One claimed advantage for offshore trust is that those jurisdictions permit self-settled trusts and asset protection from the settlor’s creditors:
“Offshore protection trusts have become one of the most talked about estate planning techniques in recent years. They are heavily promoted as effective barriers against claims of creditors because the laws of most offshore trust havens make it difficult for creditors to obtain jurisdiction over, or levy against, a trust, even if the settlor retains an interest in the trust property. Unlike most states of the United States, a number of foreign jurisdictions permit a settlor to create a spendthrift trust for the settlor’s own benefit. These barriers often insulate the property entirely from creditors or encourage creditors to agree to inexpensive settlements.”
Fox and Huft, Asset Protection and Dynasty Trusts, 37 Real Prop. Prob. & Tr. J. 286, 297 (Summer 2002).
Offshore trusts can be somewhat problematic:
“Taxpayers who have established offshore trusts are beginning to discovery that those trusts do not always provide the level of creditor protection advertised. The fundamental problem is that a U.S. resident who moves assets to an offshore trust is still personally subject to the jurisdiction of the U.S. Courts.”
Id. at 301. See In re: Lawrence, 251 B.R. 630 (Bankr. S.D. Fla. 2000), off’d, 279 F.3d 1294 (11th Cir. 2002); F.T.C. v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999).