The rise of asset protection trusts for Latin American families:  Best practices, pitfalls, and compliance in 2025

One of the most effective tools are asset protection trusts (APTs) which are closely aligned with global trends of clean structures, proper documentation, and full transparency, while penalising informal or poorly planned arrangements. 

Why APTs are growing

• Political and regulatory volatility;
• Aggressive tax scrutiny on international assets and passive income;
• Increased exposure to cross-border litigation; and 
• Differences in inheritance rules in the US or Europe.

For many families, the key question is shifting from “Should we use a trust?” to “Which trust best fits our long-term objectives?”

Best practices that work

Successful APTs consistently follow these principles:

1. Start with purpose. A trust must reflect real needs asset protection, succession, governance, and tax alignment – not trends.
2. Choose stable jurisdictions. Jurisdictions with predictable, experienced courts, strong protection laws, and clear tax treatments are important factors. This is why states like Delaware, Nevada, and South Dakota remain top choices.
3. Keep structures clean. Simple ownership between the trust, LLCs, and operating entities reduces risk and makes reporting easier.
4. Document thoroughly. Funding records, letters of wishes, governance rules, and distributions must be aligned. 
5. Integrate cross-border tax planning. Families with US persons, EU residents, or multi-country assets must coordinate gift, estate, and income tax consequences from the beginning.

Common pitfalls

Frequent mistakes in setting up APTs include:

• Creating the trust but not funding it;
• Mixing personal and trust assets;
• Choosing trustees that lack cross-border experience;
• Overcomplicating structures; and
• Ignoring US estate tax exposure for families holding US real estate.

All of these are avoidable with intentional planning and ongoing guidance.

Compliance is now the foundation

The era of “informal trusts” is over. It is now essential to have proper reporting, transparency, and clear purpose. When a trust is well-designed and fully documented, it becomes a strong, defensible structure that protects assets across generations and jurisdictions.

A final perspective

Asset protection trusts are not about hiding wealth, they are about protecting it with clarity and intention. When properly structured, they give families stability in uncertain environments, simplify inheritance across borders, and create smoother transitions for the next generation.

In a world that will only grow more demanding, one lesson remains constant: the families who plan early sleep better and pass on stronger legacies.

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Prof Sergio Guerrero Rosas, Managing Director at Guerrero y Santana, has over 25 years’ experience advising companies from SMEs to multinationals, as well as individuals, on tax and estate planning. He is also Global Vice Chair of the GGI Trust & Estate Planning (TEP) Practice Group.