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Offshore Trust Companies

By Rob Lambert - Email Editor

Date: Sep 22, 2006

Every week I get at least ten inquiries on how to choose a trust company. This must be a key issue. After all, we spend months each year traveling to different jurisdictions meeting new trust companies and reacquainting ourselves with others we have known for years. We write at least ten newsletters each year detailingthe pros and cons of different jurisdictions. We talk about statutes of limitations,statutes of Elizabeth and lots of other technical issues relating to theunique characteristics of each jurisdiction.

It must make a huge difference what country you choose as the situs of your trust, right? WRONG. It won't surprise my long run newsletter readers when they hear me say: "With a properly done Kinetic Asset Protection Trust, it doesn't matter what jurisdiction you choose to initially settle your trust in." Sounds like HERESY, but it isn't. Here's why.

Remember, proper Asset Protection Planning is done when the seas are calm. With a proper Kinetic Plan, the client normally stays in control of protected assets during this calm period. He is does NOT trust the foreign trustee to manage the protected funds, nor is he facing down any creditor attack. So, at least when the financial seas are calm, a trustee is not needed to manage the investments. In fact, most of the protected funds will probably remain in the USA during this phase.

This is also a reason why one of my oft-repeated mantras is: Never trust a foreign trust company. WHY? Because you never have to while the financial seas are calm.

At the initial stages when the financial seas are calm, it is obvious that the location of the foreign trustee does not matter. The trustee does not manage investments. The responsibility to manage the funds, which often remain in the USA, is normally retained by the client. Honestly (and all my trustee friends who read this newsletter should stop now), the trustee doesn't have much to do other than rent his jurisdiction and prepare annual invoices while everything is calm.

It is only when creditor attacks heat up that the location of the trust becomes important. WHY? Because one of the first official acts of the protector is to change the situs of the trust once trouble looms. The protector does this by firing a trustee in one jurisdiction in favor of a trustee in another jurisdiction with just the right laws.

Normally, it is a two-hour process to change the trustee and move the trust to another jurisdiction. This is the normal technique. Typically, there are no charges for this.

A quick aside: Last week I had a terrible experience trying to do just that. One of my old clients wanted to follow his administrator who had left one trust company and moved to another. Unfortunately, there was some bad blood, and the trust company that was losing the client refused to cooperate. They demanded thousands of dollars in crazy fees to transfer the files.

Fortunately, we overcame this, and eventually got the job done. Now, I have modified my documents so this never happens again, as I am requiring every trust company who gets a client from me to commit to transfer the files without charge if requested.

Back to the meat and potatoes: Once a decision is made to transfer the trust to an appropriate Asset Protection jurisdiction and a solid trustee is chosen in that jurisdiction, it is then time to trust the trustee. Why? Because the client has to in order to have a perfected Kinetic Asset Protection Plan.

It is important to realize that the only time the laws of the trust company's jurisdiction matter is when attack looms. It is also important to note that you get to choose the playing field by choosing the trustee and the country when the time is appropriate.

This is the beauty of a properly done Kinetic Plan.

Have a healthy and protected week.

Rob Lambert

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