Asset protection is the term commonly used to denote legal structures or arrangements designed to safeguard assets. One of the main purposes of asset protection is to establish an appropriate legal form which will provide for one’s own family and heirs while simultaneously excluding access by creditors.
Asset protection structures are particularly popular in offshore jurisdictions within Anglo-American legal systems. As asset protection strategies run contrary to creditor protection their use is highly controversial.
The Principality of Liechtenstein is an attractive location for asset protection because of the extensive protection of secrecy provided under its laws, the wide scope available in terms of asset-holding structures and, with the exception of Austria and Switzerland, the lack of recognition and enforcement treaties with third countries. With the foundation, the trust, the trust enterprise (trust reg.) and the establishment (Anstalt), Liechtenstein’s legal system offers the possibility of four legal structures which lend themselves to the purpose of asset protection.
Nonetheless, asset protection can occasionally be something of a balancing act, particularly as in certain cases the risk of liability to criminal prosecution cannot be excluded. For this reason, reputable asset protection is a very complex matter which calls for wide-ranging expertise on the part of the adviser. It is quite possible for the issues which need to be covered to involve a broad spectrum ranging from foundation, company, inheritance and family law to insolvency, avoidance and criminal law. As most cases will also involve parties outside Liechtenstein, conflict of laws and the law applicable to the client should also be considered.
In practice, asset protection is often used as a marketing ploy which fails to live up to its promises when it comes to the crunch. Our expertise, on the other hand, enables us to provide a realistic and risk-sensitive assessment of the extent to which Liechtenstein’s asset-holding structures can or cannot provide asset protection in a given case.