Abstract
The US has evolved in the past decades into an explosive litigation industry involving more and more capricious legislative bodies. Entrepreneurs as well as wealthy high net worth individuals feel the need to protect and preserve their wealth through the use of US domestic Trusts and even more sophisticated, through the use of Foreign Trusts established in a foreign jurisdiction offering a special asset protection legislation such as the Cook Islands for instance.
Nevertheless, in order to benefit from a strong asset protection at the moment of the event, certain conditions must be met. In addition, the tax treatment as well as the reporting requirements of Foreign Trusts have been strongly regulated by the specific set of regulations enacted by the administration Clinton in 1996. This Essay will draw the lines in between the different Trust types and go deeper into the effectiveness and possible pitfalls whenever US settlors plan to establish a Foreign Trust and appoint US beneficiaries.