When you hear the phrase “offshore account,” it is likely that your mind immediately conjures up a shady character who is trying to conceal “dirty” money from the government. This is a stereotype in movies; but it also happens in real life. However, that stereotype obscures the fact that offshore accounts can be properly used by people who are trying to protect their estate.
Still, offshore accounts have been under heavy scrutiny in recent years, as the Internal Revenue Service has become more active in investigating these accounts and the people who are attached to them. So, say you want to protect your estate and you may have been considering an offshore account — but the recent news has you thinking otherwise. What kind of options do you have?
There is an option that is available right here in the U.S. that functions in a very similar way to an offshore account, called a domestic asset protection trust. These trusts used to be forbidden, but there are 15 states that currently have domestic asset protection trust laws on the books. This trust can protect assets and securities from creditors and taxes. It can be very beneficial to use this trust, but the clerical work behind it can be complicated.
Since it is only available in a handful of states, it is crucial for someone looking to organize their estate or establish this special trust to consult an attorney with experience in estate administration. Your attorney can help you get this trust established and connect you with the right people to ensure your estate is protected.
Source: Wall Street Journal, “Creditor-Proof Trusts Replacing Offshore Accounts,” Arden Dale, Aug. 8, 2013
