Asset protection planning involves identifying and applying legal techniques to protect your assets from claims or lawsuits. These techniques are designed to deter and frustrate potential claims against you by making it difficult or impossible to grab your assets or collect judgments against you.
Attacks on affluent and productive individuals in the U.S. have led to a rising exodus of both assets and individuals to political environments and structures offering greater asset protection, privacy and lower taxation.
When significant wealth is involved, asset protection planning may include setting up a series of offshore asset protection trusts, partnerships and/or offshore entities, including: foundations, LLCs, IBCs and controlled foreign corporations, to hold legal title to your assets. When a creditor recognizes how difficult it would be to collect on any judgment, they may well decide to drop a claim or settle for pennies on the dollar. The articles below originally appeared in our montly newsletter, The Sovereign Individual and will give you all the basics, but you may need professional help to guide you along the way. You can learn more about offshore asset protection, tax havens and offshore banking in The Sovereign Individual each month by becoming a member of The Sovereign Society. Click here for details on membership.
More About Offshore Asset Protection
Why 2008 May Be Your Best Chance to Go Offshore
By Robert E. Bauman, JD
Charles Darwin once wrote: “As for a future life, every man must judge for himself between conflicting vague probabilities.”
While Darwin was addressing the possibilities of Heaven and Hell, 2008 is a year that Americans may face very serious, not just vague, probabilities.
As bad as the so-called “conservative” Republicans in power have been, the Democrats could be even worse. If the Democrats take control of both the White House and the U.S. Congress, be prepared for all kinds of restrictions on your rights to relocate, live and invest abroad.
Tempered only by President Bush’s veto power, the current Democrat majority in Congress has already adopted some of these radical restrictions. And, after 2008 with a Democrat president, there will be no holds barred on what may become law.
So start thinking of offshore solutions to protect your assets, maximize your profitable investment possibilities and preserve your financial freedoms.
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How to Go Offshore Yet Stay on the IRS’s “Good Side”
by Mark Nestmann
You probably wouldn’t ask the IRS out on a date or join the IRS for happy hour at the bar.
Nonetheless, if you’re a U.S. citizen or you live in the United States you have a relationship with the IRS, whether you like it or not. And if you invest or do business offshore, the IRS needs to know about it.
In any relationship, it pays to put your best foot forward from the outset. And that’s particularly true of the IRS, because the IRS can impose severe penalties for not following the reporting rules for investing or doing business offshore.
If you have signatory or “other” interests in foreign bank, securities or “other” financial accounts, with an aggregate value of US$10,000 or more, you must report those interests.
Given that the deposit minimums for many offshore banks now exceed US$100,000, it’s not hard to meet the US$10,000 threshold.
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The PATRIOT Act - Six Years Later: Three Offshore Strategies to Combat the Assault on Your Wealth and Privacy
By Robert E. Bauman JD
Just six weeks after the September 11, 2001, terrorist attacks on New York and Washington, what can charitably be called a panicked U.S. Congress approved the so-called "USA PATRIOT Act."
The Act's name itself is a public relations acronym. It stands for the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act," a.k.a. Public Law No. 107-56. The Act was passed with little debate by senators and congressmen, most of whom did not even read the bill.
They couldn't read it - no final printed copies of the bill were available when the vote was taken. However, copies of the U.S. Constitution were available and still are today.
Like Nothing Before
This unprecedented PATRIOT Act has been the subject of furious debate and numerous court cases, some reaching the U.S. Supreme Court. In the six years since it became law, more than 300 cities and towns and the states of Maine, Vermont, Alaska and Hawaii passed resolutions asking the U.S. Congress to reconsider this radical law and to make changes to better safeguard our liberties.
So far, Congress, whether controlled by Republicans or Democrats, has not only failed to curb the Act's excesses. They've managed to make them worse.
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Ironclad, Non-Controversial Asset Protection on the Cheap
By Marc Sola
Once you’ve accumulated a significant amount of wealth, what’s the best way to protect it? There are many options—ranging from an offshore account which offers privacy and a limited degree of asset protection, to an offshore trust which offers extremely strong asset protection, but requires that give up full control over your assets.
In Switzerland and Liechtenstein, we have a different approach to asset protection: we use insurance policies for this purpose. Foreign investors are specifically protected.
When you purchase a properly set-up life insurance or annuity policy from a Swiss or Liechtenstein insurer, your creditors can’t seize it—even if you declare, or are forced, into bankruptcy. Your privacy is also protected because like banks in these countries, insurance companies are forbidden to disclose any information on the policies they issue to investigators without a court order or other legal process.
Policies are available to foreign investors for an initial investment as small as US$50,000. And that money goes to work for you, immediately—unlike trusts, there are no big set-up costs required.
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Offshore Trusts: Very Much Alive & Well
By Robert E. Bauman, JD
For most of the last decade the U.S. Internal Revenue Service’s target shooters have slapped a big red bull’s eye on one of the most venerable of all estate planning and asset protection devices—the trust, especially the best ones—trusts located in offshore jurisdictions. The eager IRS seems to presume guilt if one dares to go offshore for any financial activity, but especially if it involves what might be a “sham” trust.
Topping the IRS target list are “people selling fraudulent trusts that they claim will eliminate or reduce income or estate taxes.” The IRS warns both sellers and buyers of “fraudulent trusts” that they face fines and jail, and if intent is proven, “criminal prosecution for tax evasion.”
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