Offshore asset protection trusts offer businessmen an opportunity to escape from the tax wrath of the IRS. By placing their assets in a foreign jurisdiction, they don't pay any U.S. taxes and they are able to keep their money out of the hands of their creditors. Many foreign countries these days offer "asset protection" from the U.S. jurisdiction. U.S. jurisdiction still applies in many different ways to these trusts.
Does this really work? The answer is no. The creditors are still able to get their hands on the money that you supposedly placed in offshore asset protection trust. The only positive effect that this action could have on your case is that the creditors might not want to pursue such an expensive arrangement such as the offshore account because they might think of what the repercussion could mean if they lost. A lawsuit costs a lot of money to both sides of the table. Your creditors might not want to pursue. Other then that creating an offshore asset protection trust is not really any protection.
A direct disadvantage of such a trust is that you might be trying to hide your assets from the IRS. That's a criminal felony and you won't get too far.
Another disadvantage is the fact that your creditors can force you into bankruptcy. A trustee will take charge of your estate and is able to find out about your foreign assets. He or she can distribute your assets to the creditors.
Another thing that a state court can do is to rule the transfer of foreign assets illegal, thereby foreign jurisdiction of "asset protection" would not apply.
The best way is to create a safe haven for your money is to establish a domestic asset protection trust, which offers a lot more advantages and protection.