The Truth about Offshore Asset Protection Trust Case Law.

Two things are true about offshore asset protection trust case law, and most of what circulates about it obscures both. First, in every reported decision our attorneys have reviewed, no properly formed and timely funded offshore trust with an independent trustee has been defeated on the merits. Second, nobody in those cases went to jail for creating a trust. The people who were jailed did one of four things - we call them TICC: Timing, Illegal, Comply, Control - and every one of the four is a choice about conduct rather than a weakness in the structure itself.

This page is the foreign half of the record. We keep a separate case register for domestic asset protection trusts, and an overview of both structures and what their decisions show.

TICC: What Actually Decides These Cases

Every adverse outcome across every one of these lists traces to one or more of four things, and they spell TICC — Timing, Illegal, Comply, Control. None is a technicality. None is a property of the trust or of the jurisdiction. Each is a decision the client makes, and each is what counsel is meant to screen for before a trust is ever funded.

T is for Timing. Fund the trust before any claim, judgment, or investigation is on the horizon and timing never becomes an issue. Transfer assets too late and a court can act — a transfer made after a claim has arisen is vulnerable to ordinary fraudulent-transfer law whether the recipient is an LLC, a spouse, a domestic trust, or an offshore trust. Note also what contempt for a late transfer usually is: purgeable. Undo the transfer and the contempt ordinarily ends with it. Bad timing is the most common fact pattern in the reported cases, and it has nothing to do with where the trust sits.

I is for Illegal. If the underlying conduct is criminal, no structure prevents the consequences. Nothing onshore or offshore protects the proceeds of fraud or tax evasion, and a prosecution for those crimes is a prosecution for those crimes. Counting one as a trust failure is a category error.

C is for Comply. When a court orders you to do something — request a distribution from your trustee, produce documents, file a schedule — you make the request and you comply to the best of your ability. Courts hold people in contempt for refusing, not for asking and being turned down. This is also where disclosure sits, because concealment is simply non-compliance under oath: an offshore trust is legal and reportable, it carries annual IRS filing obligations including Form 3520, and it must be disclosed truthfully in bankruptcy schedules, discovery responses, and sworn testimony. Every bankruptcy case on these lists turns on concealment or a false oath rather than on the trust.

C is for Control. Keep control within proper limits and the structure holds. Too much control — and particularly too much control at the wrong moment — is what hands a court the lever it then uses. The settlors who lost kept protector powers carrying repatriation authority, retained trustee-appointment and beneficiary powers, or directed distributions in practice. A properly formed trust is administered by a genuinely independent licensed trustee whom the settlor cannot compel.

So yes: someone who does TICC things can be held in contempt, and in the worst cases jailed. But read what that means. In every reported decision we have reviewed where a settlor was jailed, the conduct that put him there — the late transfer, the retained control, the refusal, the underlying crime — would have produced the same outcome behind a domestic trust. TICC conduct is what produces contempt. The jurisdiction is not.

Which is why the possibility of contempt is not a reason to avoid asset protection planning. It is a reason to work with counsel who screens for TICC before anything is funded, because the same four landmines sit in domestic planning and nobody presents them as a reason to skip a Nevada trust. Across the decisions reviewed on this page we have not found a case where a settlor who funded early, kept control within proper limits, complied with the orders he was given, and stayed inside the law was held in contempt.

Break none of these and the reported case law does not describe your situation. Break one and the jurisdiction of the trust stops being the question.

Why the Circulating Case Lists Do Not Change That

Several compilations of "failed offshore trust" cases circulate in estate-planning discussions, quoted at seminars and used to talk clients out of offshore planning. The best known is "45 FAPT Cases Gone Wrong", which has since been reduced to twenty-one entries. Others run to roughly twenty and twenty-eight cases. They overlap heavily, citing substantially the same decisions.

The earliest of them is a twenty-nine case list published in a subscriber newsletter on 13 August 2025 — LISI Asset Protection Planning Newsletter #450 — which is where the forty-five began. It matters for a reason none of the others do: the chart was withdrawn from social media in August 2026, but the numbered newsletter is still sitting in the LISI archive, and an archived newsletter is the version practitioners actually cite. We take those twenty-nine apart entry by entry, and set out what the count has done since, in Twenty-Nine Failed Offshore Trust Cases? What the Decisions Say.

Our attorneys have read every decision cited across all of them. The finding is the same each time, and it is the one stated at the top of this page: not one shows a properly formed, timely funded offshore trust with an independent trustee defeated on the merits, and not one shows anyone jailed for creating a trust.

The number of entries on any given list is not the point, and a shorter list is not a more accurate one. What matters is what the underlying decisions actually held. The rest of this page works through them.

This is a living review. As new versions of these lists, and new claims about offshore asset protection case law, are published and circulate, our attorneys apply the same process documented on this page: read every cited decision, compare what it held to what is claimed, and record the findings here. If you have seen a newer version of any list, check back; this review is updated to address it. The method applies whichever way the claims run: our fact-check of a circulating offshore trust guide corrects three pro-offshore case summaries by the same standard.

What the Lists Claim and What a Case-by-Case Review Shows

The largest of these compilations is the 45-case list, and it is the one worked through in detail below. It presents each of its forty-five decisions as an example of an offshore trust failing to protect a settlor's assets from a creditor, a divorce, a bankruptcy trustee, or a government enforcement action. Because it is frequently cited to discourage clients from offshore planning, it deserves scrutiny on its own terms.

A case-by-case review shows a very different picture. Many of the cited matters never involved a properly structured offshore asset protection trust at all. Others involve settlors who retained impermissible control, transferred assets only after a claim had already arisen, concealed assets in bankruptcy, or engaged in conduct that would defeat any asset protection structure, onshore or offshore. Still others resulted in a court holding the debtor personally in contempt or liable, without the offshore trust itself ever being reached.

Conflating those outcomes with "trust failure" overstates the case against offshore planning. The Cook Islands Trust is the structure these decisions most often involve, and the one our firm focuses on, so the record matters to us, and it deserves to be read accurately.

Eight Problems With the 45-Case List

1. It collapses distinct legal concepts into one category. Adverse events involving offshore bank accounts, self-settled trusts, fraudulent transfers, bankruptcy misconduct, contempt, divorce, tax evasion, and regulatory enforcement are all treated as failures of a properly structured offshore trust. They are not the same thing.

2. Many entries are not offshore-trust cases at all. Chadwick v. Green (annuities and a Panamanian bank account), FTC v. Fortuna Alliance (corporate funds in an Antiguan bank account), U.S. v. Plath (offshore credit-card accounts), SEC v. Cook (accounts and entities the defendant personally controlled), the Jerome Schneider case (sham offshore banks), and In re Omegas Group (a constructive-trust dispute from a commercial deal) involve no offshore asset protection trust being defeated on the merits. Counting non-trust cases as "trust failures" inflates the number and obscures the legal issue.

3. Contempt is not piercing. In a contempt proceeding, the U.S. court exercises personal jurisdiction over the debtor and asks whether the debtor can presently comply. A finding of retained control, concealment, or self-created impossibility says something about the debtor's conduct and credibility. It does not show that the foreign trustee was compelled to distribute assets or that the trust corpus was reached. It often proves the opposite: the court resorted to coercion against the settlor precisely because it could not directly reach the trust.

4. The fraudulent-transfer cases are ordinary debtor-creditor law. A transfer made after a claim has arisen, after litigation has begun, after judgment, or while an injunction is pending, is vulnerable whether the recipient is an LLC, a spouse, a domestic trust, or an offshore trust. The legal problem is bad timing and badges of fraud, not "offshore trust failure."

5. The retained-control cases are examples of what not to do. Settlors who served as protectors with repatriation powers, kept trustee-appointment and beneficiary-control powers, directed distributions, or used the trust as a personal checking account built structures fundamentally different from a properly formed offshore trust with genuine divestiture.

6. The divorce cases are mischaracterized. Decisions like Riechers, Westrate, and Breitenstine involve marital-property division and in personam remedies against a spouse. Courts made equitable-distribution awards enforceable against the spouse personally; they did not bind the foreign trustee or invade the foreign trust corpus.

7. The bankruptcy cases turn on disclosure misconduct. Brennan involved concealment and bankruptcy fraud. Colburn lost his discharge for false oaths, while the court found the trust's assets were not proven to be property of the estate. Portnoy involved sweeping retained control and non-disclosure. Debtors must disclose their interests truthfully; none of these cases shows that fully disclosed, properly timed offshore planning is ineffective.

8. The count includes duplicates and entries that cannot be found. Morris v. Wroble arises from the same dispute as Morris v. Morris. In re Brooks duplicates Sattin v. Brooks. In re Steering Committee and In re Tinsley could not be located despite extensive research. The list's rhetorical force depends heavily on the number forty-five; the number does not survive scrutiny.

The Cases, Category by Category

The list organizes its entries into the categories below. Here is every case, what actually happened, and why it is not a failure of a properly formed offshore asset protection trust. The full review (PDF) carries the complete facts and analysis for each.

Contempt of Court

The pattern in this category: a U.S. court orders repatriation, the settlor's own conduct (retained control, concealment, non-credible impossibility claims) leads to a contempt finding, and the trust assets stay offshore.

Fraudulent Conveyance

Bankruptcy

Divorce

Tax Evasion

Regulatory Enforcement

Piercing Offshore Trusts / Court Orders

Other Notable Outcomes

So, Will You Go to Jail for Setting Up a Cook Islands Trust?

This is the question behind these lists' scare value, and the honest answer comes straight from the cases above: no one in these cases was jailed for setting up a trust. The incarcerations were for contempt grounded in concealment, defiance of court orders, retained control, or transfers made after a claim, judgment, or investigation already existed. Several defendants were engaged in outright fraud that no structure, onshore or offshore, protects.

Lawful offshore planning looks nothing like those facts. A properly established Cook Islands Trust is funded before any claim arises, administered by a genuinely independent licensed trustee, fully disclosed to the IRS on the required annual filings, and operated without retained settlor control. Every consequence cataloged on these lists attaches to the opposite conduct.

TICC in the Cases Themselves

Read together, the cited decisions are a catalog of TICC conduct. Each is an execution or conduct failure, not a failure of offshore trust law:

• T, timing. Funding a trust after a judgment (Legendre, Solow), during litigation (Allen, Weese), or amid an investigation (AmeriDebt) invites ordinary fraudulent-transfer law, offshore or not.
• I, illegal conduct. Tax evasion and fraud prosecutions (Thompson, Butselaar, Schneider) involve crimes, not asset protection.
• C, comply. Bankruptcy fraud and non-disclosure (Brennan, Portnoy, Colburn) are failures to comply with an obligation under oath, and are the opposite of how legitimate planning works, in the open. Where a settlor was jailed rather than sanctioned, it was for refusing an order he could have obeyed.
• C, control. Settlors who kept protector powers with repatriation authority (Affordable Media), trustee-appointment and beneficiary powers (Lawrence), or de facto direction of distributions (Rogan, Grant) gave courts the very handle used against them.

The Jurisdictional Advantage the Cases Actually Demonstrate

A common misconception holds that U.S. courts can compel a foreign trustee to release assets. They cannot, and the contempt cases across these lists prove it. When a U.S. court jails a debtor, it is pressuring the person precisely because it cannot reach the trust. In case after case reviewed above, the corpus remained offshore and undisturbed while the fight played out over the settlor's personal conduct.

That is the structural difference between domestic and offshore planning. A domestic asset protection trust's trustee sits inside U.S. jurisdiction and can be ordered to turn assets over. An independent Cook Islands trustee, governed by Cook Islands law, cannot. The domestic side of that ledger has its own case record, and we keep it the same way: DAPT Facts reviews the decisions in which a domestic asset protection trust was actually defeated, beginning with the Alaska trust unwound in Battley v. Mortensen under the federal ten-year reach-back. The case law does not contradict the strength of properly built offshore trusts, it reinforces that timing, structure, disclosure, and genuine divestiture are what determine whether the protection holds.

A 2026 decision shows the same jurisdictional point from the domestic side, and by a second mechanism. In United States v. Huckaby, No. 2:23-cv-00587 (E.D. Cal. Mar. 2, 2026), the settlors of a Nevada spendthrift trust were also its trustees and its sole beneficiaries, and they had transferred California real estate into it in 2011 - more than six years before the United States obtained the judgment it later sought to enforce. The court agreed that the trust instrument itself is construed under Nevada law. It then held that whether the land held in that trust can be reached is governed by the law of the place the land sits, which was California, where self-settled spendthrift provisions are void. The judgment lien attached, and foreclosure was permitted.

What makes Huckaby instructive here is what the court did not need. There was no finding of fraudulent transfer, no finding of concealment, and no finding of misconduct of any kind; the government's alter-ego and nominee theories were left undecided. The trust's chosen law simply did not control the asset, because the asset was inside the United States. That is a different failure mode from the retained-control and bad-timing patterns that run through the offshore lists above, and it is one an offshore structure does not present in the same way: a Cook Islands trust's protection does not rest on a governing-law clause surviving a U.S. court's situs analysis, because neither the trustee nor the corpus is within that court's reach. It is the mirror image of the point Bilzerian makes from the offshore side, where the only asset a court could touch was U.S.-situs real estate.

To be precise about what this case is and is not: Huckaby is a domestic trust decision, and it is not an offshore trust failure. It appears on this page as the contrast that the offshore record keeps pointing to. The full entry, written from the court's own order, is in DAPT Facts.

We take the underlying concern seriously. Adverse cases exist and are worth understanding, which is why we read all forty-five rather than dismissing the list — and why we went on to apply the same method to the other compilations that circulate alongside it. That review follows.

The 20- and 28-Case "FAPT Failure" Lists, Reviewed the Same Way

The forty-five-case list reviewed above is not the only compilation of its kind. Three earlier lists circulate in the same discussions and are often cited alongside it — one of roughly twenty cases, two of roughly twenty-eight. Between them, they cite substantially the same decisions: Portnoy, Lawrence, Affordable Media, Bilzerian, Weese, Brennan, Grant, Solow, and the rest of the familiar roster, with a handful of additions.

We have now reviewed each of those lists entry by entry, against the underlying decisions, using the same method applied above. The findings are the same:

• None of the cited cases involves a properly structured offshore asset protection trust failing on the merits. The outcomes turn on the settlor's retained control, transfers made after claims arose, nondisclosure or concealment in bankruptcy, or structures that were not offshore asset protection trusts at all.
• The contempt cases follow the pattern documented above — the debtor sanctioned personally while the trust corpus was never reached.
• Several entries cut against the lists that cite them. In In re Colburn, the debtor lost his discharge to concealment and false oaths — yet the court held the creditor failed to prove the trust's assets were property of the estate.

Because the same case summaries circulate secondhand from list to list, the same misreadings replicate with them — we found identical characterizations, and identical errors, repeated across compilations that appear independent. That is not an accusation of bad faith against any author; it is how citation without verification behaves, and it is exactly why this article checks every entry against the decision itself.

We have prepared case-by-case corrections for each list's author and are providing them directly, with an invitation to tell us where they believe our reading of any decision is wrong. That conversation is open, and if any of it changes our analysis, this article will say so.

Update, September 2026: All Three Lists Have Changed

Every one of the three articles reviewed above has moved since we published our corrections. One has been rewritten, one has been taken down altogether, and one now carries our corrections on the page itself.

The revised one. When we reviewed it, the list published by attorney Paul Deloughery of Sudden Wealth Protection Law opened by describing "a list of over 2 dozen court cases commonly cited as defeating offshore trusts." As of August 29, 2026 it runs under a different title, "Offshore Trust Cases: Risks, Limits, and Lessons From U.S. Courts," and works through nine cases, each under its own heading: In re Lawrence, In re Portnoy, FTC v. Affordable Media, Riechers v. Riechers, Breitenstine v. Breitenstine, United States v. Grant, SEC v. Solow, SEC v. Greenberg, and FTC v. AmeriDebt. A tenth decision, Arizona Bank v. Morris (Ariz. App. 1967), is cited in a closing note on Arizona practice rather than as an entry. The URL is unchanged, so a reader following an old citation to "cases defeating offshore trusts" now arrives at the revised page.

The more consequential change is the framing. Not one of the nine is presented as an offshore asset protection trust failing. The revised page attributes the outcomes to what the people involved did — transfers made after claims arose, powers the settlor kept, continued personal use of trust property, incomplete disclosure, and non-compliance with court orders — and states that the warning signs are "not simply that an offshore trust exists."

That is the same conclusion this review reaches, and it is close to the TICC framework set out at the top of this page. We think the revision is the right one, and we credit the author for making it. We have taken down our redlined corrections to that list: they mark up an article that no longer exists in that form, and republishing them now would misrepresent what the page says.

The removed one. The list published by McCullough Law at mlutah.com/court-cases-defeating-offshore-trusts is gone. As of September 2, 2026 that URL returns 404 while the rest of the site resolves normally, so the page was taken down rather than the site going offline. We were given no notice of it and have made no request about it.

There is a difference between the two changes that matters here. The revised list can still be read, so anyone can check our reading against the author's. The removed list cannot — and there is no capture of it in the Internet Archive, so our redlined corrections are now the only public record of what it said.

We are leaving those corrections up for that reason, with the limitation stated plainly: a reader can no longer check our markup against the original page. We would rather that were not the case. It is also the second time material has come down rather than been corrected, and the pattern is worth noting on its own — a 2025 newsletter carrying the same errors is still in the archive, which is the version practitioners will actually cite.

The annotated one. The third article, Derren Joseph's list of roughly thirty cases at HTJ Tax, is still published, and what changed on it is that our corrections now sit on the page. He engaged further than either of the others: he added them in full and did not alter a word. The entries themselves are unedited, though, and the original list still stands above the corrections under its original heading, so a reader who scans the page meets the claim and not the correction. We have set out that sequence, and the questions it leaves open, in a separate review of the HTJ Tax list.

Our full redlined corrections are available for review:

• Lee McCullough's list — redlined corrections (PDF) — the source page has been removed
• Derren Joseph's article — redlined corrections (PDF)

For the complete facts and analysis of every entry, read our full case-by-case review.

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