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International Asset Protection Planning | Foreign Security Trust | International Variable Life Insurance Program

INTERNATIONAL ASSET PROTECTION PLANNING

Foreign Security Trust (Asset Protection Trust):

USE - Asset Protection only

The Foreign Security Trust is designed to give you asset protection and allows your planning to be international. The Foreign Security Trust is generally considered the Rolls Royce of asset protection. The Foreign Security Trust utilizes a non US trustee and is established in an international tax haven having strong asset protection laws. The Foreign Security Trust is not intended or designed to avoid Federal income or estate taxes.

The Foreign Security Trust is in some aspects similar to the Domestic Ultra Trust. It is treated like a revocable trust for Federal income tax and estate tax purposes and simultaneously as an irrevocable trust for asset protection purposes. A Foreign Security Trust commonly uses an "Advisory Committee" that is empowered to remove the trustee and appoint a replacement trustee if desired. The Advisory Committee may also provide the trustee with investment recommendations and advice. This provision protects against a trustee who does not adequately perform the fiduciary responsibilities required by the trust agreement and by law. The Advisory Committee consists of advisors selected by you and can be you if desired.

A Foreign Security Trust provides more asset protection than any domestic structure. Some of the advantages usually associated with the Foreign Security Trust (or any international trust) are:

Psychological Advantage:  The international location gives you a psychological advantage over your creditors, who almost always lack the knowledge and expertise to challenge the use of the trust. Furthermore, all United States courts lack jurisdiction over the international trust and its international trustee.

Territorial Loyalty:  Most international jurisdictions will not recognize a United States judgment without the imposition of a lawsuit in the international jurisdiction to enforce the judgment. Thus, your creditors will need to file a separate lawsuit in the jurisdiction where the trust is located. The international jurisdiction is also likely to be unreceptive or even overtly hostile to US creditors attempting to reach assets of a trust administered by a local qualified trust company.

Time and Cost:  Seeking to enforce a United States judgment in an international jurisdiction is an expensive, time consuming and complicated undertaking. Even if a creditor has the time, money and expertise to bring witnesses and evidence to the international jurisdiction, retains local counsel, and undergo the hazards of litigation, the creditor will likely need to prove that assets were transferred to the trust with the actual intent to defraud the creditor. This is a difficult burden to overcome.

Local Statutes of Limitation:  The creditor will likely need to file a lawsuit seeking to enforce the judgment within the applicable statue of limitations imposed by the international jurisdiction, which is generally very restrictive. Once creditors become aware of the statute of limitations, the time in which they may bring the action may have expired.

Change of Situs:  The trust can be drafted to include a change of situs provision to permit the trustee or your Advisory Committee to change the location of the trust under various circumstances or at will, thus, requiring the creditor to file a new lawsuit in a different jurisdiction every time the location of the trust is moved.

Spendthrift Provision: The Foreign Security Trust can also contain a "spendthrift clause" or equivalent provision, depending on local law, thus providing protection of the assets of the trust from any personal creditors of its beneficiaries. The spendthrift clause allows the trustee to withhold any payments to beneficiaries should the trustee become aware that a creditor of a beneficiary exists. This is an excellent tool for the protection of your loved ones.

Because the Foreign Security Trust has been specially drafted to create asset protection only, you can transfer any amount of your assets into the trust without any gift tax concerns and achieve total asset protection.

You can also enter into a joint venture between your Foreign Security Trust and any of your domestic structures. A joint venture is not a sale of assets, therefore, there is no gain realized and no Federal income tax incurred as a result of the creation of the joint venture. This flexibility will allow a management system in your business activities to be internationally based. A joint venture will not eliminate assets from your estate for Federal estate tax purposes so you will need to plan accordingly.

A Foreign Security Trust can also be used to capitalize and own an international corporation if it is deemed to be more consistent to be doing business from a corporate point of view. In some cases, this is just more convenient in order to avoid disclosing the terms or the trust.

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