Asset Protection Trust

An asset protection trust is a self-settled spendthrift trust.  This means it is a trust that an individual creates a trust for himself that is protected from creditors.  Asset protection trusts are normally found outside of the United States.  The basic features of an offshore asset protection trust are: 1) The use of trust protector, which is an office that overlooks the trustee; 2) An event of distress clause, which provides that the trustee must disregard any instruction from the trust protector or the settlor in the event of some event of distress.  An event of distress is usually some judicial order to repatriate the trust assets to the United States because a creditor has gotten a judgment against the beneficiary and is trying to exercise that judgment against the property; 3) A flight clause that authorizes the trustee to repatriate the trust assets from one jurisdiction to another in the event that there is a significant possibility a creditor can reach the trust property.  
Asset protection trusts do not generally exist in the United States.

 

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