How Do Offshore Trusts Compare To Offshore LLCs?

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Offshore Asset Protection and Investing Secrets Part 3a


Intro: Guide to Offshore LLCs: Fundamentals, and LLC vs. Offshore Asset Protection Trusts

Pg 2: Basics of Offshore LLCs

LLCs are Business entities (not for holding non-business assets)

"'Asset protection' is not illegal and is honored by the law if done for a legitimate purpose... However, an entity... may not be created with no business purpose and personal assets transferred to them... simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor..." In re Turner, 335 B.R. 140 (Bkrpt. N.D. Cal 2005).

Charging Order Protection
- A creditor of an LLC member may not:
- Seize LLC ownership
- Gain control of the LLC
- Seize LLC assets


P3: Offshore LLCs vs. Offshore Trusts

Offshore LLCs are more congruent with US law than offshore trusts (OAPTs)

Charging Order Protection is a staple of U.S. LLC law

Most states do not allow self-settled trusts (like Offshore Asset Protection Trusts) to shelter assets from creditors: "If the settlor is a beneficiary of a trust ... and the settlor's interest is subject to a provision restraining the voluntary or involuntary transfer of the settlor's interest, the restraint is invalid against transferees or creditors of the settlor..." California Probate Code §15304.


P4: Offshore LLC Misconceptions

Misconception: LLC Assets may be attached if a judgment is entered in the LLCs jurisdiction. WRONG!
Properly structured LLCs will never be sued directly, no proximity for a creditor to directly attach assets

See Garcia v. Coffman, 124 N.M. 12, 946 P.2d 216 (N.M.App. 1997) for a discussion of the doctrine of proximity.


P5: Offshore Asset Protection Trusts vs. Offshore LLCs

LLCs are Less vulnerable to fraudulent transfers
Transfers to trust = gifts
Transfers to LLCs = exchange of equivalent value


P6: Offshore Trusts vs. Offshore LLCs

UFTA SECTION 4. TRANSFERS FRAUDULENT AS TO PRESENT AND FUTURE CREDITORS.
(a) A transfer made... is fraudulent... whether the creditor's claim arose before or after the transfer was made... if the debtor made the transfer...:
(1) with actual intent to hinder, delay, or defraud any creditor...
(2) without receiving a reasonably equivalent value in exchange... and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small... or
(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.


P7: The Next Video
The Series "Offshore Asset Protection Secrets Video Series"
Guide to Offshore LLCs: Management Issues & Best Places to Form Them

See you in the next video!

Category:

Education

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• Offshore asset
• Offshore trusts
• Trust services
• Asset protection
• Buy offshore ibc
• Offshore company
• Trust Accounts
• Offshore LLC
• LLC Formation