Estates, Gifts, And Trusts (EGT)

Asset Protection Planning (Portfolio 810)

  • This Portfolio defines and analyzes “asset protection planning” and then examines methods used in preservation planning, and traps and pitfalls associated with these techniques.


Tax Management Portfolio, Asset Protection Planning, No. 810, begins with a working definition of “asset protection planning” to establish a uniform meaning of that term for use in the Portfolio. It then examines traditional methods utilized in rudimentary preservation planning, as well as the traps and pitfalls associated with such traditional techniques.

The Portfolio addresses the estate planner’s ethical considerations and obligations in the asset protection arena. It analyzes fraudulent transfers and special transfer considerations that may arise including potential criminal issues. The Portfolio then examines the types of exemptions that may be available to protect assets, including within the context of pre-bankruptcy planning.

The Portfolio discusses the asset protection aspects of corporations along with certain corporate income tax issues. It proceeds to an in-depth discussion of the use of limited partnerships and limited liability companies in asset protection planning, explaining the charging order concept, its protective effect, and the IRS’s position on charging orders. Partnership agreement drafting suggestions are provided. A review of the federal tax consequences of the establishment and use of limited liability entities is also provided.

The Portfolio includes a discussion of foreign limited liability entities and a survey of several foreign jurisdictions where parties can protect their assets. The use of trusts in asset protection planning is examined, including sample protective trust provisions, as well as a description of the protective effect of each provision. Following this is a discussion and comparison of the relative protection afforded by domestic and offshore trusts, including an analysis of the factors to be considered in selecting an offshore jurisdiction and an offshore trustee. Also, the U.S. tax consequences of the establishment and use of domestic and offshore trusts in the asset protection context are discussed.

Next, the Portfolio surveys 13 domestic jurisdictions and 11 offshore jurisdictions commonly thought of as permitting “asset protection” trusts. General and relevant legislative information is provided for each jurisdiction. The protective legislative provisions of selected jurisdictions are provided in the Worksheets.

This Portfolio may be cited as Rothschild and Rubin, 810 T.M., Asset Protection Planning.

Table of Contents

I. Introduction
II. Fraudulent Transfers
III. Exemption and Pre-Bankruptcy Planning
IV. Corporations
V. Limited Partnerships and Limited Liability Companies
VI. Trusts
VII. Asset Protection Trust Environment – Overview of Selected Jurisdictions

Gideon Rothschild
Moses & Singer LLP
Daniel Rubin
Farrell Fritz, P.C.
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