Anyone with property or assets valued at more than $300,000 should consider protecting them from a potential lawsuit. Litigation, or “Who can I sue today?”, has become a popular means of accumulating wealth. We see it on TV every day; people “get back” exaggerated amounts of money for almost any reason. Today, if a person believes there is any chance of getting money through a lawsuit, he will file a lawsuit. Defendants in a lawsuit settle without ever doing anything wrong because a defense attorney usually charges by the hour. It is less expensive to settle than to litigate and defend against the lawsuit. The plaintiffs’ lawyers, on the other hand, will probably take the case on a contingent basis. Lawsuits are often filed because the plaintiff has nothing to lose.
When an attorney discusses a potential lawsuit with a potential client, the attorney will discuss the likelihood of success. If the probability is low, he or she will not take the case; If the probability is high, the next thing the lawyer does is investigate whether the defendant’s assets are large enough to justify investing his time in the lawsuit. If the assets are small, the amount recovered is likely to be small. As a result, the lawyer will probably reject the case.
One way to protect your assets is through offshore trusts. Trusts originated in medieval times, when English nobles entrusted their land and wealth to friends and other close relatives before going on a crusade to ensure their families were covered during their absence. Over time, the Trust has evolved into the legal entity we know today. In recent decades, offshore trust has become popular. However, its inappropriate and illegal use by some has given it a bad reputation as an asset protection tool.
There are many reasons why an offshore trust can be an effective asset protection vehicle. The main reason to go abroad is because countries that cater to asset protection do not enforce US judgments or liens. As a result, a creditor must litigate their claim within the foreign jurisdiction. For practical and economic reasons, it is unlikely that a creditor will pursue the claim outside of the United States.
The misconception about offshore trusts arises because many falsely believe that an offshore trust will avoid having to pay income taxes. They have tried to illegally evade US income taxes through the use of “secret” offshore accounts. Recent IRS actions make it increasingly difficult to keep these accounts secret. There is nothing inherently wrong with offshore accounts. However, they cannot be used for tax evasion. Not declaring income and paying the corresponding taxes can have devastating consequences.
When an offshore trust is part of an advanced plan, it can legally and ethically safeguard your assets. Suppose a potential defendant has a high net worth and there is a danger of losing it in a lawsuit. Assets can be protected by placing them in an offshore trust before filing a lawsuit. As with any legal matter, advance planning is vitally important. While few people imagine that they will be sued and lose their assets in a lawsuit, however, in today’s litigious society, advance planning is necessary. An offshore trust is one of the many alternatives that exist to protect your assets.