The International Asset Protection Trust

The customary international protective entity is the international Asset Protection trust (IAPT) that gained popularity in the 1980's as many foreign countries enacted laws that focused on Asset Protection for the purpose of heirship, premarital assets, estate planning and international business finance. The international trust compares to the domestic irrevocable trust (DIT)—a frequently used estate planning tool—though for many reasons the international trust is significantly more protective.

The IAPT has numerous protective features:

1. The debtor-friendly laws of the IFC govern its enforcement;

2. If a U.S. court orders a repatriation of trust assets, the international trustee must refuse your demand and funds will not be turned over to your creditor;

3. A trustee can relocate trust assets to another IFC if the trust becomes endangered; and

4. A trustee can, if necessary, withhold distributions to a beneficiary who has creditors.

Different from most U.S. trusts, the IAPT has a protector who oversees the trustee. The protector's powers include replacing the trustee and approving major trustee actions. The grantor appoints the initial protector (who should not be an American resident subject to U.S. court directives). Any adult or legal entity can be the trust grantor and create and fund the trust. When confidentiality is essential, an international corporation or foreign LLC may be appointed as the trust's nominee grantor. It is relatively common for a family member to be the protector but varies based upon specific tax, Asset Protection, estate planning, business, and personal considerations.

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