The Domestic Fatal Flaw

The previous lesson explained why domestic planning can be useful. This lesson asks a harder question: what happens when the plan is seriously challenged?

A state may offer strong trust or entity laws, while a court dealing with your claim may apply different rules or reach a different conclusion. The trust’s chosen state is not the only fact that matters.

The recording points to the Constitution’s Full Faith and Credit Clause. States are part of one national legal system, and judgments can have effects across state lines. Federal law and federal courts can also matter. The details are more complex than simply choosing the state with the most favorable trust law.

Douglass calls this a problem of predictability. A plan can look strong on paper, yet still face a result in court that the client did not expect. Domestic protection remains subject to domestic legal authority.

The takeaway is not to discard all U.S. tools. The recording expressly says to use the domestic tools that are appropriate. Its argument is that some clients also want a lawful offshore component set up as part of the plan.

That raises the next question: can a plan combine ordinary domestic use with an offshore component? The next lesson introduces The Bridge Trust.