A Self Settled Spendthrift Trust is also called an asset protection trust. Simply put, in a trust like this, the Settler or Grantor is also the Beneficiary of the Trust. These trusts are therefore established for the benefit of the Settler.
A Trust That Limits Beneficiary’s Access to Protect the Assets
While establishing a Self Settled Spendthrift Trust, it’s important to include language that limits the Beneficiary‘s access to the trust, when a creditor or plaintiff is trying to access the assets through the Beneficiary.
Say for instance, you have an asset protection trust and have just been ordered by a court to pay out $1 million worth of damages to plaintiff. The court can order you to release the funds from your asset protection trust, and you may instruct your trustee to release the funds.
Offshore Trusts Are More Effective than Domestic Asset Protection
However, in the case of an offshore asset protection trust, like one that is established in the jurisdictions of Cook County, the trustee can simply refuse to obey your orders because he is in an entirely different jurisdiction. Read the article “Do Self-Settled Trusts Protect Assets” to learn more.
For this to happen however, your asset protection trust should be set up in a manner that makes it able to withstand scrutiny by American courts. In other words, the trust must be irrevocable, since this is the only kind of trust that can offer you complete financial security.
In a Self Settled Spendthrift Trust, as a beneficiary, you can enjoy access to the funds of the trust under normal circumstances. However, when there is any kind of legal action against your trust, like a lawsuit by a plaintiff for example, access to the trust is blocked to the creditor and the courts. You, on the other hand, can continue to use your trust to pay your bills through the Trustee.
A Self Settled Spendthrift Trust therefore has a two-pronged advantage. It allows you to enjoy and access the funds of your trust for your own enjoyment and use, and it also helps block creditors and courts from accessing your trust by making trust funds inaccessible to them.
If you set up a Self Settled Spendthrift Trust that is considered Off-Shore, that then makes it “springable”? So if we created the trust in a American state that laws allow such a device to be created…say alaska…at any point of time we can move that trust to any offshore location that we wished, or does there have to be some language and distinction of where it would be sprung too and would there need to be a physical connection to that location? In your examples on your website and videos you keep mentioning the Cook Islands. Also, could you give me a list of all the American states that laws allow an offshore asset managemet trust?