Your international trust frustrates lawsuit predators by putting your wealth under the protection of a Trustee outside the U.S.
Having transferred assets to your trust, you no longer are the legal owner, so you no longer have the ability to surrender the assets to a lawsuit winner — so no one can compel you to do so. The Trustee holds the assets, and it is obligated to use them exclusively for you and the other Beneficiaries you named when you established the trust — not for your creditors.
The Trustee is protected from coercion by U.S. government agencies because it is not in the U.S. It is subject to the laws of its own country — not to U.S. laws. It is able and obligated to say “No” to any U.S. court order aimed at undermining your trust.
As Grantor, you are protected because your trust is irrevocable. You can (and should) obey any order you receive from a U.S. court and still be confident that your trust is safe.
As a Beneficiary, you are protected because your trust is discretionary. You can (and should) obey any order you receive from a U.S. court and still be confident that your rights as a Beneficiary can’t be touched.
As Protector, you are protected by the Trust Instrument’s anti-duress clause. You can (and should) obey any order you receive from a U.S. court and still be confident that only your voluntary actions will influence the Trustee.
Respect existing debts to make this protection actually work, it is important not to go too far in transferring assets to your trust. You must not transfer more than some fraction of your net worth. In other words, you should hold back at least enough assets to cover all your existing and reasonably foreseeable obligations. An international trust is not a device for defeating existing creditors or for ducking obligations you already suspect may be headed your way.
And unless there is a practical reason for doing otherwise, the Trustee should hold trust assets through a custodial account at a foreign bank – not in the U.S. in the name of your trust. This guards against the arbitrary actions of any U.S. government agency that might be determined to seize trust assets despite established legal norms.
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