I am an asset protection attorney, a tax attorney, and a law school professor. I do asset protection planning that is ethical, professional, efficient, thoughtful, and eminently effective. I will provide ongoing support for any plan that I create. If you are interested in asset protection planning, call me or send me an email with a summary of your situation and I will send you a free proposal designed just for you. lee@lsmlaw.net

Let us show you how this can work for you! Contact us, or learn more at assetprotectionatty.com

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Offshore Trust

Offshore Trust - Asset Protection

This site used to market offshore trusts.  Now, we market a better solution. 

There are three major problems with an offshore trust:

1.  IRS reporting requirements for offshore trusts and accounts are egregious. 
2.  Offshore trusts and accounts are EASY for anyone to discover. 
3.  Offshore trusts only protect assets if you are willing to disobey a US court order and risk severe penalties and jail time.

Lets examine these one at a time:

First, IRS reporting requirements for offshore trusts and accounts are egregious.  If you create an offshore trust, you are required to file forms 1041, 3520, 3520A, and you must also file Form TD F 90-22.1 for each foreign bank account and each foreign investment asset.  You are also required to disclose foreign accounts on form 1040.  Transactions with foreign entities create additional reporting requiremetns.  Penalties for failing to properly file these returns are egregious.  For example, if you fail to report a foreign account with one million dollars for a period of six years, the penalties will exceed three million dollars.  If you fail to report a foreign trust or corporation, additional penalties will be piled on top.  In addition, failing to report worldwide income results in criminal penalties.   

Second, offshore trusts and accounts are EASY for anyone to discover.  By obtaining a copy of your tax returns, anyone can easily discover the location and amount of any foreign trusts or accounts.

Third, offshore trusts only protect assets if you are willing to disobey a US court order and risk severe penalties and jail time.

The following cases indicate that US Courts are willing and able to compel you to turn over the assets of an offshore trust:


FTC v. Fortuna Alliance (1997) (Debtors were arrested and funds were repatriated)

FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999). (Debtor jailed for refusing to repatriate assets).

SEC v. Bilzerian, 131 F. Supp. 2d 10 (D.C. 2001). (Debtor jailed for refusing to repatriate assets).

In re Lawrence, 279 F.3d 1294 (11th Cir. 2002). (Debtor jailed for over six years for refusing to repatriate assets).

BankFirst v. Legendre (Debtor jailed for contempt of court until assets were turned over)

Plath v. United States of America, No. 03-0439, U.S.D.C. Southern District of Florida (October 29, 2003).  (Debtor found in contempt of court for refusing to disclose information about offshore accounts).

Eulich v. U.S., (N.D.Tex. Case No. 99-CV-01842, August 18, 2004) (Debtor found in contempt, threatened with fines and jail time until assets repatriated)

U.S. v. AmeriDebt, Inc., 373 F. Supp. 2d 558 (D Md. 2005) (Debtor found in contempt and threatened with jail time until assets repatriated)

Morris v. Morris, Case Nos. 4D04-3812, 4D04-4621, 4D04-4763, aff'd Appeal No. SC05-1166 (Fla.S.Ct. April 13, 2006); Morris v. Wroble, Case No. CIV-O6-80479 (S.D. Fla.) aff'd Appeal No. 06-80452-CV-DTKH (11th Cir. Nov. 16, 2006). (Debtor jailed for contempt of court for refusing to repatriate assets.)

Securities and Exchange Commission vs. Jamie Solow, 2010 WL 303959 (S.D. FL., Jan 22, 2010). (Debtor jailed for contempt of court for refusing to repatriate assets.) 


Promoters of offshore trusts claim that contempt of court can only be used if you make a fraudulent transfer or commit a crime.  The case law does not support that claim.  Contempt of court is used whenever a person refuses to obey a court order and there is absolutely no requirement that the issue pertain to a fraudulent transfer or a crime.  

Why create a plan that is onerous to maintain, easy to discover, and only works if you want to risk going to jail?  Isn't the purpose of an offshore trust to create peace of mind?

My name is Lee S. McCullough, III.  I am an attorney practicing in the areas of estate planning and asset protection.  To learn more about me, see www.assetprotectionatty.com.

To learn about a BETTER asset protection strategy, see www.assetprotection-attorney.net.

 

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