The jurisdictional issues at the very core of how international asset protection works are very complex, and the cases challenging such are very few and far between. Some may argue (myself included), that it is the fact that there are so very few cases of precedent in this area that asset protection truly is effective. Unlike basic estate planning, the guarantees are not so much that the strategy will withstand judicial muster, but rather act as a deterrent, which deterrent became a little less powerful as a result of Grant.
This clearly seems like an obvious flaw in Offshore Planning, which is why one of the primary tenets of any Asset Protection Trust (or other entity) is to remove oneself from control of the trust or entity as much as possible. A US citizen, or anyone present on US soil is under the jurisdiction of the United states and can be compelled to pretty do anything, but a foreign trustee or board of directors is not subject to US jurisdiction (assuming no other ties to the US). And typically for another country to allow a US citizen to avail themselves of its foreign laws (and jurisdictional protection), the trustee must be a citizen or entity of that country anyway. In the past, US courts have been able to claim jurisdiction over certain organizations acting as trustees, but only because there were sufficient ties to the US to allow them to do so. Furthermore, there has been instances where the creator of the trust or entity has not sufficiently removed themselves from control, and the Court has been able to order them to repatriate the assets. Which is what the Court was able to do in Grant, but it was why the court was able to do that, where we find our lesson to learn.
In Grant the clients had trusts in the Bahamas and in Jersey (the Country). The trusts were set up properly and jurisdiction was recognized. However, the clients sought to maintain a certain amount of control to replace the trustee for any reason. The provision helps the clients ensure that whomever is acting as the trustee is acting pursuant to the unwritten wishes of the clients, and if any trustee was not acting appropriately, the clients were able to swap them out with a new trustee. This alone does not create sufficient ties to the United States, since the terms of the trust dictate how the assets are to be managed (far away from the reaches of the US), and also that the assets are to be under the exclusive control of the trustee (not the client). But where the Court was able to succeed, was in the oversight that the trust document did not specify where any replacement trustee needed to be doing business. That is to say that if the clients wanted to replace a Bahamian Trustee with an American one, they were able to do so without going against any terms of the trust.
The Court did not argue jurisdiction over the assets, but rather jurisdiction over the clients. Furthermore the Court could not order the clients to demand the trustee to repatriate the assets, since the trustee (not being under US jurisdiction) was not inclined to go against the terms of the trust. However, the Court did order the clients to replace the foreign trustees with domestic ones, thus pulling jurisdiction from these foreign countries, to the US, and that is exactly where they won. It isn't public how the clients responded, but their options are to either 1) comply with the Court and lose their assets, or 2) not comply with the Court, and face criminal charges of contempt.
The lesson to learn from Grant is an easy one. It is becoming well-settled law (relatively) that the power of the creator of a trust (the clients) to replace the trustee does not create sufficient jurisdictional ties to the US, but such a power should be limited to replacing such a trustee with another trustee that is not subject to US jurisdiction. How is this to be done? Only time will tell, but the means aren't as important as the end....that the client not only give up control over trust assets, but also give up control over the ability to appoint someone to control trust assets that could be subject to the long arm of the US Judiciary.