This article looks to define a bridge trust, what it is, how it works and why you might want to use one.
If you have built up your wealth with care and hard work you have every right to be concerned about those who might try to seek to gain access to your assets through predatory litigation or similar means. This article will help you to determine whether or not a bridge trust is right for you or whether you might enjoy greater benefit from a more robust offshore asset protection solution.
If you are looking for ways to protect your assets it’s wise to take your time and think things through. Creating an effective asset protection strategy requires careful planning and detailed knowledge.
We work hard to ensure every client meets compliance requirements. As a Nomad Capitalist client, we will work with you to find the best solution to make sure your assets remain safe, your business remains profitable and you enjoy the maximum level of tax benefits.
Bridge Trusts – TL;DR
Bridge trusts are hybrid trusts that seek to combine the tougher protection of foreign trusts with the easier implementation of a domestic one.
Plus, if you’re not fully comfortable with the idea of offshore trusts, for example, if you have concerns about ceding direct control of your assets to a foreign trustee or asset management company, then you might want to use a bridge trust as you can opt to appoint a domestic trustee instead.
Generally, we don’t recommend using a bridge trust to clients since we consider them a half measure. If you want the maximum levels of protection available you need to go offshore and, while that might sound daunting, we’re here to help make the process as smooth and as simple as possible. Talk to us about becoming a Nomad Capitalist client today.
Bridge Trusts – Overview
A bridge trust is a type of trust that attempts to merge the ease of setting up a domestic trust with the added protection of a foreign asset protection trust.
If you are a regular reader of this blog you will know that we always tell our clients that offshore asset protection trusts in jurisdictions such as the Cook Islands offer the strongest possible protection.
When compared to domestic trusts, you’re obviously more at the mercy of local courts and local judgements.
A bridge trust is an odd invention in that it tries to combine both together, a domestic and a foreign asset protection trust and by “bridging” them together, we get a bridge trust.
So does it work, or are the better options available?
Trusts – 101
First, a recap of what trusts are and how they can be used to protect assets.
At the behest of the settlor or grantor, trust assets are added to the trust. These then are put under the direct control of the trustee, who manages the trust on behalf of the settlor. This can be a lawyer, a trustee company or an asset management firm that operates in a fiduciary capacity towards the beneficiary, i.e. the party or parties who enjoy the ultimate benefits of the trust and its assets.
Since the trust itself, as a legal entity, assumes ownership of the trust assets, they are protected in the event of a lawsuit against the settlor.
Bridge Trust – Pros And Cons
A bridge trust is sold as a “best of both worlds” solution for those who don’t much care for the idea of setting up a foreign trust.
A bridge trust does have some advantages compared to a domestic asset protection trust, though we feel it is a poor compromise when compared with true offshore solutions.
Its simplicity, however, is one of its selling points, with none of the same IRS filing requirements as an offshore trust and no need to appoint a foreign trustee if you don’t want to do so.
Though we will concede there may be situations where a bridge trust may be the right solution in certain circumstances, for most purposes we feel it’s a half measure. So it’s not something we would usually recommend to a client.
With a bridge trust you open yourself up to more restrictions and more interference at local, state and federal levels. And you don’t really get the full benefit of a true offshore trust because you are still at the mercy of the US government.
In fact, one of the main reasons people choose this type of trust is because they feel that going fully offshore is more hassle than it’s worth – but we’ve built our business around the principle that it isn’t the case. To explore more options talk to us about becoming a client today.
Is One Bridge Ever Really Enough?
The first rule of asset protection is that there are always risks. Protecting your assets requires careful planning.
A single point of access means a single point of failure and that’s why one bridge is not enough, because if that bridge collapses you’re cut off from your assets.
Think it can’t happen? Think again.
Situations change, laws change, governments change.
That’s why we always tell our clients that there’s no such thing as “the right jurisdiction”.
Instead, we help develop a holistic plan with multiple bridges, multiple networks and multiple redundancies so no matter what shockwaves happen in the future, your assets are protected no matter what.
Diversification is key if you want to maintain control of your wealth, your assets and your properties.
As a Nomad Capitalist client, we’ll work with you on creating a plan that matches your exact needs. Unlike other providers who specialise in just one type of trust, be it a bridge trust or otherwise, we’ll look at a range of different options to find the best solution, the best jurisdiction and the best strategy to guarantee you the maximum levels of protection while still being in compliance with tax laws.
Bridge Trust – FAQ
A bridge trust is a type of trust product that seeks to combine the simplicity of a domestic trust with the asset protection of an offshore trust. Setting up a bridge trust may make sense in some cases but generally, we think you are actually better off going fully offshore since it will help to better protect your assets and ensure you stay fully in control of them. Talk to us about becoming a client and we’ll show you some more flexible options.
Offshore wins hands down since they offer far better protection. That’s why we always tell our clients they’re better off with a strong jurisdiction like the Cook Islands which offers the strongest possible protection for your assets.
A domestic lawyer with no offshore experience may decide to try and sell you on a bridge trust as a way to keep you as a client, but that doesn’t serve your needs.
But in many cases, an offshore trust from a popular trust jurisdiction, like the Cook Island trust, will prove virtually impregnable. The problem with using a bridge trust is that you are still legally exposed on your home soil. A lawsuit could therefore prove disastrous and your bridge trust could prove useless.
At Nomad Capitalist we help high-net-worth individual clients to enjoy the full benefits of offshore asset protection while ensuring they remain tax compliant. Talk to us about becoming a Nomad Capitalist client today.