Taxing Offshore Asset Protection Trusts: Icing on the Cake?
48 Pages Posted: 13 Jun 2008 Last revised: 30 Jun 2008
Date Written: April 15, 2008
Abstract
Income and transfer tax considerations that favor overseas asset protection trusts (OAPTs) compared to domestic asset protection trusts are contrary to sound tax policy. Tax laws should not operate to encourage taxpayers to move assets overseas to be beyond the reach of US creditors because doing so may undermine the tort system. To the extent asset protection is allowed, OAPTs should not be governed by rules more lenient than those faced by domestic trusts. Estate tax laws regarding creditor access should be interpreted to apply equally to domestic and foreign trusts.
Keywords: tax, offshore asset protection trusts, grantor trusts, creditors
JEL Classification: K00, K34
Suggested Citation: Suggested Citation