TOP VIEW Depositing assets in offshore accounts is legal under U.S. law, offering investors some degree of protection. Overseas bank accounts, trusts, businesses and life insurance products are the most common methods of shielding wealth from U.S. litigants, but investors must be wary of violating strict IRS regulations.

The primary benefit of offshoring derives from jurisdictional immunity. This means, essentially, that courts in other countries do not recognize U.S. legal judgments. Those trying to seize an individual’s offshore assets must re-litigate in the country where their target has his or her money. They must hire a legal team in that country and navigate the entire administrative process of presenting a case from scratch. “By the time they litigate their claim in the other jurisdiction, they will have wasted all the money they might have gotten,” says Robert Bauman, a member of the executive committee and legal counsel for the Sovereign Society, an organization that advises wealthy individuals on investing overseas. “Instead they may say, ‘Why don’t we settle at 10 cents on the dollar?’”

If the cost of an offshore legal fight does not dissuade a creditor or plaintiff, then roadblocks built into the actual legal system of the jurisdiction in which the assets reside may do so. The legal codes of popular offshore asset shelters such as Switzerland or Panama favor asset protectors. For example, the country may simply not recognize a case brought by a foreign person trying to get at assets domiciled there, or it may have a short statute of limitation period. In the Cook Islands, for example, a plaintiff must initiate a claim within one year.