The Checks and Balances of the 
Bridge Trust®

Asset Protection may ultimately rely on removing assets from the U.S. jurisdiction and away from the control of the clients.

The question often arises: “How can the client be sure that the new foreign Trustee doesn’t run away with my money should I ever need to use the Trust?”

The answer is in the details of how a well-drafted Asset Protection Trust creates internal and external “checks and balances.”

To begin, the plan controls and protects money through:

1. A legal structure which requires the approval and consent of various parties who act as checks and balances over movement of assets
2. A physical tracking mechanism set up directly with the client’s chosen bank, which holds the money, so that the client is always aware of the money’s location

The Asset Protection Trust has 4 primary actors:

1. Settlor (client, also known as Trustor or Grantor)
2. Trustee
3. Protector
4. Beneficiary

Prior to triggering the Bridge Trust^®, the client can remain the Settlor, Trustee & Beneficiary, thereby controlling all trust assets. If a legal crisis places client assets at serious risk, the Trust Protector declares an “event of duress” which appoints a new special successor Trustee located offshore to assume legal title over trust property.

When the trust crosses the “Bridge” to a non-U.S. jurisdiction, legal control of assets is maintained through a two-party approval mechanism (like requiring two signatures on a check). The Trustee is responsible for the management of the assets and has legal title, while physical possession of the money is held at an independent and unrelated bank.

For the Trustee to do anything with the money, they must receive consent from the Protector. This includes wiring or otherwise moving the money in any substantive way.

The Protector

The role of Trust Protector is to safeguard trust assets for the benefit of all Beneficiaries, by performing two primary jobs:

1. To approve of the actions of the Trustee
2. To remove the Trustee if the Trustee is not acting in the best interests of the Beneficiaries.

This ensures the Trustee does not run off with the money. The next logical question is: Who keeps an eye on the Protector? This is where the loop closes back to the clients themselves.

The Settlors (clients) can remove and replace the Protector for any reason and at any time. The only exception is if they are ordered by a U.S. court to appoint a Protector that will hand over assets to a creditor.  This order cannot be followed.

The only other plausible loophole is if Trustee and Protector conspire together to defraud the Trust. This is highly unlikely because the Trustee is a prominent Trust Company with its own checks and balances and holds a fiduciary duty to the Trust and the Protector is chosen by the client. Nevertheless, the plan has a final safeguard to ensure clients always have full knowledge of the location of the money.

Additional Safeguards

This safeguard is a ‘client acknowledgment’ procedure. The bank, typically a large private international bank chosen by the client, will have a hold period prior to any withdrawal or transfer from the Trust account. This procedure requires the bank to personally confirm with the Beneficiaries (clients) prior to any proposed transfer.

Here, Beneficiaries are not in direct “control” of the money, however, because the bank requires direct verification of the Beneficiaries’ knowledge of transfers, any suspicious transaction will be confirmed with the bank by the Beneficiary-client. This confirmation will delay any activity for enough time to notify the bank of the impropriety and appoint a new Protector, who appoints a new Trustee.

As you can see, the net effect makes it virtually impossible to move with Trust assets without the client’s direct knowledge and consent. This combined with L&L’s use of the most stable and reputable institutions places your Bridge Trust^® assets in a place most would agree is safer than the local bank down the street.

The difference is that the bank down the street is subject to the U.S. court at the end of the street. And right in the middle is the all-too familiar plaintiff lawyer, which is where all the trouble began in the first place.

Taking control of your own financial, estate and asset protection planning is critical to your peace of mind. Let us help you gain that peace of mind.

Please call 800.231.7112 to schedule an Asset Protection Analysis.