International Trust: An Overview
The traditional international protective entity is the International Asset Protection Trust. You may have heard other names − creditor protection trust, international trust, international trust, asset conservation trust, foreign trust, or foreign grantor trust.
You can use an international trust for reasons other than lawsuit protection. They can avoid forced heirship laws, protect premarital assets, be useful for estate planning, and also for international business planning.
The international trust has other uniquely protective features:
1. The debtor-friendly laws of the IFC govern its enforcement.
2. If a U.S. court orders you to repatriate the trust assets, the international trustee must refuse your demand. Your trust funds will not be turned over to your creditor.
3. Your trustee can relocate the trust assets to another IFC if your trust becomes endangered.
4. Your trustee can, if necessary, withhold distributions to a beneficiary who has creditors.
Unlike most U.S. trusts, the International Asset Protection Trust has a protector who oversees the trustee. The protector has the power to replace the trustee and must approve major trustee actions. The grantor appoints the initial protector (who should not be an American resident subject to U.S. court directives).
Any adult or legal entity can be the trust grantor and create and fund the trust. Parents or grandparents oftentimes create an International Asset Protection Trusts to protect their wealth for their families. Or, spouses can be the co-grantors and combine their wealth into one trust. Or, each spouse may establish separate trusts.
For confidentiality purposes, an international corporation or foreign LLC may be imposed as the trust’s nominee grantor. And international trusts in some International Financial Centers do not require you to name the grantor or that you publicly record the trust. This also helps protect the grantor’s identity.
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