What is a foreign asset protection trust?

A foreign asset protection trust (FAPT) is a type of trust that is designed to protect the assets of a high net-worth individual from being seized by creditors or a government. It is often used to help protect assets outside of the country of residence of the trustee. FAPTs are created in foreign countries and can be used to shield assets from creditors or other claimants located in other countries. The assets held in the trust are legally held by the trustee and are not owned by the beneficiary, therefore, the beneficiary has no legal property rights to them. FAPTs are one of the asset protection tools available under Hawaii law. The main purpose of setting up a FAPT is to protect assets from unsecured creditors in the event of any legal, financial or reputational issues. Generally, the assets placed in the trust cannot be reached by creditors, including the government or a private party. The assets placed into the trust are protected for the lifetime of the trust, even if the owner of the trust dies. When creating a foreign asset protection trust, it is important to understand the laws of the foreign country in which the trust is created. In Hawaii, it is important to choose a trust company that is experienced in creating asset protection trusts and is knowledgeable about the laws of the foreign jurisdiction. The trust company should also be able to provide ongoing advice and assistance in administering the trust throughout its lifetime.

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What is a foreign asset protection trust?

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