Offshore?
March 10th, 2008
By The XBanker
I am constantly amazed by the number of asset protection ‘gurus’ who advocate the use of offshore asset protection trusts or “APTs.”
My incredulity is further stretched when these so-called experts claim that APTs are the right choice for U.S. real estate holdings.
If you own real estate in California, for example, will holding title in either an LLC owned by an APT or directly in an APT provide you with any greater protection?
The answer is no.
If you get sued over an accident on the real estate a California court will have jurisdiction over the case. California law – not the law of the Caymans, Belize or your promoter’s favorite island – will govern the case. The California court is free to ignore the tens of thousands of dollars you spent on your ‘bulletproof’ APT.
If you get sued personally on a claim unrelated to the real estate a domestic LLC (set up at a fraction of the cost) will protect you as well as any overblown APT will a judgment creditor will have the same trouble collecting from a properly structured and maintained Wyoming or Nevada LLC as they will from an APT.
So what have you accomplished, besides spending a lot of money by going offshore? Well, you have probably angered the judge in the case. Let’s be very clear: judges do not like to deal with people who set up offshore structures. They are immediately suspicious of a citizen who would go offshore for legal protection. And in a court case, you want to do whatever you can to keep the judge on your side. An APT is at least one strike, perhaps two, against you.
As well, after 9/11 there is a much greater scrutiny of offshore transactions. Many promoters will not tell you about the new filings that must be made when you use an APT, or the consequences of failing to file.
Going offshore presents many traps of the ill informed. Don’t be another future audit. Wyoming and Nevada entities can protect you as well as any APT at a fraction of the cost and without raising any eyebrows.
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I know someone who paid thousands to “get out of her mortgage” so she would “own her home free and clear” without having to pay the mortgage. (I know, people will believe anything they want to hear.) She ended up deeding it to some offshore trust, and lost the house anyway.