People who are considering offshore asset protection understandably prefer a plan that is simple and that maintains control over their assets. For example, many people believe that they can protect cash deposits from their creditors simply by opening an offshore bank account in their own name. If their money is in an account of a bank with no U.S. branches or offices a creditor will have difficulty garnishing the debtor’s bank account because a U.S. writ of garnishment cannot be enforced outside the state where it was issued.
However, presently it is difficult for a U.S. citizen to open foreign bank accounts. In practice, the easiest way to deposit money in a foreign bank is to establish first a foreign LLC or trust and then have a foreign LLC manager or trustee open the account in the name of the foreign entity. Foreign managers and trustees have relationships with banks that enable them to open accounts on behalf of their U.S. clients.
In some cases, the bank will permit the U.S. client to have signature authority over the foreign bank account. Maintaining control over the foreign account may undermine asset protection because a creditor could seek a court order requiring that the debtor use his rights over the account to pay the judgment.