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Today’s topic provides a fresh prospective of the US government’s undertaking to “save the day” and answers the question of what international planning means to individuals looking to protect their hard-earned nest egg at home. What follows also serves as a fresh reminder of topics of great importance.
Our newsletter topic today:
Why International Planning, anyway?
A trillion here, a trillion there.
Worthless asset buying almost seems incomprehensible and meaningless when compared to our personal assets. But it’s not until you start adding up the numbers do you realize just how significant the amount really is. The devil is always in the details.
According to Bloomberg, its tally of the various credit facilities and bail out programs thus far comes to US$ 7.7 trillion. But what does $7.7 trillion represent anyway?
Even by inflation adjusting the US government’s greatest expenditures for the Marshall Plan ($115 bil), Louisiana Purchase ($217 bil), Race to the Moon ($237 bil), S&L Crisis ($256 bil), Korean War ($454 bil), The New Deal ($500 bil), Invasion of Iraq ($597 bil), Vietnam War ($698 bil), and Nasa ($851 bil), the total in today’s US dollars is a paltry $3.9 trillion.
But for good measure, throw in the inflation adjusted cost of World War II ($3.6 tril) and add it to the above former US government’s greatest expenditures and the total is still only $7.4 trillion, less than Bloomberg tally of $7.7 trillion representing the current government expenditures for the bail out programs.
All of the US government’s greatest expenditure programs combined in the past – and inflation adjusted - are still dwarfed by the current expenditures to “fix things” today.
And that's the good news. The bad news is that the problem is growing even faster than politicians can figure out how to throw more money at the problems. Yes, stuff happens.
But how will it be financed? When China, Japan and the Middle East stop buying worthless US debt, then who pays? The US taxpayer and holders of worthless US dollars, that’s who.
That means you and I will likely be responsible for the new US government $7.7 trillion undertaking that has become the mother of all social programs … already exceeding all other of the greatest US government expenditure programs of the past combined.
Yes, all others combined!
As individuals continue to look for safety in protecting their assets globally, can you say “race to the exit?” The problem is that the door gets crowded when the masses rush at the same time.
One only needs to look to recent reminders from Russian and South African expatriates – and the Jews fleeing Hitler’s Germany – to know how currency restrictions and border controls interfere with the free movement of people and their money. Don’t think borders controls are already taking place in the US and elsewhere? If you think this is hyperbole, you’ll be surprised when you bother to look closer.
If you haven’t already done so, why not start today with an international plan to protect your assets? An International Trust becomes a convenient – and smart - strategy to protect what you have earned over a lifetime from being wasted away.
Is International Planning the Answer?
For some it’s about asset protection and wealth preservation …. but there is much, much more. It’s also about integrated estate planning. And about saving for your retirement. And it’s about opening doors to international investing, foreign currencies, and global diversification. And it’s about pre-migration planning for those looking to live part time - or full time - outside of the US and looking to keep assets and income away from a new taxing jurisdiction. And for a select few, it’s about planning ahead to give up US citizenship and leaving American burdens behind.
It’s one or two of the above for some folks, and for others it’s several of the above.
For those interested in asset protection, there is nothing else of importance. When I first started doing work in the international asset protection arena almost twenty years ago, you could count those of us performing domestic and international planning on one hand … and likely have a couple of fingers left over. During the 1990s international asset protection evolved considerably, and over the past few years it seems like everyone and their brother has hung out a shingle offering services in international asset protection.
As a former litigation attorney and judge I witnessed how fortunes were won and lost quickly in courtrooms. How can someone selling a ‘one-size-fits-all’ trust package or an estate planner offer years of litigation experience to your planning? They can’t, and a certain percentage of all planning will someday need to withstand challenges of different natures.
Asset protection designed and implemented with an eye towards future challenges – including litigation - from the start is essential. I repeat: asset protection designed and implemented with an eye towards future challenges – including litigation - from the start is essential.
But there is both a life side and a death side of protecting assets.
Integrated estate planning is also an important component of the planning process to preserve assets. Looking to minimize estate taxes, provide for a surviving spouse or children, keeping assets from a re-marriage - or second marriage children - are only a few of the objectives when integrating estate planning into the structure. A surviving spouse or child’s trust inside an International Trust is an excellent way to control assets from the grave.
And integrating pour over wills into the trust, durable powers of attorney’s for health care and financial purposes, and dieing declarations to avoid being kept alive artificially, are all an important part of the planning process.
Furthermore, saving for retirement through an International Trust can provide security and confidence for what are supposed to be the rewarding years of our lives. Failing to do so means dependence on an already overburdened government provided pay-as-you-go health care system. Creating a separate nest egg in case things “go to hell” can provide you peace of mind if – or when – all else fails.
Better yet, many have discovered how quickly safer global investment opportunities become available. Owning higher yielding CDs in different currencies in safer offshore banks can be found.
However, many Americans have already discovered that 96% of the world’s population will not deal with US citizens, sometimes for no other reason than due to the draconian SEC and IRS regulations they must satisfy when dealing with American investors. This effectively cuts offs 75% of the world’s investment products to many US citizens.
But the yoke of US citizenship can be removed without leaving home by combining domestic planning with offshore structures within an International Trust to open the doors to greater opportunities and quality asset protection. Offshore living and investing from the comfort of home can be very beneficial.
And many are surprised to find high yields in extremely safe AA or better banks with government guaranteed depositor insurance of $1 million or more. These safer jurisdictions offer much better returns – even on cash deposits – and can be yours, too, if you organize your planning correctly.
Some outward looking individuals look to retire and live outside of the US part time, or sometimes longer. Pre-migration planning can avoid the tax traps of a newly adopted second home or homeland. When taking the correct steps in advance you can also avoid issues of double taxation, or worse. Many learned the hard way that investing in an offshore mutual fund is a tax trap to avoid.
Finally, for those select few who have finally said “enough is enough” with the over-burdened, faltering US system, the option of giving up US citizenship is the answer. With the American Exit Tax now firmly law in the US, important planning steps can be taken with international planning to create an opportunity for a better lifestyle elsewhere.
The American Dream has been replaced by the Global Dream for many.
Yes, the world is changing. And you too must change or go the way of the dinosaur. If you wait until the last minute as everyone rushes to the exit, it’s likely already too late. In the meantime, there are still ways to protect assets in a changing world.
Are you following the crowd? Or thinking for yourself?
Just because an opinion is widely held doesn’t mean it is factually correct. If history is any guide (and it usually is) the view of the majority of mankind is more likely to be foolish than sensible. Think herd instinct.
Has everyone else already convinced themselves how bad things are – and will likely become – and therefore creating a self-fulfilling prophecy of doom? I mean, are we all chicken-littles? If everyone is thinking alike, is anyone really thinking?
You be the judge.
Many have already stepped up to take personal responsibility to create a better world for themselves and their family.
Until next time….
David
David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)
David A Tanzer & Assoc., PC.
Datlegal@aol.com
DAT@DavidTanzer.com
www.DavidTanzer.com
Vail, CO USA:
Tel. (970) 476-6100
Fax (720) 293-2272
Auckland, New Zealand:
Tel. (64) 9 353-1328
Fax (64) 9 353-1328
Brisbane, Australia:
Tel. (61) 7 3319 6999
Fax (61) 7 3319 6999
(Licensed to Practice Law in U.S. States & Federal Courts;
Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; &
Assoc. Member Queensland Law Society, AU - Foreign Lawyer)
The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.
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