Post by Jonathan Curshen on Aug 13, 2010 7:41:53 GMT 4
Curshen And Associates
United States: Common Misconceptions of Offshore Asset Protection - A closer look
10 March 2006
Article by Jonathan Curshen
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The annual Asian Offshore Association Conference was held in Hong Kong last September. It’s one of the largest conferences for international asset protection specialists of its kind in Asia. I have spoken at many conferences in the past, but this time I just got to relax and listen.
Immediately after, I flew to the annual International Bar Association conference in Prague, Czech Republic. During both conferences, I was surrounded by other asset protection specialists and professionals in similar fields.
Upon my return home I had a conversation with a pleasant young clerk in the local store who inquired as to my profession… to which I replied, "international asset protection and offshore finance." He sort of rolled his eyes as if to question the validity of my trade. This latest experience instantly juxtaposed against two weeks with others in my field highlighted for me the sea of doubtful misconceptions among the general public that exists surrounding international business and finance.
Now granted a young store clerk would likely have little reason to educate himself about the strengths of global asset protection and international finance. What frightens me more is the number of intelligent, well-educated, well-off individuals who nevertheless are truly ignorant of many of the strongest asset protection techniques available.
Worse still are those who work in the financial sector of legal services, and are still in the dark when it comes to using foreign entities for asset protection. This is the very core of the financial and legal community that could help their clients the most, if only they opened their eyes to the legal wealth protection methods used by the affluent, worldwide, for well over half a century. While the newest and most protective asset laws are written by small stable governments in the Caribbean, the Swiss have been protecting old European money for years. Everyone has heard of secrete Swiss bank accounts. Asset protection has come a long way since those days. Light years ahead - as far as real asset protection is concerned.
Just as no one knows what the future holds for that nice young store clerk, we can never be assured of what our own future holds for us. That is why I continually remind readers that there is never a better time to plan for the future than right now. It’s easy to do.
Get your facts straight.
The first step in any wealth preservation planning is to make sure that you have all your facts straight. Spending two weeks surrounded by other asset protection specialists, it was nice to be able to speak fluently with an informed group of people. I found I didn’t have to bring others up to speed, or have to explain every nuance or law of each jurisdiction, or spend time correcting the common misconceptions held by most people about offshore services.
But it made me wonder how many individuals there are who could greatly benefit from the services I and other offshore finance professionals offer but are simply uninformed as to the advantages of a sound, legal international financial plan? How many could benefit from a solid protection strategy, whose strength goes way beyond the scope of domestic investment returns and domestic tax shelters?
There is much misinformation - and downright ignorance - regarding the protection of acquired wealth. This is odd since our society now seems to thrive on law suits where legally acquired wealth is up for grabs to any one with the best lawyer. I personally feel it’s due to the overemphasis on creating wealth, with almost no emphasis on how to preserve and protect the wealth one has created.
For example, I’m sure everyone reading this article has heard of Merrill Lynch and Morgan Stanley... and doesn’t have to be educated as to the nature of their business - which is acquiring more wealth. However bring up some of the strongest asset protection tools available such as a Nevis LLC, a Trust or a Panamanian private foundation and barely a soul could tell you what they are, let alone how they function.
How could this happen?
Between the news media and the general government - who is always against anything that will move money out of their economy, out of their direct view and out of their reach - a propaganda war exists to support now common misconceptions surrounding asset protection and offshore financial services.
The reality is simple: some of the strongest and best forms of asset protection exist outside of the U.S. This is why many larger corporations, well informed individuals, and high ranking government officials incorporate offshore shelters in their wealth preservation strategies.
Today more than ever, people realize they can not depend on the government to look out for their individual best interests, let alone keep them informed of financial opportunities that exist outside of the county.
The governments today seem to exist to simply support and sustain themselves, to serve a small percentage of the extremely rich, to the benefit of the few who wield the greatest power, and those that influence the masses from their perch at the top.
So where does that leave the rest of us? We must learn how to best protect ourselves, our wealth and our investments. It starts here: I am privileged to be part of an industry that shows each person how to take the first step in protecting his or her wealth. I’m not a stockbroker, I don’t give investment advice. I’m not a banker, I don’t hold on to your money and pay you little interest (while offering to loan you money at giant rates.) I am an international asset protection specialist.
What do I do? I simply show you the structures and places to best protect your wealth according to your needs, and design a program you are comfortable with to accomplish those goals. Simple, isn’t it?
I help those who have worked hard to build up a comfortable means of living by showing them the best ways to keep their wealth safe and secure. Safe from frivolous or malicious lawsuits. Safe from U.S. courts and U.S. jurisdiction. Safe from judgments. And safe from predators who would unfairly attack their wealth simply because they could and had a reasonable chance of acquiring it - the only reason being they had a good lawyer.
As an expert in my field, I would now like to debunk some of the more common misconceptions with regards to asset protection and offshore finance.
Myth #1: Offshore Financial Services are Illegal
One of the most common and pervasive misconceptions about asset protection I hear almost every day. Many people hold the common misconception that only gangsters, drug dealers and bookies use financial services in foreign lands.
The term "offshore" merely denotes outside of one’s own country’s jurisdiction. Hundreds of thousands of people use offshore services every day of the year.
Are there some crooks in there? I’m sure there are. But most are just ordinary people who are knowledgeable and informed about the benefits of an international wealth preservation program. Most are business owners, heads of corporations, and wealthy individuals concerned about protecting their assets. With an open mind, they simply took the time to learn about the attractive tax benefits and the strongest asset protection methods available.
With the increasing globalization of today’s world wide corporations, there hardly exists a U.S. Fortune 500 company that doesn’t utilize some form of offshore financial strategy. This can range from a bank account in a foreign land to protect the business from domestic predators, to establishing a corporation, trust, foundation, or other legal entity in another country to lessen their insurance load and reduce taxes and costs.
Some businesses use foreign jurisdictions to register ships, aircraft or property, or simply to protect investments from domestic taxation. Not only is this a very common day to day occurrence for the convenience of commerce, but if properly structured and implemented it can also be one of the strongest, most secure forms of asset protection available.
How does offshore asset protection work?
The most basic function of international asset protect is to place your assets out of reach of the domestic judicial system. At first that might sound highly suspicious, as if you are trying to hide something - but this isn’t necessarily so. This is not to say that many a shady character has not tried the same tactics used in asset protection to defraud, cheat and outright steal. Can’t a hunting rifle that is used to put food on the table also be used in a bank robbery?
Let me show you an example. You own a small retail chain of stores in The United States. During the remodeling of one of your stores a worker falls from a scaffolding and is paralyzed. A lawsuit follows naming you and your store as defendants along with the insurance companies.
Now let’s look at two different scenarios: One, all your assets are owned by you and your corporation, registered in your own home state. This makes you a domestic U.S. entity within the jurisdiction of the U.S. court system. The second scenario, the store and all its assets are owned by a Nevis LLC, and a good portion of your personal assets are held in trust for you by a Panamanian foundation, both entirely legal and above board, but both outside of the jurisdiction of the US court system. In which of these two scenarios is a good litigator most likely to say it’s not worth pursuing you and just go after the insurance companies?
The answer should be obvious. The second scenario would necessitate the plaintiff going to the jurisdictions where the entities are domiciled, posting a large bond that is forfeited if they lose their case, then hiring a local lawyer to secure a judgment against you.
We live in an overly litigious society. If you are a regular reader of any of the financial magazines or law periodicals that feature my columns, you doubtlessly have encountered not only mine but numerous other articles touting the benefits of establishing a financial presence out of the reach of frivolous lawsuits. To those of us who routinely work with offshore finance for thousands of both individuals and companies, the idea that moving assets to a foreign jurisdiction is illegal—or not commonplace—is outright laughable.
A word about taxes.
Although it is true that a sound, well thought-out international financial strategy will also likely lessen your domestic tax bill, it is not the primary function of most asset protection plans. The primary objective of offshore asset protection structures is to form an impenetrable shield that can’t be pierced by domestic legal weaponry. But since the most successful tax and estate planning methods use some of the same legal instruments as asset protection, the secondary benefit is reduced taxes. Although estate planning is a very different area of financial planning, the same legal structures can serve two different functions simultaneously.
All the money that any tax paying citizen earns must be declared. Any one who claims that you do not have to pay taxes on money transferred or earned offshore is giving you incorrect information. And any honest asset protection specialist will tell you this, just as your accountant would.
Any solid, long term asset protection plan will take this tax ramification into account. This is where a good tax planner can earn his weight in, well... gold: by legally lessening the extent that offshore assets are taxed. By designing a proper tax strategy utilizing foreign entities to hold and invest funds, certain earnings are not taxed in the jurisdictions they reside, and profits may be reinvested without capital gains. If structured properly, for example using a Ross IRA, these taxes would be minimized.
But how about moving money out of the country? Again, you must declare money moved to a foreign jurisdiction. The IRS or your accountant can provide the standard tax forms to fill out for doing so. This brings up another common misconception regarding transfers of funds out of one’s country to a foreign jurisdiction:
Myth #2: Movement of money to an offshore jurisdiction will trigger an audit.
I have heard this falsehood many times. Truth be known, we live in a bureaucratic society and as such, we are swimming in paperwork. If every time such forms were filed it necessitated an audit, there would not be enough auditors to complete the task.
Imagine every foreign corporation with a branch filing in the U.S. triggering an audit - every year. Imagine every U.S. corporation with a branch in another country triggering an audit every year. Every company that sells internationally - every car manufacturer - Ford, Chevy, Chrysler-Benz, every hotelier, Hilton, Four Seasons, the plethora of manufacturers - Boeing, HP, Dell - and shipping agents, Sea Land, UPS... don’t you think each has foreign offices? And how about the hundreds of thousands of small firms that market small products and parts of products (that you never heard of) overseas. Don’t you think all these firms and more use offshore transactions every day to the very best of their monetary advantage, without triggering audits?
Actually, by complying with the mandates of the authorities, it is more likely an indication that you have been well advised and are in compliance with all the applicable regulations with respect to any particular financial structure, business, or overseas investments you have chosen.
Misconception # 3: Asset protection is only for the extremely wealthy.
No matter how much wealth you have managed to accumulate, if you don’t take steps to protect it you risk losing it. Without safeguards and protection you become "easy prey". For example, perhaps you are a physician with good deal of your wealth in securities or some form of readily liquefiable assets. If you get sued for malpractice, the suit is usually against both you personally and your insurance carrier. "Let’s sue them both. There, that was easy!" say the plaintiff’s lawyers.
It is the objective of a true asset protection professional to make sure the amount of wealth you have accumulated is yours and stays yours. If the assets are easily within reach of a savvy litigator they are that much more likely to be attacked and pursued in court. On the other hand, if the cost to go after your assets once placed offshore precludes any significant gain by those who would prey upon them, it necessitates a higher threshold to justify such measures. So in effect, assets of smaller values which are harder to procure offshore are even less likely to be gone after. Thus it is important that a person of medium wealth protect their assets in this fashion also.
Misconception #4: It is not very likely that I will be sued
The easiest way to dispute this misconception is not to spout statistics compiled each year by the lawyers’ guild, which is pretty scary in itself. Rather just have you pull out your checkbook and look how much you pay annually for insurance: homeowners, auto, business, and heaven forbid if you are a practicing physician! If you don’t feel you are a likely target of a lawsuit, drop your insurance.
You see, insurance companies thrive on lawsuits. Whether suing or being sued, insurance companies, when they are not collecting premiums from you, live most of their active lives in the courtroom.
You only have insurance for one reason: to prevent the loss of your assets. People and companies that have their assets titled offshore don’t need to worry about losing their assets - their assets are protected, safe from U.S. jurisdiction and U.S. courts. In addition, the new set of very specific protective laws from the brightest stars of the asset protection countries such as St Kitts make it hard, no, make it incredibly hard, to sue someone in that country... let alone win the suit. In addition, foreign asset protection structures such as trusts, foreign corporations and foundations are difficult if not impossible to pierce, even with a team of great lawyers.
Myth #5: Assets outside of the jurisdiction in which you live are out of your control
In an age of instant communications where financial transactions occur with ever-greater frequency at the speed of electrons beaming over the internet, you are never any further away from control of your assets than you are from a computer and a telephone. It’s as easy as the electronic banking you already do from your local bank. Yes, it’s that easy.
You may navigate your way through such transactions as easily as you would opening a checking account in your own neighborhood. The real difference is the absolute safety and unprecedented privacy of your accounts. It doesn’t have the snooping eyes of every credit card bureau. It isn’t accountable to the labyrinth of tellers and bank personnel or quasi-governmental officials who may examine your account any time they feel like it. The court system can’t view your bank statements or freeze your account assets.
With an offshore account, it is likely that none of these entities will even be aware of your account, let alone be able to see the amount you have in it. You will become comfortable that you are practicing behind a solid firewall of privacy through the safety of the world’s toughest asset protection strategy. You will feel infinitely more confident knowing that your assets are well out of the reach of prying eyes, malicious suits, governmental judgments or any of these most eminent threats.
Myth #6 Through proper use of domestic legal structures I can create an impenetrable shield to protect my wealth
This myth is actually true to a certain degree: certain liabilities are indeed limited by the use of corporate structures such as limited liability corporations (LLCs) and family limited partnerships (FLPs). But as long as these structures are domiciled in the same jurisdiction as the assets they are designed to protect reside, they do not have the maximum protection of a plan utilizing an offshore or foreign jurisdiction. The are still subject to local courts and judgments. Assets can still be easily found, examined, analyzed... and frozen without warning (sometimes without just cause) by any prominent government official or as a routine matter from a justice in a court of law.
In order to achieve the most ironclad protection the asset ownership rights must reside outside of the jurisdiction of the authority (i.e. outside the reach of the courts) that would be able to seize the assets.
Myth # 7 Having assets offshore only helps in a lawsuit.
Having assets safely offshore avoids litigation by stopping most lawsuits before they even begin.
Before one even considers the ability or inability to secure a judgment in one’s favor, just the fact of knowing what it would take to begin litigation in a foreign country is enough to discourage even the sharpest courtroom attorney. In this aspect foreign domiciles are vastly superior to domestic asset protection structures as they save incalculable amounts of time and money by closing off a lawsuit option before it is seriously considered. This saving is in both time and money which would be required just to ward off such an assault once preliminary litigation is started.
While many people rely on domestic courts to prevail for them, the law department with whom we work closely has found you cannot rely on the courts to rule on a consistent basis. What keeps assets safe one day may very well be ruled against the next day. Much law depends on the particular judge hearing the case - or it may simply come down to how that particular judge interprets the law of any given case. The smartest protection is to not allow the judicial process to begin, and this is best accomplished by having assets outside the reach of local lawyers and courts.
When kept offshore, assets are a private matter. One of the advantages of offshore asset protection is the guarded secrecy in which accounts are handled. Strong privacy laws keep wealth private and confidential. In some countries there are huge fines and jail time for divulging offshore account information. There are fines of $50,000 each occurrence, plus possible jail time for breach of secrecy and confidentiality. These fines restrict government officials, bank operators and credit companies alike from finding or divulging accounts. Without a highly visible deep pocket, attorneys are always reluctant to sue.
Myth #8: No one I know uses offshore accounts to protect their assets.
You’d be surprised. The majority of professionals who are in a position to advise us are more often than not lawyers, bankers, and other financial service providers who must maintain confidentiality as part of their fiduciary obligation to their client. So, you don’t really know. Most people who use international asset protection remain quite and under the radar. Why would they tell you?
President Bush has over $2,000,000 held in trust for his two daughters. A large percentage of the Fortune 500 companies have international holdings.
Myth #9, My accountant and lawyer can handle my offshore needs
Most lawyers and accountants don’t recommend offshore accounts because they simply aren’t familiar with the nuances of offshore financing. And, not that they would do it intentionally, but lawyers live in court, and that’s the way they position everything. So if anything goes wrong with your wealth preservation plan, they’re ready to go to court for you and sue or be sued. That’s what they do. That’s what all the domestic laws are geared for: let the lawyers fight it out in court. Don’t forget - they do this by getting paid… with your money. They live in court. And win or lose, they get paid. If you’re thinking there must be a better way, I hope I am opening your eyes.
As fast as laws, banking and securities regulations change, there is a great deal of homework and classroom hours required to keep up with such changes in offshore counties specializing in asset protection. It is no wonder that most professionals have a hard time keeping up just within their own jurisdictions. I specialize in international asset protection, and study these international matters every day, just as local lawyers and bankers study local law in their jurisdiction. I travel to many seminars to present new information from the countries I deal with every day and to learn from others who study countries outside my sphere of knowledge.
No one has a complete understanding of tax strategies for every possible place in the world, myself included. But I absolutely can tell you how to keep your wealth safe and out of harms way from those who would seek to take it from you. From years of heavy experience in a global economy and formulating international asset protection strategies, I am intimately familiar with asset protection laws around the world; and an expert in the specific asset protection laws of the countries I recommend to clients.
Conclusion:
These are only a few of the more common misconceptions I encounter on a regular basis. Unfortunately asset protection is one of most overlooked components of a complete financial plan. Most people don’t see the value of a comprehensive wealth preservation plan until it’s too late. So please take the time today to consider how vulnerable your wealth is, and how valuable it is - to someone else. There will always be those who desire to seize it.
What real protection do you currently posses against the domestic courts? What protection from your own government? Is there a chance your wealth can be sought after by an angry business partner, and accident victims, dissatisfied clients, or an irate ex-wife? If you have never considered that there are legal ways to keep your assets out of view and out of reach of such hands, and safely in your possession, now’s your chance to think again.
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Bio: Jonathan Curshen is an expert in international asset protection strategies. He specializes in wealth protection, international asset protection trusts and foundations, international business corporations, worldwide investing, yacht registrations, and global banking. Mr. Curshen is a member of AOA (The Asia Offshore Association), IFA (International Fiscal Association), ITPA (The International Tax Planners Association), TOI (The Offshore Institute), IOD (The Institute of Directors) and has been a featured speaker at countless asset protection seminars. To find out more about any offshore havens please call Mr. Curshen's at Country Code 506, 258-6060, or TOLL FREE from anywhere in North America 800-315-4269 begin_of_the_skype_highlighting 800-315-4269 end_of_the_skype_highlighting begin_of_the_skype_highlighting 800-315-4269
United States: Common Misconceptions of Offshore Asset Protection - A closer look
10 March 2006
Article by Jonathan Curshen
Comment | View All Comments
The annual Asian Offshore Association Conference was held in Hong Kong last September. It’s one of the largest conferences for international asset protection specialists of its kind in Asia. I have spoken at many conferences in the past, but this time I just got to relax and listen.
Immediately after, I flew to the annual International Bar Association conference in Prague, Czech Republic. During both conferences, I was surrounded by other asset protection specialists and professionals in similar fields.
Upon my return home I had a conversation with a pleasant young clerk in the local store who inquired as to my profession… to which I replied, "international asset protection and offshore finance." He sort of rolled his eyes as if to question the validity of my trade. This latest experience instantly juxtaposed against two weeks with others in my field highlighted for me the sea of doubtful misconceptions among the general public that exists surrounding international business and finance.
Now granted a young store clerk would likely have little reason to educate himself about the strengths of global asset protection and international finance. What frightens me more is the number of intelligent, well-educated, well-off individuals who nevertheless are truly ignorant of many of the strongest asset protection techniques available.
Worse still are those who work in the financial sector of legal services, and are still in the dark when it comes to using foreign entities for asset protection. This is the very core of the financial and legal community that could help their clients the most, if only they opened their eyes to the legal wealth protection methods used by the affluent, worldwide, for well over half a century. While the newest and most protective asset laws are written by small stable governments in the Caribbean, the Swiss have been protecting old European money for years. Everyone has heard of secrete Swiss bank accounts. Asset protection has come a long way since those days. Light years ahead - as far as real asset protection is concerned.
Just as no one knows what the future holds for that nice young store clerk, we can never be assured of what our own future holds for us. That is why I continually remind readers that there is never a better time to plan for the future than right now. It’s easy to do.
Get your facts straight.
The first step in any wealth preservation planning is to make sure that you have all your facts straight. Spending two weeks surrounded by other asset protection specialists, it was nice to be able to speak fluently with an informed group of people. I found I didn’t have to bring others up to speed, or have to explain every nuance or law of each jurisdiction, or spend time correcting the common misconceptions held by most people about offshore services.
But it made me wonder how many individuals there are who could greatly benefit from the services I and other offshore finance professionals offer but are simply uninformed as to the advantages of a sound, legal international financial plan? How many could benefit from a solid protection strategy, whose strength goes way beyond the scope of domestic investment returns and domestic tax shelters?
There is much misinformation - and downright ignorance - regarding the protection of acquired wealth. This is odd since our society now seems to thrive on law suits where legally acquired wealth is up for grabs to any one with the best lawyer. I personally feel it’s due to the overemphasis on creating wealth, with almost no emphasis on how to preserve and protect the wealth one has created.
For example, I’m sure everyone reading this article has heard of Merrill Lynch and Morgan Stanley... and doesn’t have to be educated as to the nature of their business - which is acquiring more wealth. However bring up some of the strongest asset protection tools available such as a Nevis LLC, a Trust or a Panamanian private foundation and barely a soul could tell you what they are, let alone how they function.
How could this happen?
Between the news media and the general government - who is always against anything that will move money out of their economy, out of their direct view and out of their reach - a propaganda war exists to support now common misconceptions surrounding asset protection and offshore financial services.
The reality is simple: some of the strongest and best forms of asset protection exist outside of the U.S. This is why many larger corporations, well informed individuals, and high ranking government officials incorporate offshore shelters in their wealth preservation strategies.
Today more than ever, people realize they can not depend on the government to look out for their individual best interests, let alone keep them informed of financial opportunities that exist outside of the county.
The governments today seem to exist to simply support and sustain themselves, to serve a small percentage of the extremely rich, to the benefit of the few who wield the greatest power, and those that influence the masses from their perch at the top.
So where does that leave the rest of us? We must learn how to best protect ourselves, our wealth and our investments. It starts here: I am privileged to be part of an industry that shows each person how to take the first step in protecting his or her wealth. I’m not a stockbroker, I don’t give investment advice. I’m not a banker, I don’t hold on to your money and pay you little interest (while offering to loan you money at giant rates.) I am an international asset protection specialist.
What do I do? I simply show you the structures and places to best protect your wealth according to your needs, and design a program you are comfortable with to accomplish those goals. Simple, isn’t it?
I help those who have worked hard to build up a comfortable means of living by showing them the best ways to keep their wealth safe and secure. Safe from frivolous or malicious lawsuits. Safe from U.S. courts and U.S. jurisdiction. Safe from judgments. And safe from predators who would unfairly attack their wealth simply because they could and had a reasonable chance of acquiring it - the only reason being they had a good lawyer.
As an expert in my field, I would now like to debunk some of the more common misconceptions with regards to asset protection and offshore finance.
Myth #1: Offshore Financial Services are Illegal
One of the most common and pervasive misconceptions about asset protection I hear almost every day. Many people hold the common misconception that only gangsters, drug dealers and bookies use financial services in foreign lands.
The term "offshore" merely denotes outside of one’s own country’s jurisdiction. Hundreds of thousands of people use offshore services every day of the year.
Are there some crooks in there? I’m sure there are. But most are just ordinary people who are knowledgeable and informed about the benefits of an international wealth preservation program. Most are business owners, heads of corporations, and wealthy individuals concerned about protecting their assets. With an open mind, they simply took the time to learn about the attractive tax benefits and the strongest asset protection methods available.
With the increasing globalization of today’s world wide corporations, there hardly exists a U.S. Fortune 500 company that doesn’t utilize some form of offshore financial strategy. This can range from a bank account in a foreign land to protect the business from domestic predators, to establishing a corporation, trust, foundation, or other legal entity in another country to lessen their insurance load and reduce taxes and costs.
Some businesses use foreign jurisdictions to register ships, aircraft or property, or simply to protect investments from domestic taxation. Not only is this a very common day to day occurrence for the convenience of commerce, but if properly structured and implemented it can also be one of the strongest, most secure forms of asset protection available.
How does offshore asset protection work?
The most basic function of international asset protect is to place your assets out of reach of the domestic judicial system. At first that might sound highly suspicious, as if you are trying to hide something - but this isn’t necessarily so. This is not to say that many a shady character has not tried the same tactics used in asset protection to defraud, cheat and outright steal. Can’t a hunting rifle that is used to put food on the table also be used in a bank robbery?
Let me show you an example. You own a small retail chain of stores in The United States. During the remodeling of one of your stores a worker falls from a scaffolding and is paralyzed. A lawsuit follows naming you and your store as defendants along with the insurance companies.
Now let’s look at two different scenarios: One, all your assets are owned by you and your corporation, registered in your own home state. This makes you a domestic U.S. entity within the jurisdiction of the U.S. court system. The second scenario, the store and all its assets are owned by a Nevis LLC, and a good portion of your personal assets are held in trust for you by a Panamanian foundation, both entirely legal and above board, but both outside of the jurisdiction of the US court system. In which of these two scenarios is a good litigator most likely to say it’s not worth pursuing you and just go after the insurance companies?
The answer should be obvious. The second scenario would necessitate the plaintiff going to the jurisdictions where the entities are domiciled, posting a large bond that is forfeited if they lose their case, then hiring a local lawyer to secure a judgment against you.
We live in an overly litigious society. If you are a regular reader of any of the financial magazines or law periodicals that feature my columns, you doubtlessly have encountered not only mine but numerous other articles touting the benefits of establishing a financial presence out of the reach of frivolous lawsuits. To those of us who routinely work with offshore finance for thousands of both individuals and companies, the idea that moving assets to a foreign jurisdiction is illegal—or not commonplace—is outright laughable.
A word about taxes.
Although it is true that a sound, well thought-out international financial strategy will also likely lessen your domestic tax bill, it is not the primary function of most asset protection plans. The primary objective of offshore asset protection structures is to form an impenetrable shield that can’t be pierced by domestic legal weaponry. But since the most successful tax and estate planning methods use some of the same legal instruments as asset protection, the secondary benefit is reduced taxes. Although estate planning is a very different area of financial planning, the same legal structures can serve two different functions simultaneously.
All the money that any tax paying citizen earns must be declared. Any one who claims that you do not have to pay taxes on money transferred or earned offshore is giving you incorrect information. And any honest asset protection specialist will tell you this, just as your accountant would.
Any solid, long term asset protection plan will take this tax ramification into account. This is where a good tax planner can earn his weight in, well... gold: by legally lessening the extent that offshore assets are taxed. By designing a proper tax strategy utilizing foreign entities to hold and invest funds, certain earnings are not taxed in the jurisdictions they reside, and profits may be reinvested without capital gains. If structured properly, for example using a Ross IRA, these taxes would be minimized.
But how about moving money out of the country? Again, you must declare money moved to a foreign jurisdiction. The IRS or your accountant can provide the standard tax forms to fill out for doing so. This brings up another common misconception regarding transfers of funds out of one’s country to a foreign jurisdiction:
Myth #2: Movement of money to an offshore jurisdiction will trigger an audit.
I have heard this falsehood many times. Truth be known, we live in a bureaucratic society and as such, we are swimming in paperwork. If every time such forms were filed it necessitated an audit, there would not be enough auditors to complete the task.
Imagine every foreign corporation with a branch filing in the U.S. triggering an audit - every year. Imagine every U.S. corporation with a branch in another country triggering an audit every year. Every company that sells internationally - every car manufacturer - Ford, Chevy, Chrysler-Benz, every hotelier, Hilton, Four Seasons, the plethora of manufacturers - Boeing, HP, Dell - and shipping agents, Sea Land, UPS... don’t you think each has foreign offices? And how about the hundreds of thousands of small firms that market small products and parts of products (that you never heard of) overseas. Don’t you think all these firms and more use offshore transactions every day to the very best of their monetary advantage, without triggering audits?
Actually, by complying with the mandates of the authorities, it is more likely an indication that you have been well advised and are in compliance with all the applicable regulations with respect to any particular financial structure, business, or overseas investments you have chosen.
Misconception # 3: Asset protection is only for the extremely wealthy.
No matter how much wealth you have managed to accumulate, if you don’t take steps to protect it you risk losing it. Without safeguards and protection you become "easy prey". For example, perhaps you are a physician with good deal of your wealth in securities or some form of readily liquefiable assets. If you get sued for malpractice, the suit is usually against both you personally and your insurance carrier. "Let’s sue them both. There, that was easy!" say the plaintiff’s lawyers.
It is the objective of a true asset protection professional to make sure the amount of wealth you have accumulated is yours and stays yours. If the assets are easily within reach of a savvy litigator they are that much more likely to be attacked and pursued in court. On the other hand, if the cost to go after your assets once placed offshore precludes any significant gain by those who would prey upon them, it necessitates a higher threshold to justify such measures. So in effect, assets of smaller values which are harder to procure offshore are even less likely to be gone after. Thus it is important that a person of medium wealth protect their assets in this fashion also.
Misconception #4: It is not very likely that I will be sued
The easiest way to dispute this misconception is not to spout statistics compiled each year by the lawyers’ guild, which is pretty scary in itself. Rather just have you pull out your checkbook and look how much you pay annually for insurance: homeowners, auto, business, and heaven forbid if you are a practicing physician! If you don’t feel you are a likely target of a lawsuit, drop your insurance.
You see, insurance companies thrive on lawsuits. Whether suing or being sued, insurance companies, when they are not collecting premiums from you, live most of their active lives in the courtroom.
You only have insurance for one reason: to prevent the loss of your assets. People and companies that have their assets titled offshore don’t need to worry about losing their assets - their assets are protected, safe from U.S. jurisdiction and U.S. courts. In addition, the new set of very specific protective laws from the brightest stars of the asset protection countries such as St Kitts make it hard, no, make it incredibly hard, to sue someone in that country... let alone win the suit. In addition, foreign asset protection structures such as trusts, foreign corporations and foundations are difficult if not impossible to pierce, even with a team of great lawyers.
Myth #5: Assets outside of the jurisdiction in which you live are out of your control
In an age of instant communications where financial transactions occur with ever-greater frequency at the speed of electrons beaming over the internet, you are never any further away from control of your assets than you are from a computer and a telephone. It’s as easy as the electronic banking you already do from your local bank. Yes, it’s that easy.
You may navigate your way through such transactions as easily as you would opening a checking account in your own neighborhood. The real difference is the absolute safety and unprecedented privacy of your accounts. It doesn’t have the snooping eyes of every credit card bureau. It isn’t accountable to the labyrinth of tellers and bank personnel or quasi-governmental officials who may examine your account any time they feel like it. The court system can’t view your bank statements or freeze your account assets.
With an offshore account, it is likely that none of these entities will even be aware of your account, let alone be able to see the amount you have in it. You will become comfortable that you are practicing behind a solid firewall of privacy through the safety of the world’s toughest asset protection strategy. You will feel infinitely more confident knowing that your assets are well out of the reach of prying eyes, malicious suits, governmental judgments or any of these most eminent threats.
Myth #6 Through proper use of domestic legal structures I can create an impenetrable shield to protect my wealth
This myth is actually true to a certain degree: certain liabilities are indeed limited by the use of corporate structures such as limited liability corporations (LLCs) and family limited partnerships (FLPs). But as long as these structures are domiciled in the same jurisdiction as the assets they are designed to protect reside, they do not have the maximum protection of a plan utilizing an offshore or foreign jurisdiction. The are still subject to local courts and judgments. Assets can still be easily found, examined, analyzed... and frozen without warning (sometimes without just cause) by any prominent government official or as a routine matter from a justice in a court of law.
In order to achieve the most ironclad protection the asset ownership rights must reside outside of the jurisdiction of the authority (i.e. outside the reach of the courts) that would be able to seize the assets.
Myth # 7 Having assets offshore only helps in a lawsuit.
Having assets safely offshore avoids litigation by stopping most lawsuits before they even begin.
Before one even considers the ability or inability to secure a judgment in one’s favor, just the fact of knowing what it would take to begin litigation in a foreign country is enough to discourage even the sharpest courtroom attorney. In this aspect foreign domiciles are vastly superior to domestic asset protection structures as they save incalculable amounts of time and money by closing off a lawsuit option before it is seriously considered. This saving is in both time and money which would be required just to ward off such an assault once preliminary litigation is started.
While many people rely on domestic courts to prevail for them, the law department with whom we work closely has found you cannot rely on the courts to rule on a consistent basis. What keeps assets safe one day may very well be ruled against the next day. Much law depends on the particular judge hearing the case - or it may simply come down to how that particular judge interprets the law of any given case. The smartest protection is to not allow the judicial process to begin, and this is best accomplished by having assets outside the reach of local lawyers and courts.
When kept offshore, assets are a private matter. One of the advantages of offshore asset protection is the guarded secrecy in which accounts are handled. Strong privacy laws keep wealth private and confidential. In some countries there are huge fines and jail time for divulging offshore account information. There are fines of $50,000 each occurrence, plus possible jail time for breach of secrecy and confidentiality. These fines restrict government officials, bank operators and credit companies alike from finding or divulging accounts. Without a highly visible deep pocket, attorneys are always reluctant to sue.
Myth #8: No one I know uses offshore accounts to protect their assets.
You’d be surprised. The majority of professionals who are in a position to advise us are more often than not lawyers, bankers, and other financial service providers who must maintain confidentiality as part of their fiduciary obligation to their client. So, you don’t really know. Most people who use international asset protection remain quite and under the radar. Why would they tell you?
President Bush has over $2,000,000 held in trust for his two daughters. A large percentage of the Fortune 500 companies have international holdings.
Myth #9, My accountant and lawyer can handle my offshore needs
Most lawyers and accountants don’t recommend offshore accounts because they simply aren’t familiar with the nuances of offshore financing. And, not that they would do it intentionally, but lawyers live in court, and that’s the way they position everything. So if anything goes wrong with your wealth preservation plan, they’re ready to go to court for you and sue or be sued. That’s what they do. That’s what all the domestic laws are geared for: let the lawyers fight it out in court. Don’t forget - they do this by getting paid… with your money. They live in court. And win or lose, they get paid. If you’re thinking there must be a better way, I hope I am opening your eyes.
As fast as laws, banking and securities regulations change, there is a great deal of homework and classroom hours required to keep up with such changes in offshore counties specializing in asset protection. It is no wonder that most professionals have a hard time keeping up just within their own jurisdictions. I specialize in international asset protection, and study these international matters every day, just as local lawyers and bankers study local law in their jurisdiction. I travel to many seminars to present new information from the countries I deal with every day and to learn from others who study countries outside my sphere of knowledge.
No one has a complete understanding of tax strategies for every possible place in the world, myself included. But I absolutely can tell you how to keep your wealth safe and out of harms way from those who would seek to take it from you. From years of heavy experience in a global economy and formulating international asset protection strategies, I am intimately familiar with asset protection laws around the world; and an expert in the specific asset protection laws of the countries I recommend to clients.
Conclusion:
These are only a few of the more common misconceptions I encounter on a regular basis. Unfortunately asset protection is one of most overlooked components of a complete financial plan. Most people don’t see the value of a comprehensive wealth preservation plan until it’s too late. So please take the time today to consider how vulnerable your wealth is, and how valuable it is - to someone else. There will always be those who desire to seize it.
What real protection do you currently posses against the domestic courts? What protection from your own government? Is there a chance your wealth can be sought after by an angry business partner, and accident victims, dissatisfied clients, or an irate ex-wife? If you have never considered that there are legal ways to keep your assets out of view and out of reach of such hands, and safely in your possession, now’s your chance to think again.
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Bio: Jonathan Curshen is an expert in international asset protection strategies. He specializes in wealth protection, international asset protection trusts and foundations, international business corporations, worldwide investing, yacht registrations, and global banking. Mr. Curshen is a member of AOA (The Asia Offshore Association), IFA (International Fiscal Association), ITPA (The International Tax Planners Association), TOI (The Offshore Institute), IOD (The Institute of Directors) and has been a featured speaker at countless asset protection seminars. To find out more about any offshore havens please call Mr. Curshen's at Country Code 506, 258-6060, or TOLL FREE from anywhere in North America 800-315-4269 begin_of_the_skype_highlighting 800-315-4269 end_of_the_skype_highlighting begin_of_the_skype_highlighting 800-315-4269