The Asset Protection Law Center

The Asset Protection Trust can be used to hold stocks, bonds, mutual funds, insurance and annuity investments. An APT is established under the laws of a foreign country which provides certain advantages which cannot be achieved with a strictly domestic structure. Certain countries such as the Cook Islands have laws much more favorable to asset protection then the laws in the United States. By creating a trust under the laws of one of these jurisdictions an individual can obtain greater protection and flexibility than is available under United States law.

In using the Asset Protection Trust the individual does not usually sacrifice any degree of immediate control and access to his property. All accounts are transferred into the Trust but can remain at their current financial institution. The individual, as Co-Trustee and Protector of the APT, retains significant authority over his property. However, since legal ownership of the assets has been moved to the trust, a creditor will not be permitted to reach these assets if there is a subsequent judgment.

The tax rules governing this kind of trust are straightforward. Properly structured, there are no gift tax consequences to the arrangement and all income of the trust is reported directly on the return of the Settlor.

Some people prefer a more elaborate plan, utilizing an FLP or LLC to hold all domestic assets. The limited partnership interests in the FLP or the membership interests in the LLC are transferred to the APT. The APT holds no property or assets other than these interests. At some point in the future, if the client wishes, liquid assets can be transferred to an Overseas Trust Account for additional protection or to take advantage of investment opportunities not available in the United States.