What are the benefits of owning no assets? Managing warranty risk.
Same fact pattern above but Allen has recently negotiated and sold one of his operating companies. As part of this deal he was asked to provide personal guarantees with respect to certain warranties that formed part of the deal.
12 months later the acquirer is claiming that Allen has breached the warranties and is being sued personally for the guarantees he made.
If the claim is successful and Allen does not settle the liability it would result in his personal bankruptcy but it will not impact any of the assets that are owned directly or indirectly by the trustee of his offshore trust.
This is because as trustee of the trust rather than Allen owns the interest in the holding limited liability company the interests in the other entities will be protected.