Asset Protection Bridge Trusts

LA Law Center, PC is pleased to offer our California Clients a Tried & True Hybrid Asset Protection Trust that can convert a Domestic Trust into a Foreign Trust (aka…Off-Shore Bridge Trust… Cook Island Trust.) in the event of possible judgment from a lawsuit. California is a place where you really do need to protect yourself and your assets from potential lawsuits!

 

The Bridge Trust and Control of Assets

When a Lawsuit happens, a secondary set of rules in The Bridge Trust are activated so that legally the creditor and the courts are blocked from any access to the Trust assets. During this time, the clients remain the beneficiaries and may still indirectly access Trust assets.

For Example: The Off-Shore Trustee may lease a car for the beneficiary, rent a home or pay credit card bills of the beneficiaries. The net effect is that the Bridge Trust assets are permanently preserved for the beneficiaries and completely protected from unauthorized court proceedings and creditors.
 

Who Needs The Bridge Trust?

The Bridge Trust has fast-become the ultimate “Lawsuit Deterrent” for clients with assets over $250,000, especially in California! Relatively new to mainstream law, The Bridge Trust was created less than a dozen years ago to help establish “a more level playing field” for largely unprotected defendants who find themselves in the crosshairs of an unbridled explosion of abusive litigation in America. California Litigation Attorneys are out of control these days with many law suits!

If you have assets that you wish to protect… The Bridge Trust (Hybrid Domestic Trust) is the type Trust you need to understand BEFORE YOU GET SUED!

The Bridge Trust is tailored primarily for high-risk professionals, such as California Landlords of multi-unit apartments, Physicians, Dentists, Chiropractors and others at appear to have deep pockets and substantial vulnerable assets. It’s primary purpose is to protect and conserve a client’s financial resources for their future use, benefit, and enjoyment of the beneficiaries, including the grantor. This is accomplished by diminishing the size of the client’s “legal” estate using a legal carefully crafted tax-neutral Bridge Trust.

Properly prepared by an experienced asset protection law firm, as part of a comprehensive Estate Planning and Preservation Strategy, The Bridge Trust can be a powerful legal tool to:

1. Remove the incentive to sue from would-be claimants who use the court system for the practice of legal extortion;
2. Substantially enhance the grantor’s negotiating position with creditors, allowing resolution of legitimate disputes that is far less damaging to the defendant;
3. Protect privacy and avoid Probate of all Trust assets.

Until triggered by an “Event of Duress” or “Cause of Action”, The Bridge Trust acts as a U.S. Grantor Trust for income tax purposes and by the laws of Nevada.

For all other purposes, The Bridge Trust is governed by the laws of Belize, and, if triggered by law suit, by the laws of the Cook Islands.
 

Asset Management Limited Partnership & The Bridge Trust

In conjunction with The Bridge Trust, we help our Client form an Arizona Asset Management Limited Partnership (AMLP). The Bridge Trust will be the largest Limited Partner. Typically, the client is a 1% General Partner who manages the AMLP, and a spouse or children become a 1% Limited Partner, with The Bridge Trust a 98% Limited Partner. This is another layer of protection. Arizona is chosen because once set up, the Limited Partnership does not have to annually renew its existence, and Arizona Statutes make it very difficult for a Creditor to attack or pierce.

The AMLP would be the vehicle that would directly own assets that are ‘safe’ (i.e., Stocks, Bonds, Notes Receivable, Collectibles, etc.), as well as the equity of LLCs or other limited liability entities that may hold more riskier assets.
 

Foreign Trust Administers ‘Triggered’ Trust

If triggered by a Threatened Lawsuit, The Bridge Trust, serving as the majority Limited Partner of the AMLP, typically pulls the client’s assets out of the U.S. jurisdiction by legally transferring them to a foreign jurisdiction under the administration of a Foreign Successor Trustee. This occurs without the loss of beneficial ownership or distributive rights by the grantor (our Client). Importantly, our client’s assets – most of which are in an AMLP – never have to leave jurisdiction in the U.S… unless The Bridge Trust is “triggered” by some legal crisis or pending law suit.The good news is that once the threat (law suit) ends, The Bridge Trust can be re-domesticated to the status of a U.S. Grantor Trust if our client so desires.

Also, assets in The Bridge Trust will avoid Probate and will be protected from future fiscal emergencies. Importantly, funding may occur only when the client has no claims pending threatened or expected. Once funding is complete, our client must be able to pay all reasonable anticipated debt from resources outside the Trust. Accordingly, our client must sign and notarize an Affidavit of Accuracy and Solvency before The Bridge Trust can be established.

Unlike the AMLP, The Bridge Trust can legally own sub-chapter S stock and annuities. The Bridge Trust may also own personal residences without loss of tax-free capital gain or home interest deduction benefits. Unlike the Revocable Living Trust, The Bridge Trust, when holding title to a personal residence, can legally remove the equity of those residences to the protection of a foreign jurisdiction, if needed. While IRAs and other qualified retirement plans may not be placed in the trust, The Bridge Trust may be a primary or contingent beneficiary of such plans.
 

Successor Trustee Can Make Distributions

Once triggered, the Grantor (our Client) may request distributions of resources to selected beneficiaries and make bequests through Letters of Wishes to the Foreign Successor Trustee. The Foreign Trustee, with consent of the trust’s “Protector”, has the power to make distributions in any amounts desired in accordance with the terms of The Bridge Trust. This includes distributions of resources for the maintenance, support, health, education, and general welfare of all beneficiaries of The Bridge Trust.

The Trust Protector is named by the Grantor. In the case of our clients, the Trust Protector typically is Lodmell &Lodmell. In addition to having veto power over the Foreign Successor Trustee’s actions, the Trust Protector also has power to remove and replace trustees for any reason or no reason and to determine when an “Event of Duress” has occurred.

There are no income tax advantages of asset protection planning other than those that can be accomplished through conventional planning – nor are there any disadvantages. A legitimate Bridge Trust is tax neutral. Its objective is to protect assets – not evade taxes.

Of the hundreds of Bridge Trusts prepared by L&L’s attorney-analysts, less than a handful have been challenged over the years and none have been penetrated.

A properly drafted Asset Protection Trust is virtually impenetrable, while combined with a proper integration with a Family Limited Partnership and Limited Liability Company the APT is a fortified asset protection structure.
 

 

Please contact our office for a free initial consultation with Joseph McHugh, a California Asset Protection / Estate Planning Attorney. We are very proud of the many personal and professional referrals we receive from happy clients and colleagues. Please contact our office today to schedule a free consultation.

Call us for a free 30 minute initial consultation for our legal services at: (818) 241-4238. Or you can submit this form to request this free 30 minute consultation to determine if our services meet your needs.

Click Here for Joe McHugh and Doug Lodmell Webinar