Legal Note – Reasons for Offshore Planning

Several clients have recently inquired about the benefits of offshore planning. We below summarize some of the principle reasons for offshore planning:
1. U.S. courts generally have no authority to govern property beyond our borders. Without jurisdiction over foreign property, domestic courts cannot reach such property to satisfy U.S. debts.
2. Domestically, a judgment holder can overcome the jurisdictional obstacles of obtaining a judgment in one state and reaching the debtor’s property in a different state. The creditor simply records the judgment in the state where property may be attached. The judgment then becomes enforceable in the second state. U.S. judgments are, however, generally not recordable (or enforceable) in debtor friendly foreign jurisdictions. If foreign collection is required, the U.S. judgment creditor must actually again prove his or her case for damages in the foreign court to record a judgment in the offshore jurisdiction.
3. Offshore jurisdictions generally limit fraudulent transfer remedies available to creditors. Unlike U.S. states which generally allow creditors several years to file suit to recover assets fraudulently transferred, debtor havens limit fraudulent transfer claims to a very short recovery period. The short statute of limitations therefore quickly forecloses the creditor’s ability to reach assets previously transferred to avoid payment.
In light of the potential benefits of offshore planning, it should be considered as a facet of any sophisticated asset protection plan.

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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