While many planners and clients steer clear of offshore trusts, they do offer advantages. "You open yourself up to a whole world of investment opportunity," Taylor says. "Certain investments are prohibited for U.S. citizens, but a foreign trust can buy them."
And, there are cases where having a FAPT proved beneficial. Vernazza tells the story of a client who established a Gibraltar trust in 1993 and lost everything but those assets in a technology-infringement lawsuit several years later. Still, not all are convinced. Trust distributions are discretionary with the trustee, Tobias reminds us. "I have seen cases where people didn't have access to their money in an offshore trust when they wanted it."
Which only goes to show that as with anything else, asset-protection planning should be approached from a cost-benefit perspective. Kochis says that with complex structures, "there are hard dollar costs, sacrifice costs and foregone opportunity costs. Do an analysis of how those trade-off with the potential benefits before you start down a complicated, expensive path that ultimately could be very frustrating to the client. The probability of actual liability is slim," Kochis says. "It's not like (cashing in on) life insurance." Often, simple solutions really are the best.