Question 14.   What are the major advantages of an offshore APT structure as compared to a domestic APT or just the use of an LLC?

Answer.   First of all, the maximum protection afforded by an LLC is based upon the law of the state in which the LLC is based. If the LLC is based in a state which limits a creditor's remedy solely to a charging order, nevertheless, the LLC should not distribute any of its annual proceeds because if it does then the creditor will receive its portion of such proceeds. By retaining the taxable proceeds within the LLC, all of the parties will be forced to pay taxes on funds which they have not received (NOTE: There is disagreement over whether income attributable to the charged LLC interest would be taxable to the creditor). In addition, an aggressive judge may also issue a charging order which includes in it certain operational and accounting restrictions. Thus, overall, an LLC is often nothing more than a short-term asset protection vehicle.

As to an offshore APT, coupled with one or more LLC's, when compared to a domestic trust, the advantages are: (a) all of the advantages of a typical trust based in the U.S.; (b) Increased ability of the creator to retain benefits and control over the overall administration; (c) Less likelihood of being an automatic target in a lawsuit brought against the creator of the trust (d) The choice of foreign laws governing the offshore APT, compared to a domestic APT, provides substantially greater privacy and protection; (e) The APT's presence creates a decided chilling effect on the willingness of the creditor to chase assets to a foreign jurisdiction; (f) A replacement or supplement to liability insurance; (g) A reduction of one's financial profile so as to discourage lawsuits; (h) A means to segregate assets into various "pockets" so that not all assets are at risk for a single transaction; (i) A way to improve one's strategic position with respect to negotiations with creditors; (j) A vehicle to cover periods of time during which there is no liability insurance coverage; (k) Protection against risks which arise from other activities outside of one's main profession or occupation; (l) A means to rebuild wealth from past or current problems; (m) As a vehicle to protect inheritances, and which is more flexible than a typical "spendthrift" trust; (n) As an alternative to prenuptial agreements; (o) A vehicle to avoid forced heirship provisions of applicable U.S. law; (p) A means of protection against future actions which may be brought against the shareholders and directors of companies, including those who have sold their business only to later be sued by former creditors of the business; and (q) A protective vehicle for business and property owners who are extremely concerned with environmental (i.e., CERCLA) liability exposure.