PROTECTING ASSETS IN A CHANGING WORLD

Whether you agree or disagree with the direction America is heading, one thing that is certain is that there are challenging seas ahead. What does this mean? And more to the point: What does it mean for protecting your assets?

Our newsletter topic today:

Protecting Assets in a Changing World

Since I authored the first edition of the book How to Legally Protect Your Assets almost twenty years ago, domestic and international asset protection planning has changed substantially. When the second edition was published, it brought most matters current, but it continues to be a dynamic world we live in.

Along the way I’ve written many newsletters on the changes to protecting assets inside the US, and protecting, investing and living with an offshore world. Nearly 100 of those complimentary newsletters are posted on our site for our clients and visitors to read, found here in the Past Articles.

From domestic asset protection, offshore banking, defining International Trusts – and how to invest your assets through an International Trusts – to risk management, and much, much more, our Past Articles page is a great place to learn more.

As they say, the world is a changin’.

With so many past changes, it’s almost impossible to fathom that even more lay ahead. Old perimeters are increasingly meaningless. What worked a few years ago may not be the best planning today. Changes are inevitable. For those willing to plan ahead, they can still protect their hard-earned assets.

We have often written about how an International Trust can help protect assets – and more about that below.

But who would have thought only a decade ago that the US and global financial institutions would be given free money to keep the world economy afloat? Or that the US dollar could lose its global appeal as ‘the’ international reserve currency? Or that history would be made across the world changing the way governments do business, including in the US?

The world outside of America does not view the current US leadership - or America - in a positive manner. So too inside the US. Regardless of what you think, a large void in global leadership has developed that will be filled by others.

Those with any measurable wealth continue to come under attack. In the past, protecting assets against frivolous lawsuits was a motivating force. Today, more than ever, government intervention, social unease, burdensome regulations, currency restrictions, border controls, and many other issues add to the necessity of reaching beyond the borders at home. And still, the International Trust continues to be a safe haven wherever you or your assets are located.

The need to think globally for financial diversification and asset safety becomes increasingly important for those who have worked a lifetime seeking to simply preserve what they have.

Today, new trade barriers and protectionism add to the global mix. Greater restrictions to accessing offshore financial markets and products will be even more commonplace in the days ahead. It is clear more of these inward looking measures will follow.

Protectionism has already begun to unwind the expansion of Globalization. With this, the free movement of people and capital will tighten-up even more for those looking for the free movement of capital, and even family. And there are many history lessons how these inward looking measures were the precursor to major civilizational wars.

Take comfort in the fact that there are still steps you can take today to protect your assets.

But first, some examples of changing global currencies that might interest you.

How is the Global Currency Defined?

‘The’ global currency has been a moving target over time. Historically speaking, the US dollar’s status is a rather recent event, and new to the global party. 

Many are surprised to learn that the Mexican silver coin was the international anchor currency for almost 400 years from 1500 to 1870. One Mexican dollar was fixed to the pure silver the Spaniards exploited from the Americas. The silver coin was the international currency for all global finance.

Between 1700 to 1870, the Pound Sterling emerged as the international anchor currency, competing against the Mexican silver coin. As the British Empire grew, its global colonies preferred the pound sterling to facilitate international trade with the empire back home.

Then between 1870 to 1945 – when London was the world’s financial center - the pound was pegged to gold. A banking system evolved based upon paper money, developed in London where commercial banks and a central bank came into being. Gold was held in reserves, gradually replacing the Mexican silver based dollar.

After WWII, a new world financial order emerged when the Bretton Wood Agreement ushered in an era of global finance with the US at the center of the financial system. Between 1945 to 1972 sovereign governments deposited their gold bars with the US Federal Reserve and the US dollar became the international currency. The US dollar was pegged to gold. This means that the US dollar as the king currency is only a recent phenonenum.

During 1972 to 1987 the US dollar was 'the' de-facto international anchor currency, but trust and confidence began to wane after it broke from the gold standard. The US government was free to print paper money at will – a fiat currency – without the dollar being fixed to any valuable medals (gold or silver). Other countries pegged their currencies at a fixed rate against the US dollar, and currencies worldwide went through drastic monetary valuations to keep economies from going broke.

The US dollar continued as the international currency from 1987 into recent years, but most sovereign nations started floating their currencies during the 1980s and were no longer fixed against the US dollar. Free floating exchange rates are now pretty much the standard around the world.

Today, the US dollar – and its value – continue under attack. The Japanese yen and the Euro are still obvious contenders, but even more so is the Chinese Renminbi. Time will tell if the crypo currencies have a long term place. In the meantime, the US dollar is increasingly recognized globally as being problematic, and no longer considered the safe haven it once was.

The above history serves as a gentle reminder that the US dollar as ‘the’ international currency is neither permanent, nor long term. Nor does it continue have the at-home safety advantage. The more you understand history, the better you can prepare to accept that monetary changes are inevitable and take steps early to protect your assets.

Having freedom of movement between different currencies and assets around the globe are ways to help preserve your assets. Freedom of movement and reasonable levels of privacy are two of the hallmarks gained by controlling assets through an International Trust.

When the British Empire was in decline many people were ringing the bell. Then, like now, few listened until it was too late. And when Spain and Rome were in decline some may have noticed things were going downwards, but who bothered to believe the worst when living inside a global power? Is it too much to expect Americans today to be any different than those before us and ignore the warnings?

Warning signs have always included struggling financial systems, government over-extension outside its borders, heavy taxation, currency controls, protectionism, and declining faith in a faltering system. We’ve been seeing this happen in the US for some time now, but only the wise ones bother to take action.

In 1918, after WWI,  the British were the mighty masters of the world, the richest country, and home of the most powerful nation following its two century global domination. Then, by 1939 – only 20 years later – this once wealthy nation was so riddled with financial burdens and bankruptcy that it instituted currency exchange controls making it an act of treason (yes, treason) to settle business transactions in anything other than in the local currency. The Brits with money were trying to flee to safety en mass.

Currency restrictions by struggling nations are more commonplace than you might realize.

Throughout history great nations prosper, then fall. The Greeks had a term for it called “hubris.” Literally, it means first the pride, then the fall. After all, even great nations are run by mere mortals like you and me. But like today, the struggling rulers always tell the minions they will make everything great again.

The bottom line is that when you limit your investments and asset protection to only domestic planning, you are increasingly at risk and missing out on the global world of diversity, investing, and superior asset protection. The worst thing to do is nothing, and sit idly by as the world changes around you.

If you are looking for a solution, an International Trust is an excellent tool to globally diversify and protect assets, while seeking superior protection for your hard earned assets.

How Does an International Trust Fit into Your Future?

It is often asked, what benefits can an International Trust provide?

Obviously, everyone's situation and objectives vary, but there are some common themes that run constant for many people. Keep in mind that good planning integrates many different legal tools and techniques, and provides a synergy by bringing planning tools together.

Below are a few examples to consider how you too could benefit from using an International Trust to protect your hard-earned money as the world around you changes.

First, an International Trust provides you an opportunity to diversify your assets, bank in stronger financial jurisdictions, and potentially achieve higher investment returns than you might accomplish at home. Due to over-burdensome domestic rules and regulations, there are more and more offshore financial institutions and investment companies that simply refuse to deal with US citizens. Notwithstanding, there are perfectly legal ways to work around these issues.

Today, more than two-thirds of all available stock and equity opportunities are located outside of the US, providing far greater diversification than keeping all of your eggs in one US basket of investments. Safer banks, offering better returns in multiple currencies, are available. An International Trust can open the doors to better yields, safer banks, and greater financial diversification with proper planning.

Second, an International Trust is an excellent tool in which to obtain a high level of asset protection. As a former litigation attorney and judge, I don’t need to remind you that there is a lawsuit crazy cancer in our society that has gotten grossly out of control. Too often, greedy plaintiffs and over-zealous lawyers are looking to win the lottery with your hard-earned money.

There is no end in sight to our litigation gone crazy society. Any and all steps you can take today to reduce your exposure by legitimate asset protection planning provide you an opportunity to control your future. Meeting this goal allows you to plan for successful retirement, leave behind a legacy for your loved ones, and reach other legitimate objectives.

Third, if financial privacy is important to you, then an International Trust can help accomplish this objective as well. A trust organized offshore affords a wonderful opportunity to keep snooping eyes - and potential frivolous claimants - from going after your nest egg.

It's simply a way of flying under the radar screen. Seeking privacy doesn't mean you are doing something wrong or have something to hide, it just means that you don't need to share every aspect of your private life with anyone willing to pay a small fee to obtain all of your private financial and personal information.

Fourth, estate planning can - and should - be integrated into a properly drafted International Trust. Think of this as the ‘death side’ of asset protection. Providing for the future needs of spouses, children, and others is a part of the planning process. Provisions for maximizing the Federal Estate Tax Exemptions, to reduce the taxable estate, is important. And too, allowing for spendthrift provisions for heirs, or sprinkling inheritances over a term of years, can often be accomplished. This is an opportunity to ‘speak from the grave.’

Fifth, an International Trust should aim to provide the maximum possible tax minimization allowed by law. Minimizing, or legally avoiding taxes, is neither illegal nor unpatriotic. You have the legal right to use each and every legal tax reduction technique to reduce your taxes.

And using an International Trust for pre-migration planning for international investing and living can be a powerful tool to keep assets and income outside of a newly adopted homeland.

Trusts have been around since Roman warriors went off to do battle two millennia ago. International Trusts, designed to protect and preserve family assets, are simply using long established legal techniques to accomplish your particular set of objectives. 

Choosing the best trust structure and laws to protect your assets is critical to reaching these goals.

Yes, the world continues to change. But what changes are you making to protect your hard-earned assets? Remember, the key is to act now, before it is too late.

Start Today:

To learn more, the book How to Legally Protect Your Assets, 2nd edition, explains how this fits together and the different options available to you. Offshore Living & Investing, 2nd edition, then takes it to another level. View here the table of contents of How to Legal Protect Your Assets, 2nd edition.

And see the table of contents for Offshore Living & Investing, 2nd edition go here.

Both books are available in quality soft cover, pdf, or Kindle, at reduced prices at our web site at DavidTanzer.com.

As a reminder, visit our site for planning tips and complimentary Past Articles.

And if you'd like to discuss your planning objectives in a confidential initial review, contact me here.

Until next time…..

David