Beware the Asset Protection Trust

Abstract

Civil law regimes in Europe have been cautiously open to the common law trust for commercial purposes, and to some forms of the private trust as well. This openness indicates that the time may be right to issue a warning to civil lawyers about the recent proliferation of highly problematic forms of the trust in the U. S., and to offer an explanation of the dysfunction which allowed these trusts to win legislative approval. Civil law may be less amenable to these forms of trust for reasons of social policy and legal philosophy as expressed in foundational legal texts. Recent changes to EU trust law and to French and Dutch tax law indicate that this may be the case. This article discusses these new trust forms and discusses some elements of civil law which, at least from a common lawyer’s perspective, offer some resistance to them.