Commercial Aspects of Trusts and Fiduciary Obligations

By Ewan McKendrick | Go to book overview
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11
THE ADAPTATION OF THE ASSET PROTECTION TRUST FOR USE BY THE MULTINATIONAL CORPORATION: THE AMERICAN PERSPECTIVE

Jeffrey Schoenblum


1. Introduction

During major international conflagrations and internal political disruptions in the past, corporate and individual capital has sought refuge in the United States and, to a lesser extent, the offshore Caribbean Islands. The conditions that have fostered the flight of capital to these jurisdictions persist and, thus, there is a continuing demand for fail-safe mechanisms for the preservation of the assets of corporations operating around the world.1

The common law trust has been regarded by some as an instrumentality that is capable of assuring the protection of such capital, while preserving flexibility of management and perpetuating corporate control, even though the corporation itself may be under siege. A careful analysis suggests, however, that there needs to be far more evolution in the law and focus on the underlying problem before one can truly claim this new role for the trust. Presently, the asset protection trust may actually be less appealing in many situations than the alternative of inaction or reliance upon certain other protective devices discussed in Chapter 10.

The focus of this chapter is on the United States. It functions as a giant receptacle for assets from abroad. The United States and the sovereign island nations offshore serve as well as the administative centres for trusts and other entities. The purpose of many of these entities is to hold and administer assets already invested in the United States and, possibly, elsewhere in the Western Hemisphere. The purpose of others is to exist in a dormant state, to stand by until a specified emergency arises that triggers the transfer of assets to the waiting trust or other management vehicle.

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1
This chapter focuses exclusively on non-tax matters. While tax considerations are beyond the scope of this chapter, they do play an extremely important role in structuring asset protection vehicles.

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