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This article is a continuation of Why Offshore is the Strongest Form of Asset Protection: Even Better Than Special Powers of Appointment.

Once a lawsuit is filed against you and a plaintiff’s attorney discovers the existence of a domestic trust, the outcome of the suit is left to a judge or jury.  Make no mistake about it, a special power of appointment cannot protect assets held in a domestic trust if a judge or jury decides to find an exception to the law or, worse, if the judge or jury decides to make an example of your situation.  Leaving your fate to the judgment of strangers is dangerous.  Deterring litigation and keeping control is a better

Offshore Asset Protection Puts You in Control

The main problem with relying solely on a special power of appointment is that assets held in trust and the trust itself are subject to the jurisdiction of the U.S. court system.  If a U.S. court decides to disregard a trust, the assets held by that trust are easily accessible.  That’s not where you want to find yourself.  Offshore asset protection removes both the trust and the assets held in trust from the reach of domestic judges.

Cook Islands Trust Law Deters Litigation

Consider an example from the Cook Islands. If Mr. Jones sets up a trust in the Cook Islands and is later sued, plaintiff’s attorneys are not likely to attack the trust for a number of reasons.  First, the only way to invalidate a trust in the Cook Islands is with a judgment from a Cook Islands’ court.  The Cook Islands will not recognize such a judgment from a U.S. court.  The only way for a plaintiff’s attorney to get such a judgment is to sue in the Cook Islands, which is incredibly expensive, since it requires plaintiff’s to front all the expenses of litigation and does not allow plaintiff’s attorneys to collect contingency fees.

In other words, attorneys attacking a trust in the Cook Islands have to either bill their clients by the hour or work for free (after fronting the cost of international litigation), both of which are expensive propositions.  Other benefits include a hard two year statute of limitations, which means that Cook Islands trust cannot be attacked after it is has been in existence for two years!

Special Power of Appoint Revisited

It is true, as we wrote previously, that a special power of appointment contained in a domestic trust provides some level of asset protection.  It does not, however, provide comprehensive asset protection.  A savvy plaintiff’s attorney will easily be able to discover the existence of such a trust, unless you are willing to lie under oath, which is never advisable.  In addition, plaintiffs lawyers have incentives to attack domestic trusts, which leaves the assets in such trusts subject to the whims of the U.S. legal system.

An offshore asset protection trust makes litigation very expensive and, therefore, deters lawsuits in the first place.  Even if an offshore trust is attacked, the laws in many foreign jurisdictions are stacked so in favor of asset protection that an adverse judgment is almost inconceivable.

Combining Forces Offshore & Power of Appointment

While an offshore trust provides the most comprehensive form of protection in itself, there is nothing to prevent you from seeking to combine that protection with a special power of appointment.  If you have questions about how to accomplish that goal, ask an asset protection attorney.

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Pashmina Lalchandani

CEO & Co-Founder, Bar & Cocoa / Owner, Flow Simple
December 9, 2010, Douglass was a client of Pashmina’s

I’ve known Doug in many contexts, as a friend, as a client and as a business partner and he impresses me on all levels. He’s dependable, smart, generous and I wouldn’t hesitate recommending him and his law firm to anyone.
He’s the best and most ethical lawyers providing asset protection with rock solid strategies to give you peace of mind about your wealth. Straight forward, and straight talk. Doug is exactly the lawyer I want on my side. If I send someone to Doug, I know they’ll thank me for it!

Social & Solar Entrepreneur, Pan Afrikan Theorist, Translator/Interpreter,
Founder & Visionary Leader @ Afrikanpride.
March 12, 2011, Marlon E. D. J. worked with Douglass but at different companies

Doug is one of the most powerful thinker i have came across. During the short time that i have known Doug he has been a great source of inspiration. He has a simplistic yet effective and accurate way to analyze anything you bring to his attention, and then by asking you key questions he gets you to see the light at the end of the tunnel. Besides being extremely bright, he is a genuine and caring individual which is why I feel fortunate to know him. I can say without a doubt that he his the person you would want to talk to if you were in need of a person with his expertise.
Most of the lawyers out there will probably meet your needs, but if you are looking for someone to exceed your expectations and give you that wow factor, look no more he is the person for the job.

Patricia Salter

Associate Dentist at Smileology
December 1, 2010, Patricia was a client of Douglass’

I have been a client of Douglas Lodmell’s since 2001. My main concern was asset protection in this litigious society. I can sleep alot better at night knowing I have the instruments in place to protect the fruits of my labor, and that they will not end up in the hands of a slick trial attorney.

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