The Special Power of Appointment Trust (“SPA Trust™”) is better than an Offshore Trust. The chart below explains in detail the flaws of Offshore Trusts and the benefits of our SPA Trust™. The chart includes an extensive list of court cases proving that Offshore Trusts don’t work. You can also click HERE for 10 Reasons SPA Trust™ is Better for asset protection.
| Criteria | Offshore Trust | SPA Trust™ |
| Confidentiality | Offshore Trusts are easily discovered through a review of your tax returns. In fact, you must disclose the exact location, account number and maximum amount in each account each year. Failure to report offshore trusts or accounts can result in criminal penalties and severe civil penalties which can exceed the amount in the offshore accounts. Interests in offshore trusts must also be disclosed on a standard bankruptcy questionnaire; and failure to disclose can result in bankruptcy fraud and criminal penalties. | The SPA Trust™ requires no disclosure on tax returns and there is no risk of criminal or civil penalties. The SPA Trust™ is not discoverable through a review of your tax returns, or through a bankruptcy questionnaire. |
| Usefulness | It is a universally understood and accepted fact that an offshore trust is not effective at protecting onshore assets. See In re Brooks, 217 B.R. 98 (D. Conn. Bkrpt. 1998). | The SPA Trust™ can be used to protect any type of asset in any location. |
| Case Law | As shown in the cases set forth below, US Courts have established plenty of precedent to allow them to defeat an offshore trust:In re Colburn 145 B.R. 851 (Bkrpt E.D. Va. 1992). (For failing to disclose offshore trust, debtor was denied a discharge and accused of fraud).Brown v. Higashi, (Bkrpt Ak. 1995). (Assets of offshore trust included in bankruptcy estate).
In re Portnoy, 201 B.R. 685 (S.D.N.Y. Bkrpt 1996) (Because of offshore money, discharge denied and debtor accused of fraud). FTC v. Fortuna Alliance (1997) (Debtors were arrested and funds were repatriated). Riechers v. Riechers, 679 N.Y.S. 2d 333 (1998) (Offshore trust assets included in marital estate for divorce purposes). Westrate v. Westrate (1998) (Husband accused of fraud and threatened with criminal penalties. Assets included in marital estate). In re Brooks, 217 B.R. 98 (D.Conn. Bkrpt. 1998) (Offshore trust disregarded and assets seized by US court). FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999). (Debtor jailed for refusing to repatriate assets). SEC v. Brennan, 230 F. 3d 65 (2nd Cir. 2000) (Debtor convicted of bankruptcy fraud). SEC v. Bilzerian, 131 F. Supp. 2d 10 (D.C. 2001). (Debtor jailed for refusing to repatriate assets). In re Lawrence, 279 F.3d 1294 (11th Cir. 2002). (Debtor jailed for over six years for refusing to repatriate assets). Bank of America v. Weese, 277 B.R. 241 (D.Md. 2002) (Debtors paid settlement of over $12,000,000 in order to avoid incarceration). BankFirst v. Legendre (2002)(Debtor jailed for contempt of court until assets were turned over five days later). Breitenstine v. Breitenstine, 2003 WY 16, 62 P.3d 587 (Wyo. 2003) (Trust assets included in property division). U.S. v. Plath, 2003-1 USTC 50,729 (U.S. District Court, So. Dist. Fla. 2003) (Debtor held in contempt for refusing to obey court order to disclose details about offshore accounts despite the fact that there was no fraudulent transfer). Eulich v. U.S., (N.D.Tex. Case No. 99-CV-01842, August 18, 2004) (Debtor found in contempt, threatened with fines and jail time until assets repatriated). U.S. v. AmeriDebt, Inc., 373 F. Supp. 2d 558 (D Md. 2005) (Debtor found in contempt and threatened with jail time until assets repatriated). Morris v. Morris, Case Nos. 4D04-3812, 4D04-4621, 4D04-4763, aff’d Appeal No. SC05-1166 (Fla.S.Ct. April 13, 2006); Morris v. Wroble, Case No. CIV-O6-80479 (S.D. Fla.) aff’d Appeal No. 06-80452-CV-DTKH (11th Cir. Nov. 16, 2006). (Debtor jailed for contempt of court for refusing to repatriate assets). Barbee V. Goldstein, 2006 U.S.Dist. LEXIS 82945. (Goldstein funded offshore trust over a year before filing for bankruptcy. Bankruptcy Court ordered Goldstein to repatriate funds from Cook Islands Trust. Goldstein failed to comply and was jailed for contempt. Goldstein finally agreed to terminate the trust and repatriate the assets). Chadwick v. Green, Civ. No. 09-2134 (Del. County Ct. Com. Pl. July 10, 2009) (H. Beatty Chadwick was released after serving 14 years in jail for refusing to obey a court order to turn over $2,500,000 that a judge believed was hidden offshore. The court said that after 14 years, the contempt order “has lost its present coercive effect and that it is unlikely that the continued incarceration of Petitioner Chadwick will result in his compliance with [that order].”) Securities and Exchange Commission vs. Jamie Solow, 2010 WL 303959 (S.D. FL., Jan 22, 2010). (Debtor jailed for contempt of court for refusing to repatriate assets). FTC v. Direct Benefits Group, LLC, 2011 WL 3654469 (M.D.Fla., Slip Copy, Aug. 19, 2011). (Court ordered all offshore funds repatriated without regard to any documents or legal structures). Advanced Telecommunication Network, Inc. v. Allen, D.C. Docket No. 05-00770-CV-ORL-19-JA-DA (11th Cir. 2011) (Debtor funded Cook Islands trust which included duress clause and all the usual provisions; bankruptcy court found offshore trust against public policy and ordered debtor to repatriate funds; debtor claimed he had no power to comply; debtor was held in contempt and the court cited earlier cases holding that a self-created impossibility is not a defense; 11th circuit affirmed.) U.S. v. Rogan, 2012 WL 1107836 (N.D.Ill. 2012)(Peter Rogan transferred assets to an offshore trust in 1996. The Bahamas Trust included all the traditional offshore trust provisions and it gave no apparent control to Peter Rogan. In November of 2002 he was sued. Judgments were entered against him in 2006. The court held that Illinos law applied instead of the laws of the Bahamas, and Rogan was ordered to turn over the assets because Illinois law does not protect the assets of a self-settled trust. Rogan has since fled the country. Rogan and the attorney who helped create the trust have been indicted for perjury for claiming that they had no control over the trust. The court held that “Notwithstanding the terms used to create the trust, Rogan and Cuppy controlled the [Trust].” They were also indicted for obstruction of justice and conspiracy to obstruct justice.) |
For a listing of cases supporting the asset protection provided by a SPA Trust™, see Law-and-Precedent-Supporting-the-SPA-Trust™ |
| Appearances | Because there is no legitimate purpose for an offshore trust that cannot be accomplished with an onshore trust, the offshore trust includes a reputation associated with criminal activity and unethical conduct. If a judge, jury, or government agency learns that you have an offshore trust, they will view you as a criminal who is attempting to hide assets or evade the law. | The SPA Trust™ is an ordinary estate planning tool that people establish for legitimate purposes. It does not raise a red flag or indicate unethical or inappropriate activity. |
| Cost & Complexity | Offshore trusts are notoriously expensive to create, and they require annual payments to a foreign trust company in the range of $2000 to $3,500 per year.Offshore trusts require the completion of tax forms 3520, 3520-A, and 1041. Offshore accounts and investments must be reported on form TD F 90-22.1, which requires you to disclose the exact location, account numbers, and the maximum dollar amount in each account each year. Foreign accounts must also be reported on your personal income tax return, form 1040. Starting in 2011, Form 8938 also must be filed for all offshore accounts. Failure to properly report offshore trusts and accounts can result in criminal penalties and severe civil penalties which can exceed the amount in the offshore accounts. | The set-up cost of a SPA Trust™ is usually about one-third of the cost of an offshore trust. Because the SPA Trust™ is accepted and upheld in all jurisdictions, it may be possible to minimize or avoid significant annual fees.The SPA Trust™ results in NO extra tax returns. |
Based on the precedent set forth above, this is how a US court can defeat an offshore trust:
1. The court will rule that a self-settled offshore trust is against public policy and the court will order the defendant to turn over the assets of the trust.
2. If the defendant refuses to obey the court order, the court will hold the defendant in contempt of court and send the defendant to jail until he complies.
The fact is that there are no court cases and absolutely no authority preventing a court from following the steps set forth above.
Those who make lots of money selling offshore trusts will tell you the following:
1. They will cite old Supreme Court cases (including Maggio v. Zeitz (1948) and Rylander (1983)) which say that impossibility is a defense to contempt of court. Those old cases are meaningless because all they do is state the general rule that impossibility is a defense. They ignore the fact that the law has developed over time and more recent cases have found that a self-created impossibility (such as an offshore trust) is not a defense.
The truth is that the Rylander case was cited by Lawrence and many of the recent cases where the courts have found that a self-created impossibility is not a defense. When Stephen J. Lawrence appealed to the Supreme Court citing the Rylander case, the Supreme Court refused his appeal.
2. They will claim that their trust agreement includes a duress clause or a flight clause that will solve the problem. The truth is that there is no clause that you can include in a trust agreement that will prevent a US court from finding that the settlor created those provisions, and that a self-created impossibility is not a defense.
3. They will claim that a US court cannot order you to repatriate the assets if you establish the trust in advance of a problem. The cases cited above clearly refute that idea.
4. They will cite the Raymond and Arline Grant case as authority that offshore trusts work. That conclusion is misleading because in this case the settlor of the trust was dead and the court correctly found that the beneficiary had not created the impossibility.
5. They will try to claim that a US court can use the same tools against an onshore trust that they can use against an offshore trust and this is completely false because the offshore trust fails to comply with US law and attempts to avoid the law while the SPA Trust™ complies with the law and is supported by an overwhelming number of statutes and cases, with zero contrary authority.
6. They will claim that they have established many offshore trusts and none have been defeated by the US courts. This is like saying that I have never been robbed so my dog must be a great watch dog.
What the promoters can’t give you is one shred of authority to refute the fact that a US Court can order you to turn over the assets of your offshore trust or go to jail.
If you want to learn a better way to protect assets, click here: 10 Reasons SPA Trust is Better