Let’s start at the beginning, with an explanation of offshore asset protection trusts. No better summary exists than appeared in the Rutgers Law Review several years ago.

Generally OAPTs [Offshore Asset Protection Trusts] are trusts created under the laws of certain foreign jurisdictions in order to shield the assets transferred to the trust from future creditors. Numerous devices fall under OAPTs. Typically, however, an OAPT is established under laws ofa foreign jurisdiction with trust legislation supportive of OAPTs. Once framed, the trust is irrevocable. The trust may terminate in a relatively short time period, such as ten years, with the sett­br [creator] retaining a reversionary interest. Alternatively, the trust term may be tied to the lives of the senior or one or more beneficiaries. Beneficiaries of the trust are members of the settbor’s family, such as spouse and children, and may include the senior. The trustee is a foreign trust company or financial institution.

Ordinarily, the trust vests the trustee with unfettered discretion over distribution of income or principal among the designated beneficiaries. The senior, however, typically reserves some measure of control over the trust either through membership in a “committee of advisors,” or as a self-designated protector of the trust with authority among other things, to replace the trustee.

OAPTs are utilized primarily for two reasons: (1) they offer added protection from creditors when compared with domestic spend­thrift trusts; and (2) they offer this added protection without the settlor divesting total control over the transferred assets. For these reasons, OAPTs have become the most popular vehicles for foreign asset protection planning. In fact, current estimates suggest that the staggering amount of $1 trillion of foreign trust funds are held in asset protection trusts. One reason behind the explosion in OAPTs is that the class of OAPT seniors has expanded from its traditional base of the :‘super_rich’ to include less-well-heeled more