Foreign Asset Protection Trusts
A Foreign Asset Protection Trust (FAPT) is structured similarly to a DAPT, however, it is created under the laws of a non-domestic jurisdiction. The Trustee will be located in the foreign jurisdiction. The attractiveness of using a FAPT for asset protection purposes is that a foreign jurisdiction that recognizes self-settled trusts would not honor a judgment from a United States court.
In addition, a client with a FAPT is an extremely unattractive target for a lawsuit because a creditor would need to litigate its claim against the foreign Trustee and pursue a collection action in that foreign nation. The creditor would need an attorney that practices in such foreign jurisdiction and the litigation cost could be prohibitive in many instances.