to keep all eggs in one basket
6. There is not much discussed about what comes after the formation. So you payed X$ and incorporated the trust and Y$ and incorporated the Holding LLC and Z$ and incorporated the local company that wants to let’s say buy a real estate and rent it. Everyone advices you to give a private credit to one of the companies in this chain (ideally the one in the investment jurisdiction). What happens if the court decides to seize the debt ? wouldn’t that defeat the whole purpose of the plan ? (sure, the provide has something else to sell to ALLEGEDLY protect you from this too)
Whether it makes sense depends also on your private tax situation
7. In the case of Trust, I feel the risk of the trustee going rogue is being downplayed. Even in old / traditional / not-so-offshore jurisdictions (like Lichtenstein - foundation) have been multiple situations where some fiduciary company took away the money / did not follow the instructions of the founder/settler. Who is to say that when s**t really hits the fan (on a personal level e.g. criminal trial or on a global level e.g. in a World War), they are really going to act as instructed. If you ask a provider, they will just recommend you to ask another layer of protection (like a trust protector)…. so more expenses . Even if the risk would be mathematical 0,1% of this happening, am I really willing to accept this risk to my back up plan . Of course, the provider can give you another trust in a different jurisdiction to spread the risk…
Over the years, trusts have been exposed to more regulations, such as the need to register them in public registers.
There is also pressure from certain stakeholders to prohibit discretionary trusts and treat them as high risk for secrecy, sanction avoidance and prevention of asset recovery.
In short, trusts have certainly lost some of their former appeals, and if you factor in giving up some control over your assets, and depending on your goals it might not be an ideal vehicle.
8. Some lawyers that I talked to believed that a holding company can do in most cases just as much as a trust if set up properly (for example with an call option clause in your favour) for so much less money. Why is this not being talked about more ?
Holding companies and SPVs are valuable for corporate risk management, but they do not match the asset protection capabilities of trusts for individuals facing personal risks.

However, trusts provide legal mechanisms that can protect personal assets from creditors, lawsuits, and other financial threats, ensuring that an individual's wealth is preserved and managed according to their specific wishes.

The biggest limitation of trusts is that they are not recognized by many jurisdictions, so trusts alone are often not sufficient.

You can also consider different kinds of legal entities like foundations, non-profits, hybrids, partnerships, LLC, etc., Check for entities whose membership interest cannot be seized or so called "orphan structures".
Note, however, that in some cases, a judge can force you to surrender shares that have been fraudulently transferred internationally.
 
Can this be expanded a bit more, doesn't sit with me quite right.

In case you own 100% of a company, and s**t hits the fan, someone sues you on a personal side.

But then, your son can have warrants to buy all your shares, immediately.

If a court sees that this "transfer of shares" was done after you were sued - can you get away with it?

Seems that this is when Trusts become handy.
That was my view as well. But some lawyers seem to believe that (in the case of civil trial) there is enough time between the start of the trial and the asset freezing order. And that means that you have enough time for transfer(s).

At the end of the day, it is the same thing in a trust, if you change the beneficiary than you are in the same situation.
 
That was my view as well. But some lawyers seem to believe that (in the case of civil trial) there is enough time between the start of the trial and the asset freezing order. And that means that you have enough time for transfer(s).

At the end of the day, it is the same thing in a trust, if you change the beneficiary than you are in the same situation.
There is a legal term called "claw back" - check it out
 
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I have invested about 100 h the ASSET PROTECTION topic (research, talked with lawyers and different providers). The more I read, the more I doubt the actual need of a trust for 99% of the cases.

Disclaimer: I do understand that there is a not a one-size-fits-all type of situation!


My conclusions so far:

1. As many other on this forum, I have come to the conclusion that the physical location/ jurisdiction of the assets AND the physical location of the owner are even more important than the juristidiction where one incorporates his asset protection vehicle.

2. It is very very hard to find HONEST advice on this matter. There are not many people who really know this topic (but a lot who say they do). Everyone is trying to sell you whatever they have for sale (if they are specialised in Cook Island they are going to give you all the reasons why Nevis is worse, if you talk to someone specialised in Nevis, they will give you just as many reasons why Cook Island is worse and so on).

3. There is extremely hard to find REAL FULL TRANSPARENT total cost for the construction starting the 2. year . And almost every provider seems to ‘’forget’’ to tell you all about it. They give you a rough estimate which looks good (2-3k) without explaining what other ‘’small fees’’ comes on top.

4. Reduntant (useless?) overinflation of the structures is quite common: it starts with a trust, than you need a Holding under the trust (obviously again in an offshore jurisdiction) and than another company to really hold the real estate / do the business locally. Is this really necessary for more than 1% of us ?

5. There is not much talk about differences in THREATS that one is trying to avoid through this kind of structure. For example , if you live in Europe the risks are quite different than in the USA. Moreover, on the individual level the threats are quite different. Most of the offered constructions are focused on protecting yourself from non-governamental creditors. But isn’t it just as important to be protected by the more and more abusive goverments (talking from a pure legal-earned-money perspective here)?

6. There is not much discussed about what comes after the formation. So you payed X$ and incorporated the trust and Y$ and incorporated the Holding LLC and Z$ and incorporated the local company that wants to let’s say buy a real estate and rent it. Everyone advices you to give a private credit to one of the companies in this chain (ideally the one in the investment jurisdiction). What happens if the court decides to seize the debt ? wouldn’t that defeat the whole purpose of the plan ? (sure, the provide has something else to sell to ALLEGEDLY protect you from this too)

7. In the case of Trust, I feel the risk of the trustee going rogue is being downplayed. Even in old / traditional / not-so-offshore jurisdictions (like Lichtenstein - foundation) have been multiple situations where some fiduciary company took away the money / did not follow the instructions of the founder/settler. Who is to say that when s**t really hits the fan (on a personal level e.g. criminal trial or on a global level e.g. in a World War), they are really going to act as instructed. If you ask a provider, they will just recommend you to ask another layer of protection (like a trust protector)…. so more expenses . Even if the risk would be mathematical 0,1% of this happening, am I really willing to accept this risk to my back up plan . Of course, the provider can give you another trust in a different jurisdiction to spread the risk…

8. Some lawyers that I talked to believed that a holding company can do in most cases just as much as a trust if set up properly (for example with an call option clause in your favour) for so much less money. Why is this not being talked about more ?

9. Almost no one talks about the problems of getting an account for the subsidiary company (as some bank do not open accounts if the local company has an off-shore company as shareholder). Of course you can get some account in another off-shore jurisdiction, but how realistical is it to use that on an everyday operation business? Yes, I know, the provider will just open another company in an on shore jurisdiction or provide u with a swiss account for a ‘’small fee’’….



I would like to hear other peoples honest thoughts on this topic, as there is less likely that an answered here is money-driven as it is with any company provider. Just to be clear: I am absolutely NOT trying to save money here. I am more than willing to pay much more than the normal quoted fees to any provider IF I REALLY GET THE BEST OPTION FOR ASSET PROTECTION. My biggest concern is that everyone is biased and no one is presenting you what YOU need but what THEY want you to buy.

Thanks
1. It depends a bit on the jurisdictions involved.
2. I agree wholeheartedly on this. A lot are just selling whatever their company offers without looking at what the client needs.
3. Hmmm, ok. If you truly spend 100 hours on the topic you would be able to answer this question without too many problems.
4. Upselling is what any company would want to do. You are the client, so you decide. There is however a valid reasoning for when you are being advised to have under the trust a holding / operational company etc. In many cases it again depends on who you are, what you do, where you live and which passports you hold.
5. This depends on the individual need and should be discussed in person with the specialists.
6. It could defeat the whole purpose. This is again something you need to discuss with the specialists. Your plans, wants and needs decide on which route to follow.
7. Negative news travels 10 times faster than positive news. In other words, yes there are stories to be found on where things went wrong. There are however more situations where everything goes according to plans. You wont find stories about that because it would defeat the privacy aspect.
8. Interesting... Who will hold the shares? If that is you, you will just be personally prosecuted. If it's a bare trust / nominee situation it will come to light in a court of law and you will still be prosecuted. Things are possible in that sense. It just means that you give up control and become dependant on the shareholder being trustworthy. The call back option works in theory only. Claw back is real unless you perhaps use one of those offshore jurisdictions that have provisions against debt collectors?
9. If you are in the market for a trust structure your wealth level is high enough to get an account opened. Recently I've experienced it again; 4 accounts opened in 4 jurisdictions across the planet for a trust with multiple operational companies. It took 4 weeks from the beginning to the end. Unfortunately, if your level of wealth is below a certain amount or your situation is not crystal clear (you are not paying taxes or not a resident anywhere) then its challenging to impossible.

To give valid advice you first need to tell your story including ALL the details. Until then it will be generic and similar to what you find online etc.
 
1. It depends a bit on the jurisdictions involved.
2. I agree wholeheartedly on this. A lot are just selling whatever their company offers without looking at what the client needs.
3. Hmmm, ok. If you truly spend 100 hours on the topic you would be able to answer this question without too many problems.
4. Upselling is what any company would want to do. You are the client, so you decide. There is however a valid reasoning for when you are being advised to have under the trust a holding / operational company etc. In many cases it again depends on who you are, what you do, where you live and which passports you hold.
5. This depends on the individual need and should be discussed in person with the specialists.
6. It could defeat the whole purpose. This is again something you need to discuss with the specialists. Your plans, wants and needs decide on which route to follow.
7. Negative news travels 10 times faster than positive news. In other words, yes there are stories to be found on where things went wrong. There are however more situations where everything goes according to plans. You wont find stories about that because it would defeat the privacy aspect.
8. Interesting... Who will hold the shares? If that is you, you will just be personally prosecuted. If it's a bare trust / nominee situation it will come to light in a court of law and you will still be prosecuted. Things are possible in that sense. It just means that you give up control and become dependant on the shareholder being trustworthy. The call back option works in theory only. Claw back is real unless you perhaps use one of those offshore jurisdictions that have provisions against debt collectors?
9. If you are in the market for a trust structure your wealth level is high enough to get an account opened. Recently I've experienced it again; 4 accounts opened in 4 jurisdictions across the planet for a trust with multiple operational companies. It took 4 weeks from the beginning to the end. Unfortunately, if your level of wealth is below a certain amount or your situation is not crystal clear (you are not paying taxes or not a resident anywhere) then its challenging to impossible.

To give valid advice you first need to tell your story including ALL the details. Until then it will be generic and similar to what you find online etc.
I appreciate your contribution. Who are the specialist exactly ? Do you have ONE name of a company/person who is honest and gives tailored advice ?
 
I appreciate your contribution. Who are the specialist exactly ? Do you have ONE name of a company/person who is honest and gives tailored advice ?
There is no universal/generic specialist. I can't give you a name because I dont know your story. At the very least I need to know your story before I can answer that question. I learned this back in the day (around 30 years ago) the hard way and paid 500 USD for it. You are welcome.

You start with an idea, for example, based on what you found yourself information wise, you think that jurisdiction X is good for your situation. You then contact at least three parties with whom you enter into a conversation that are known for working with jurisdiction X. These parties will ask you (if they are any good) about your personal situation with questions relating to relating to age, partner, kids, relatives, country, passport, level of wealth, entrepreneur or not, what type of activities, what do you want to accomplish, wants, needs and many more "items".

Out of the three conversations you hold you normally find out that two out of the three come with similar solutions. One of the two becomes your specialist. If all three tell a different story it's time to find a fourth party and hold a similar conversation as with the previous three. You continue this process until you are satisfied. Make sure that these conversations are NOT for free. If they are for free you are the product and will be told a story that is likely not 100% applicable to your situation.

There is no universal/generic specialist. Let alone more than one. The name specialist already says it. They specialise in a certain area which is either applicable to you, or not.

Owh and remember, when you hold those conversations, play full out. Else it will be garbage in, garbage out. If you find it uncomfortable to tell all ins and outs, make sure that the information becomes part of an attorney/client privilege.
 
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