What is a foreign asset protection trust?

A foreign asset protection trust (FAPT) is a special type of trust created in a foreign country to help a person protect their assets from creditors in the United States. This type of trust can help protect the assets of a person from creditors and lawsuits in their home country, but it is important to note that it is not a form of tax avoidance. In Virginia, FAPTs are not recognized as trusts, so the person creating the trust must be sure to comply with all applicable laws in the foreign jurisdiction. Generally, the person creating the trust will transfer their assets to the trust, and the trust then holds the assets outside of the person’s name. The assets are managed by the trustee of the trust, who is typically a foreign financial institution with expertise in the kind of trust that the person creating it is attempting to establish. Under Virginia’s asset protection laws, FAPTs are not recognized as trusts. However, the assets in the trust are still protected from creditors in the United States. This means that if a person creates a FAPT and their assets grow in value, creditors cannot go after those assets. Additionally, the trust may be set up to prevent assets from being accessed or taken away in the event that the person creating it is sued in the United States. Overall, a foreign asset protection trust is an important tool for asset protection and can help a person protect their assets from creditors in the United States. However, it is important to understand the laws governing asset protection in Virginia to ensure that the trust is properly created and can offer the protection that is sought.

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