Michael Ioane

Article IV

SUMMARY GUIDE ARTICLE

Guide: Multi-Jurisdiction Structuring

This guide provides a practical reference for evaluating and implementing multi-jurisdiction asset protection structures. The frameworks here reflect Michael Ioane’s approach to jurisdiction selection, coordination design, and compliance management in multi-jurisdiction planning engagements.

Jurisdiction Selection Criteria

Evaluate potential jurisdictions against the following criteria for each component of the structure:

•Fraudulent transfer statute of limitations: shorter periods favor the asset holder; the Cook Islands and Nevis offer some of the shortest available

•Creditor burden of proof: Jurisdictions that require creditors to prove fraudulent intent beyond a reasonable doubt provide stronger protection than those using a preponderance standard

•Judgment recognition: Jurisdictions that do not recognize foreign judgments without a separate local proceeding create the most enforcement friction for creditors

•Trust law flexibility: evaluate the jurisdiction’s discretionary trust provisions, spendthrift protections, and dynasty trust availability

•Charging order protection: for entity components, evaluate whether the jurisdiction provides an exclusive charging order remedy and strong single-member LLC protection

•Political and legal stability: the jurisdiction’s legal framework must be reliably administered over the structure’s intended lifespan

•Treaty relationships: evaluate whether the jurisdiction has tax treaties or mutual legal assistance treaties with the United States that affect the structure’s privacy and enforcement exposure

Compliance Obligations by Structure Type

Every multi-jurisdiction structure involving U.S. persons must address the following compliance obligations:

•Foreign bank account reporting: FBAR filing required annually for foreign financial accounts exceeding $10,000 in aggregate at any point during the year

•Foreign trust reporting: Forms 3520 and 3520-A required for U.S. persons who create or transfer assets to foreign trusts, and for U.S. beneficiaries who receive distributions

•Foreign entity reporting: Form 5471 for controlled foreign corporations; Form 8865 for controlled foreign partnerships; Form 8858 for foreign disregarded entities

•FATCA compliance: foreign financial institutions receiving transfers from U.S. persons must comply with FATCA reporting requirements

•PFIC rules: passive foreign investment company rules may apply to foreign entity investments

These obligations are independent of tax planning intent and apply to all U.S. persons with foreign-structured interests, regardless of the structure’s purpose.

Coordination Design Priorities

Every multi-jurisdiction structure should address the following coordination requirements at formation and maintain them on an ongoing basis:

•Cross-document consistency: all governing documents reviewed for consistency with each other before finalization

•Choice of law alignment: choice of law provisions in each component’s governing documents reviewed for interaction effects

•Governance role consistency: authority assigned to each governance actor in each component is reviewed for consistency across the structure

•Operational protocol: documented protocol for how decisions affecting multiple components are made and recorded

•Amendment coordination: any amendment to any component’s governing documents is reviewed for consistency effects on all other components

•Annual review: all components are reviewed together annually to identify and address accumulated inconsistencies

Risk Indicators in Existing Multi-Jurisdiction Structures

Review existing multi-jurisdiction structures for the following warning signs:

•Compliance filings are not current for all foreign components

•Governing documents of different components have not been reviewed together since formation

•Governance actors in foreign components have changed without corresponding updates to governing documents

•The U.S. person exercises informal control over foreign components in ways not reflected in the formal governance structure

•Choice of law provisions have not been reviewed in light of changes in the jurisdictions’ laws or treaty relationships

•The structure was established reactively in response to a known creditor relationship

Multi-jurisdiction structuring is among the most powerful tools available in asset protection planning. Its power is proportional to the precision and discipline with which it is designed, implemented, and maintained.

The information in this article reflects general structural principles and practical observations from consulting experience and is provided for educational purposes only. It should not be interpreted as individualized legal or tax advice.

Michael Ioane | MichaelIoane.com