Legal Note – Origins of Asset Protection

We are often asked how asset protection began. Interestingly, the practice is generally thought to have begun as a reaction to the common law of England. In the middle ages, the feudal system imposed onerous financial burdens on holders of legal title to real estate. The feudal system entitled the lord of the land to “relief” which generally consisted of money payments by the owner (known as the “feoffor”) due upon the occurrence of certain events. Such events included, for example, the passage of the property to an heir, marriage of a daughter, the knighting of the eldest son or upon the holding of the “tenant” for ransom.

Owners of property in England would therefore transfer legal title to a “foeffee” or trustee, bound by agreement to direct profits and sales proceeds of the property to a “cestui que use” or beneficiary. The maneuver allowed the owner to escape the burdens of legal title. The act of vesting legal title in another, while controlling use of the property, also established an important additional benefit. The arrangement took advantage of the fact that the common law provided no remedy to a creditor of the beneficiary regarding property in trust. The fifteenth century beginnings of trust law are therefore generally attributed with having established the origins of modern asset protection.

Gary Forster is a Florida native practicing in all areas of business transactions, personal planning and tax matters, both domestic and international. Gary handles a variety of corporate, personal and tax planning matters, ranging from wealth protection and corporate structuring to complex business reorganizations. Mr. Forster has designed and drafted hundreds of asset protection plans involving domestic and foreign corporate and trust structures. Gary is a member of both the Florida Bar (admitted October 8, 1993) and District of Columbia Bars (admitted February 6, 1995), including bar sections for international and tax law. Gary is also a member of the U.S. Tax Court. Gary earned an undergraduate degree from Tufts University in 1990, graduating cum laude, with majors in Spanish Literature and Economics. Gary graduated from law school at the University of Florida in 1993 with honors. Gary earned the Masters in Taxation degree in 1994 from the University of Florida where he was a graduate fellow. Mr. Forster writes and lectures frequently on international tax, corporate law and asset protection issues. Gary speaks Spanish fluently.

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