My Husband has formed an Asset Protection Fund - What do I do about it?
The first piece of advice is to firstly find your Trust/Company/Anstalt/Big Black Hole.
It is a regrettable facet of modern life that wealthy businessmen and women particularly those who have one or more residencies, who are ex-patriot or plain sneaky, make increasing use of an assortment of structures.
There can of course be legitimate reasons for so doing but as an asset protection trust salesman said in a recent article “Divorce is never far from the draughtsman’s mind”.
It seems to us to be pretty brazen to be advocating the use of asset protection trusts as a protection against legitimate divorce claims.
First find your Trust, this is sometimes an interesting equation. However there are various tell-tales and most wives know something. Once you have one end of the ball of string you can start pulling.
Tell-tales include assets and objects which are enjoyed but which are not owned, such as foreign houses, boats and the related. Strange movements of money which sometimes result in quite child-like explanations like “a friend of mine decided to give it to me”.
When we say strange movements of money, in divorces you always get to see at least some of the bank statements, you would be amazed at what information and further questions an experienced forensic accountant can produce in quite short order.
At the more extreme end, some years ago we dealt with a gentleman who was in the off-shore industry himself, the figures we were seeing on behalf of his wife did not stack.
This is one of the few cases in which we did advocate some close surveillance and our agent fished out of the bin, outside a really rather nice restaurant in Europe, a credit card slip for an account in somebody else’s name; the husband had a credit card in somebody else’s name. We kept tugging and loh and behold he not only had a trust but had a complete false persona in somebody else’s name complete with the banking and credit cards.
Once we exposed the false identity he was keen to make good his obligations, much to the relief of our client.
Sometimes the non-disclosing/structured party’s own actions result in disclosure. We had a client who was sitting at home waiting for her husband to come back from a business trip, to the best of her knowledge they were going out for dinner that night.
Instead she received a letter from his solicitor informing her that she was to leave the matrimonial home within 48 hours because it was an asset of “the Trust”. She was informed that an officer of the trustee would be coming round on Monday, this was Friday, to help you pack. Thus the end of the ball of string came into play. We then sought trust and company accounts. “Let us re-value the assets not on the basis of historic cost conventions but net asset values”. “What are all these factories”? “How much do they sell for”? Once we had an end we kept tugging.
A properly informed litigant in many jurisdictions has available a fair number of robust sanctions and powers which the Court can deploy on their behalf, a proper dissertation on same is beyond this brief article. However, it is worth reminding those who sell Asset Protection Trusts and similar what the law of the land has to say in relation to this subject.
“It has become common for wealthy individuals in many parts of the world (including countries which have no indigenous law of trust) to place funds at their disposition into trusts (often with a network of underlying companies) regulated by the law of, and managed by trustees resident in, territories with which the settlor (who may be also a beneficiary) has no substantial connection. These territories (sometimes call tax havens) are chosen not for their geographical convenience (indeed face to face meetings between the settlor and his trustees are often very inconvenient) but because they are supposed to offer special advantages in terms of confidentiality and protection from fiscal demands (and sometimes from problems under the insolvency laws, or laws restricting freedom of testamentary disposition, in the country of the settlor’s domicile). The trusts and powers contained in a settlement established in such circumstances may give no reliable indication of who will in the event benefit from the settlement. Typically it will contain very wide discretions exercisable by the trustees (sometimes only with the consent of a so-called protector) in favour of a widely-defined class of beneficiaries. The exercise of those discretions may depend on the settlor’s wishes as confidentially imparted to the trustees and the protector. As a further cloak against transparency, the identity of the true settlor or settlors may be concealed behind some corporate figurehead” (Schmidt v Rosewood Trust Ltd  UKPC 26 1)
Their Lordships did not seem to be amused.