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Should A Foreign Situs Asset Protection Trust Own Real Estate?

Should a foreign situs asset protection trust own real estate? This has been a question of some contention, although less-so over the last number of years. The answer to this question is, “yes, why not?”

This answer is supported by two recent litigation matters in the author’s office that settled very favorably, including the fact that the U.S. real estate owned by each planning structure was left undisturbed as a result of each settlement.

One of these cases involved a trustee in bankruptcy as the adverse party, and the other involved the federal government as the adverse party. In each case, the adversary party stated one of the reasons it was settling was because of the difficulty it faced in pursuing assets held in a foreign situs trust settled years earlier. The author’s office has seen the same or similar results many times over the course of the past 25+ years.

Thus, while it is true that movable assets can be more easily protected than immovable assets, these two settlements (and others) demonstrate the positive results that can follow from simply executing a transfer deed and vesting ownership of the real estate in the hands of the trustees of the trust.

Stated another way, the negative results of leaving real property out of the planning structure are far more certain than are the positive results of transferring ownership of real estate to the trust. In the case of the latter, the only way things can go is up.

Barry S. Engel was named to The National Law Journ...

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Barry S. Engel
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