Do we want a Foreign or Domestic Trust?There are many different types of trusts for estate planning purposes. For this asset protection information, we are concerned with only one attribute, specifically the legal (and tax) geographic classification of the trust. For our purposes, trusts are classified as either Foreign or Domestic. Foreign Asset Protection Trusts are frequently preferred for asset protection purposes, because they provide a higher level of protective measures than domestic trusts by the nature of the statutes that govern them. Because the foreign asset protection trust is an offshore entity ("person"), it is generally not answerable for judgments handed down by US courts. For a US creditor to collect a judgment against a foreign asset protection trust, it would generally have to bring a new action in the foreign jurisdiction. While there are lots of client specific issues that determine how immune the trust assets may be from creditor attack, generally the barriers are formidable for all but the most determined and well financed creditors.
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