It is no surprise that foreign trusts can easily be used as elements to fraudulently protect or conceal beneficially owned assets. In some jurisdictions a trust may however, be considered void if the trust was “self-settled” (i.e. the grantor and beneficiary were found to be one and the same). Trust veils might also be pierced on the ground that they are fraudulent conveyances, as explained by the May 23, 2011 “Asset Search News Roundup”.
To analyze whether a trust is actually fraudulent, litigants ranging from bankruptcy trustees to divorcing spouses try gathering relevant evidence through pretrial discovery devices. If a foreign trust has a U.S. owner for example, discovery devices could conceivably be used to elicit copies of the “Annual Information Return of Foreign Trust with A U.S. Owner”, Form 3520-A, that may have been supplied to the IRS Service Center, in Ogden, Utah.
Below are some discovery devices filed by the Chapter 7 trustee in the Michael Mastro bankruptcy case in Seattle, Washington. In Mr. Mastro’s case, one of three trusts at issue, (i.e. the LCY Trust), was replete with foreign elements. Mr. Mastro formed LCY Trust under Belizean law and it had a Belizean trustee, called “Compass Trust Corporation.”
(To Access The Discovery Devices, Click On The Image)
Copyright 2012 Fred L. Abrams