Asset Protection

Offshore Creditor Protection Trusts are an increasingly popular, and legitimate, way of separating off part of an individual's total assets. and placing these in a financially safe haven, away from possible attack.  Effective Creditor Protection Trusts donut depend on secrecy.  Nor are they necessarily designed to produce any Tax savings.

It is possible, through careful planning, for a Settlor to Transfer assets to a CPT at a time when he/she is fully solvent, and when such Transfer is not rendered invalid as a "Fraudulent Conveyance", and is not made as part of a course of fraudulent behavior.

Nevertheless, Trustees and others involved in CPT planning must take great care in doing so, as it is not at this stage proven that all forms of CPT planning are effective, in the sense of being immune from successful attack by creditors.  For this reason, it is prudent to err on the side of caution and conservatism, and only accept CPTs where it is reasonably certain that all necessary safeguards are in place.

The safeguards outlined in this Paper may assist Trustees in selecting Trusteeships of properly structured CPTs which will be effective to shelter the assets placed in Trust from Creditor risk, and at the same time prevent the Trustees themselves from being drawn into time-consuming litigation.