There is No Place Like Home: Mature Foreign Asset Protection Trusts Are Coming Home
The 10-year time limit is expiring for a raft of foreign asset trusts, and those who hold them could benefit in several ways now by redomiciling them to the United States.


Do you have a foreign asset protection trust (FAPT)? Has it been established for more than 10 years? Are you interested in ways you can save on the costs of maintaining your FAPT? You may now bring your trust home to a qualifying state and still maintain the firewall protections your FAPT provided.
In recent years many FAPTs that have reached their 10-year anniversary are being migrated back to the United States. Why is the 10-year period so critical? Under a federal law pertaining to bankruptcy proceedings, the U.S. bankruptcy trustee is allowed to challenge transfers to a domestic asset protection trust or other similar devices for up to 10 years from the date assets were transferred to the trust. Once the 10-year term has expired, the trust is no longer at risk of being challenged as a fraudulent transfer in a bankruptcy proceeding.
The long statutory period to challenge transfers to asset protection trusts caused many people to establish these trusts in an overseas country where Federal Bankruptcy Code Section 548 would not apply.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The benefits of bringing a trust home
Once the statute of limitations under Section 548 has expired, a creditor is no longer able to pursue the assets held in the trust. This is great news, considering the FAPT can now return home! The many benefits of converting the FAPT to a domestic trust include:
- lower administration fees
- more flexibility in banking and investment custodians
- convenience
- less IRS tax compliance, i.e., less costs to maintain the trust
A real-life story
Here is a client example: Dr. Veronica G. developed a specific medical procedure to fix an ongoing condition and for several years she had successfully helped more than 75 patients overcome their medical issue. One day while watching the news, Dr. G. saw a commercial in which a law firm advertised that it would sue doctors who injured patients who had the procedure performed and who may have sustained injuries.
Dr. G. began to realize that although this procedure was successful, there could be some larger liability than her malpractice policy would cover. This prompted her to consult with a lawyer who specialized in comprehensive estate planning with asset protection and resulted in her establishing foreign asset protection trusts.
Dr. G.’s trust is now more than 10 years old, and after meeting with her attorney, she decided to redomicile her trust to Nevada, a state that year after year ranks in the top five of asset protection trust states. This strategy will maintain the protections of the trust while reducing Dr. G’s overall costs to maintain the trust. She won’t be required to file the IRS tax compliance forms required for trusts established overseas, and her choice of banks and brokerage firms will increase significantly, because many U.S. banks and brokerage firms will not open accountants under a FAPT.
Overall, the key concept is that if your FAPT is now more than 10 years old, you may now bring it back to the U.S. and still maintain the protections of the trust.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jeffrey M. Verdon, Esq. is the lead asset protection and tax partner at the national full-service law firm of Falcon Rappaport & Berkman. With more than 30 years of experience in designing and implementing integrated estate planning and asset protection structures, Mr. Verdon serves affluent families and successful business owners in solving their most complex and vexing estate tax, income tax, and asset protection goals and objectives. Over the past four years, he has contributed 25 articles to the Kiplinger Building Wealth online platform.
-
Trump Targets Student Loan Forgiveness: Here’s How Taxes and Repayment Could Soon Change
Student Loans The so-called One Big Beautiful Bill and the Trump administration’s executive action are making the future of student loan forgiveness and its tax consequences uncertain.
-
California, South Florida, Long Island, New Jersey: The Places People Are Leaving in Droves in 2025
Skyrocketing costs and shifting priorities mean people are packing up and leaving some cities and states in droves, while others are flocking to more affordable or lifestyle-friendly destinations.
-
I'm a Financial Strategist: This Is the Investment Trap That Keeps Smart Investors on the Sidelines
Forget FOMO. FOGI — Fear of Getting In — is the feeling you need to learn how to manage so you don't miss out on future investment gains.
-
Can You Be a Good Parent to an Only Child When You're Also a Business Owner?
Author and social psychologist Susan Newman offers advice to business-owner parents on how to raise a well-adjusted single child by avoiding overcompensation and encouraging chores.
-
How Advisers Can Steer Their Clients Through Market Volatility (and Strengthen Their Relationships)
Financial advisers need to be strategic when they communicate with clients during market volatility. The goal is to not only reassure them but to also help them avoid rash decisions, deepen your relationship with them and build lasting trust.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial Issues
Many caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
-
Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
Cash balance plans offer business owners and high-income professionals a powerful way to significantly boost retirement savings and reduce taxes.
-
Five Things You Can Learn From Jimmy Buffett's Estate Dispute
The dispute over Jimmy Buffett's estate highlights crucial lessons for the rest of us on trust creation, including the importance of co-trustee selection, proactive communication and options for conflict resolution.
-
I'm a Financial Adviser: For True Diversification, Think Beyond the Basic Stock-Bond Portfolio
Amid rising uncertainty and inflation, effective portfolio diversification needs to extend beyond just stocks and bonds to truly manage risk.
-
I'm a Retirement Psychologist: Money Won't Buy You Happiness in Your Life After Work
While financial security is crucial for retirement, the true 'retirement crisis' is often an emotional, psychological and social one. You need a plan beyond just money that includes purpose, structure and social connection.