Asset-protection Trust - Offshore Jurisdictions

Offshore Jurisdictions

The trust laws of the offshore world are typically founded on the trust laws of the onshore world. For those jurisdictions which are currently possessions of the UK, or were former posessions of the UK, typically the UK Trustee Act of 1925 is the common starting point. From there, each jurisdiction has sought to develope and evolve the law in a race to develope the most attractive trust environment which maintains acceptable standards, preserves the concepts of a trust, yet is attractive to potential users. Many of these jurisdictions share similar characteristics.

According to Jacob Stein's treatise on asset protection, common provisions enacted among some, but not all, of these countries are: (i) there is no recognition of foreign judgments with respect to trusts; (ii) there is a very short statute of limitations on fraudulent transfers; (iii) to establish a fraudulent transfer the creditor must show that the debtor was insolvent, and must establish the debtor's intent to "hinder, delay or defraud" beyond a reasonable doubt; (iv) the anti-duress provisions are incorporated into the statutes; and (v) spendthrift protection is extended to self-settled trusts. These jurisdictions also offer the additional advantages of (i) not being subject to the U.S. constitutional issues like the Full Faith and Credit clause; (ii) using the English common-law legal system; (iii) having abolished the rule against perpetuities; and (iv) not allowing trusts to be pierced for child or spousal support.