An asset protection trust is a self-settled spendthrift trust. This means it is a trust that an individual creates for themselves that is protected from creditors. Asset protection trusts are normally found outside of the United States. There are some basic features of an offshore asset protection trust:
- First, there is the use of a trust protector, which is an office that overlooks the trustee.
- Second, there is 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 distress.
- Third, there is 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.
[Last updated in June of 2022 by the Wex Definitions Team]
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