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We receive many different types of email questions from our newsletter readers and prospective clients regarding all aspects of offshore planning, international trusts, and the nature of our services. Today we thought you might enjoy some unusual voyeurism, and take a peek at what a few of our friends and readers are thinking.
Our newsletter today is a collage of questions and brief answers. In many cases the Q & As are much more detailed, but you still catch the drift. Some lead to an initial review of personal circumstances and planning implementation. Naturally, we always preserve confidentiality and privacy.
WHAT READERS WANT TO KNOW
First, from SA in NY
I've read you book "How to Legally Protect Your Assets" and enjoyed it. While I might not be an international jet-set multimillionaire, I'm very interested in protecting the assets I have from legal & personal liability. Saving taxes would also be nice as well. How do I begin the process? What are the up front and ongoing costs? And how does a ‘land holding trust’ accomplish some of the objectives you write about? I look forward to hearing back from you.
Dear SA: Glad you found How to Legally Protect Your Assets a useful resource. Most of the individuals we work with are not 'international jet-set multi-millionaires' as you state, and most are good, old-fashioned individuals you'd think are least likely to have asset protection. So you're right at home.
A land holding trust offers little advantage, as there is no asset protection, or other integrated benfits. My first investment property over 35 years ago was in a land holding trust in Illinois, and the past advantages of some limited privacy with a land holding trust are long a thing of the past. It is possible we may be able to assist, but would need to know a bit more about your objectives. Each situation is very different, and therefore the costs can vary as widely as the different planning options and objectives. Once we better understand your situation and objectives we can then provide an indication of costs.
From DB in Florida
Dear Sir: My daughter was in a serious car accident while traveling in Europe last year. The local insurance company would not pay for her recovery outside of Europe, so we have been living there since. She is getting a large indemnity, and I need to know how to handle the taxes, a trust for the proceeds, and the growth of this money so that I can care for her the rest of her life.
Dear DB: Sorry to hear about your daughter. What is amount of funds you wish to place into trust? And too, what are your primary objectives regarding the funds? Are there other personal assets you wish to protect? And if so, what is the value of those other funds? And if the other funds are encumbered, to what amount? These questions are important starting points and how the planning should evolve.
From MW
David. In your recent newsletter you made reference to and offered a link to numerous Australia banks which offer higher interest rates on deposits. However, when I checked several out, one of the requirements was that you have an Australian mailing address. How can someone from the U.S. meet this requirement? Thanks for responding. I enjoy your newsletters.
Dear MW: Glad you enjoy the newsletters. You are correct that Australia is a stickler for a physical address for just about everything. If you don’t know someone in Australia whose address you can use that will forward mail to you, check out different mail forwarding services which designate a physical address (not a PO Box) and will forward mail to you for a fee. I’ve also heard of some individuals opening a local PO Box, but using the physical address of the local Post Office. In some situations it may require a personal visit and IDs to open. But in other circumstances you may be able to open an account in Australia or elsewhere over the Internet….this is actually much easier than you might think.
From JC in Vancouver
Do you provide information on tax structures and investing in offshore ventures for Americans? Can your book help Canadians?
Dear JC: We work with clients across the globe, and certainly from Canada. The book How to Legally Protect Your Assets has general application to all nationals. The book Offshore Living & Investing is more directed to US citizens (follow the links to the table of contents), but has plenty of universal application. We do not provide services designed for tax planning.
From JD in Austin
Am I too late? Being sued and my assets are at risk. I need your advice.
Dear JD: Not sure what you mean by being too late. If you mean too late to take asset protection steps after getting sued, then the answer depends on many factors. Obviously, we need to know much more before commenting. An initial review of your situation and the circumstances will determine if certain assets can still be protected. Naturally, the best time to implement planning is when neither you nor your assets are under threat.
From JF in Oklahoma
I am interested in buying land and expanding my energy business overseas. I would like to talk about such purchases and moving money out of US banks, etc and some asset protection ideas.
Dear JF: It is possible we may be able to assist, but would need to know a bit more about your plans. Please call or provide your contact details. In the interim, the information attached might be useful to you.
From FF in Florida
I’ve read your articles in the Oxford Club, the Sovereign Society, and elsewhere. I’ve also reviewed the table of contents on your web site for both of your books, which appear very interesting and address all facets of asset protection and offshore investing. However I was unable to see Private Interest Foundations mentioned. Are PIFs viable as an offshore option for US citizens? What chapters in your books address PIFs?
Dear FF:You didn't indicate your purpose or motive for Private Interest Foundations (PIFs), but they have rather limited purposes, and can be expensive to operate. In most circumstances an International Trust can accomplish the objectives of a PIF, and much more. There are references in the books to PIFs that you might find useful for these purposes.
From SH
Hello, I favor a Liechtenstein portfolio bond structure (insurance policy) over an international trust because the Insurance Company owns the Policy (not us) which gives us privacy, asset protection, multi-jurisdictional structuring with multiple checks and balances, multi-currency switching, institutional and jurisdictional safety, liquidity, direct inheritance separate of probate, unrestricted access to the universe of investment opportunities, solid asset protection from creditors and lawsuits, and other benefits.
I would be very interested in your comments as to why you favor an international trust.
Dear SH: An insurance policy - whether purchased from a Liechtenstein company or elsewhere - and an international trust are very different types of vehicles, and offer significantly differently planning opportunities. You indicate your insurance policy investments are in bonds, and you list a number of features. While an international trust is not a life insurance policy, it can invest in insurance products and therefore has all of the benefits you list in your email, and more. The reverse is not true, as an insurance policy does not typically create a trust to obtain the many other benefits of a trust.
The list of benefits of an International Trust are far too many to outline in one email. And what works for one individual may not be a benefit to another. A few examples of the benefits of an international trust include opportunities to protect your other assets (besides the insurance proceeds or cash values); opportunities to segregate assets by risk classes and equities amounts, Charging Order protection, and forcing litigation threats to those assets offshore, all integrated into an aggressive asset protection planning structure. As a medical professional I would assume you are well aware of the risks to all assets you encounter regularly.
From LH in Canada
Hi David, I am a US citizen residing in Canada. I am a Wealth Vault member and I found your contact information through WV. My wife and I are getting wiser to the world of sovereignty and I was hoping to ask you a few questions. I am just getting involved with investing through several international groups, as well as purchasing Gold and Silver. I am curious, should I be doing this personally or through an international trust or foundation?
Dear LH: An International Trust has superior benefits over a foundation. The foundation is a rather limited use vehicle, and a trust has a very broad application of uses, including asset protection planning, estate planning, global investment diversification, and much more. And too, holding assets in a trust instead of personally is generally preferred for many reasons. Depending on the value of assets and other factors, an International Trust is often most desirable. You can learn more about International Trusts from the links and information at our web site.
From DR in New Zealand
I’m a US citizen living in New Zealand and recently acquired my New Zealand citizenship. After selling my US business of 25 years, I formed a trust in New Zealand and moved my family there for a better quality of life. My US accountant files income tax returns for US income, and my NZ accountant does the same with NZ income. Do I still need to file other burdensome US based returns and compliance information, even though not living in the US and reporting all income? If so, what are the forms?
Dear DR: Following are just a few of the information and compliance returns required. First, the TDF 90-22.1 (the 'FBAR' form) if you have signing capacity over any bank accounts outside of the US in any capacity - whether personal, partnership, company, consolidated, trust fiduciary, or otherwise - in the aggregate of USD $10,000 or more, then this form is required annually by 30 June of the following year.
Next, for a foreign trust (any trust not a US domestic grantor trust) there is a long list of forms, and the penalties for not reporting are very severe - up to 35% penalty of the total value of trust assets, per year. It is for this reason that we do not generally create foreign trusts (for tax purposes) and an International Trust can be created as US domestic trust (for tax purposes).
Foreign trust forms include trust reporting requirements on forms 3520 & 3520A, and depending on company status and elections under 8832 'check the box' entity election, forms 8865, 8858, 5471, 5472, and interest dividends under 1042-S (like 1099, but on a foreign basis). And personal contributions to foreign entities are generally required to be reported annually with a form 926, but gift taxes can sometimes be avoided if designated as 'incomplete' transfers to these entities, dependent on your planning structure.
And complements of the recently enacted US Hire Act, form 8938 is a new form to be part of your US tax return (likely due for 2011 reporting in 2012) where more than US$ 50,000 in assets are located outside of the US, of any type. It includes the above bank accounts, and everything else owned outside of the US. This is basically a complete foreign asset disclosure, and last I inquired, only a draft version is available (let me know if you would like a draft copy).
A complete list of the above and all other IRS forms and instructions are available at this link. Yes, the above can be burdensome, and I despise the USA reporting requirements. However, the penalties - civil and criminal - can be severe for failing to comply with the above and other related forms.
For the above reasons – and more – there are ways to implement an International Trust with offshore planning options, but initially without the burdensome requirements. As your offshore activities become realities, then the requirements would be necessary.
If the above is enough to make you want to give up your US citizenship, compliments of the HEROs Act, don't forget about the USA Exit Tax, as it’s another ugly whopper and taxes soon-to-be expats as though they have died....but taxed more harshly than the USA federal estate taxes, and without the more ‘generous’ estate tax exemptions.
In the meantime, avoid investing into non-USA mutual funds (or other similar PFIC passive investments), as the foreign ‘mutual funds trap’ is also a real tax killer.
As Shakespeare said "don't kill the messenger", but pre-migration planning with a pre-settled International Trust would have been a significant benefit over your current situation. Hopefully your US accountant is fully on top of these and all other reporting requirements to keep you in USA compliance.
From VN in Missouri
My plans are expatriation. I believe the US is finished, or to become so draconian my finances are not safe here. My elderly mother will be leaving me an inheritance very soon. I do not wish to reside fulltime in the US, or keep all of my assets in the US, and plan to live part time in St. Kitts. I also have interest in Belize and BVI property for investments. I want to act before the inheritance occurs, and I’m also concerned the dollar will drop another 50% against the index….I hope to be entirely out of it when that happens.
I don't know if the real estate portion of my interests should be in international LLCs because they are not yet reportable to IRS and certainly can't be confiscated from SKT or Belize, but if I put the properties in rental pools, that income is reportable. Then there are the stock market/gold/silver mining holdings which I'm guessing should be part of an IBC with me as business manager and perhaps a son as Protector?
That's where you come in. Five flags, separate entities LLCs, wrapped in an IBC or Asset Protection Trust in Panama overall? Things get hazy when I get into your expertise. I hope this gives you some direction.
Dear VN: All good thoughts, and that's a lot to cover in one email response. If you forward your telephone contact details I would be pleased to call and discuss how we might be able to proceed with an initial review of your situation.
From PB in New York
Hi David, I ordered your books a couple of weeks ago and have just finished. Congratulations on a very helpful book. Easy to follow and thought provoking. I need some help and maybe you could point me in the right direction? I have moved to the US for a couple of years and want to set up the right structure to hold assets I'll buy here. If I learnt one thing from your book - it's the importance of getting good advice. I am interested in putting structures in place to maximize my future flexibility. If I leave the US in a couple of years to return to Europe or to take up another post, I want to understand what the best structure is to hold my assets and minimize taxes. Might there be an advantage in a conversation?
Dear PB: Thank you for your information. Please keep in mind that if you are primarily US tax motivated, then the nature of our planning is not designed with that outcome in mind. The nature of our planning is designed to be tax neutral and with other intended planning purposes integrated therein (for example, asset protection, estate planning, pre-migration and/or expat planning, to name just a few). Can you kindly clarify this point as I'm unclear of your needs. Based upon your interest, if there is a fit I'd be pleased to ring you to discuss further.
From MD in South Carolina
In your last newsletters about offshore myths you recommended to form an international trust to hold offshore assets. But all this does is insulate those assets from domestic lawsuits. I would still be required by law to tell the IRS about the trust and the assets, so they can tax and/or audit them. So why is an offshore trust of any value?
I am also thinking about taking up another citizenship in a more stable country, and want to control my assets, minimize taxes, and the offshore banking entity. If the IRS knows where all the offshore assets are, is it easy enough to force them all to be sent back to the USA?
Dear MD: The International Trusts we create for our US clients are - for tax law purposes - US domestic grantor trusts. For civil law purposes (for asset protection) they are registered in a more favorable trust law jurisdiction outside of the US. You are correct that the trust, and income that flows through the trust, is reported to the IRS so long as you are a US citizen / taxpayer. And too, you are correct that the TDF 90-22.1 (FBAR) and the new Form 8938 requires financial assets to be reported to the IRS, so there are disclosure requirements.
However, the benefits of an International Trust include strong, aggressive asset protection (both domestically and globally), and also have many other benefits too. I attempted to list some of the benefits in the last newsletter, which you may wish to revisit. Also, the many Past Articles section at our web site has numerous newsletters that discuss the many different benefits, as also do the two books available on the site.
From MF in Florida
Mr. Tanzer - While I finished reading How to Legally Protect Your Assets and also Offshore Living & Investing, I would like to know if you have interest in consulting with me in the near future regarding asset protection. A quick snapshot of wife's and my financial situation is no long term debt, minimal short term debt, about $785,000 in liquid assets, approximately $600,000 in fully paid for home, and about $425,000 in deferred income accounts. I have interests in estate planning, asset protection, wealth preservation, and global investment diversification.
I also want to maintain control over my assets, in as much I actively manage day to day allocation of my portfolio and wish to keep doing same.
I currently have a Revocable Living Trust, Multiple Liquidity Insurance Trusts, and Durable Powers of Attorney, put into effect several years ago. This past summer had another law firm create a "new and improved" set of docs which I have yet to sign and put into effect. At that time, they suggested an attorney who would set up an asset protection trust based in South Dakota. I also spoke with another company which suggested yet another solution, and that South Dakota was not a good idea as the whole trust case law there is new and lacking in settled precedents, so that I would be a kind of "test case" if I went down that route. Have held up doing anything since then as I know I need to connect with someone experienced and knowledgeable who will help me get this right the FIRST time.
It is vital to me, as you say, that ..." planning we offer can also be used as a tool for pre-migration planning and/or expat planning, which might be useful from a tax planning perspective in a new offshore destination. Setting up offshore accounts is occasionally ancillary to the services we provide." I look forward to speaking with you when your time permits. Are you available for an initial consultation?
Dear MF: Much more than we can cover in an email, and yes, I am available for an initial consultation. Can you provide some additional information about your objectives going forward?
From OP
Hi David, I've just read your article in Oxford Club's Ultimate Income and would like to share with you one more way to (perhaps) protect from such a disaster. My bank is BoA btw, and I have some money I keep there. I can't say I did it intentionally to protect myself against this bank failure (do you really think there is possibility it fails?), but I acquired recently some investment (rental) properties and I have now a mortgage with my friendly BoA which is about the same as my total deposits there. So now, after reading your article, I am just wondering, assuming this bank fails and my deposits are gone, is it possible to use this "gone" money to offset my mortgage so at least I don't owe them anything and keep that property free and clear?
Dear OP: Thank you for your comments. The article you refer to is actually a condensed version of a longer newsletter article that we sent out earlier from our web site. You can read the full article by visiting www.DavidTanzer.com and scroll down to the lower left side under Recent Articles for the link to How Safe is Your Cash? I would say that a strong argument could be made for a set off if your bank fails, but obviously other factors come into play. Just one example is whether the mortgage lender is the same entity as the deposit holder, or if its been assigned.
From GH in Texas
I would like to know if you deal with Visas from Argentina and Equator.
Dear GH: While our office assists with Visas and citizenships as part of larger planning, it is not a service we offer independently.
From RR
Hi, I am a surgeon. I have a little over $2M in assets (stock/cash, and the rest in the form of real estate). I wanted to learn more about your asset protection plans.
Dear RR: Pleased to provide further information about asset protection planning, as you requested. A large number of our clients are in the health care field, and we certainly understand the high risk profession in which you practice. The primary services our firm provides includes asset protection - domestic and international - and integrates estate planning into the structure. The type of international planning we offer lends itself to asset protection, wealth preservation, global investment diversification…..whether financially, socially or politically motivated. The planning we offer can also be used as a tool for pre-migration planning and/or expat planning, which might be useful from a tax planning perspective in a new offshore destination. Setting up offshore accounts is occasionally ancillary to the services we provide. If you are interested in discussing your personal situation in respect to the services we provide, please provide me some further details to see if there might be a fit between your needs and our services. And if so, I would be pleased to originate a telephone call for a brief discussion with you of how you might proceed with an initial review
From VR
Dear Mr. Tanzer, I am very happy to receive some strong warnings on how to protect assets when being an expat. But I am missing how to choose the best country to reside (planning with either Panama, Ecuador or Uruguay) when my activity is for short term capital gains on financial markets. If the Capital Gains rate is rather low in the mentioned countries, do you still favor a protection plan for less than $500,000 equity? Do you have such topics covered in one of your books, please? Otherwise, do you recommend setting a protection plan to run trading activity for the above countries? What do I need to do to obtain information about your books, please? Thank you very much for your reply to this request.
Dear VR: Asset protection is important at all asset levels, but the type of planning implemented can vary greatly depending on asset values, types, risk profile, and many other factors. And too, there is not a country of choice that is "one size fits all", as many different needs and factors are important. And yes, I think that you will find these and many other topics are covered in the two books at our site.
From SS
David: I am interested in your International Trust. I may have a potential large inheritance some day, and maybe large capital gains from the sale of speculative assets. I’m looking to minimize taxes and protect assets, if these occur. I would like to set up a planning structure ‘just in case’ I receive these funds. What is the next step?
Dear SS: The next step is to assess your needs and objectives and customize a planning structure that fits. Below in this email is further information that will help you - and us - move to the next level. We would be pleased to create a trust for you, but you gain no benefit with delaying or avoiding taxes with a trust or other entity by the mere creation of an entity. Anyone that advises you to the contrary is not correct. Once you obtain the funds, we'd be pleased to assist you. Since the inheritance is uncertain, and the capital gains are speculative, first take title in your name, and then you can implement the planning….or at least make sure there is some reasonable certainty in acquiring the assets before implementing planning.
From MM in London
I just finished reading your two books (Asset Protection and Offshore Living). I am putting together a plan to register an IBC from which I would sell a product that I recently invented. I plan on traveling to Belize soon. I've set up US Corps and LLCs but never an IBC so this is a new one for me. I was wondering if I could schedule some time with you over the phone. Thanks very much! Cheers
P.S. Great books!
Dear MM: Regarding your plans for Belize and inquiry about an LLC, the type of entity and venue for registration is very significant for various reasons. With approximately 45 countries offering some form of LLC, the benefits vary greatly. Often LLCs offer much more than an IBC, and LLC benefits can vary widely, depending on where registered, how implemented, and how maintained during their life cycles. Will contact you at the number provided.
From JP & MP in New York
Mr. Tanzer, JP is a US citizen, MP is a dual citizen of the US and Philippines. We currently plan to move to either Belize or the Philippines in 2013. We are near retirement age and are concerned about protecting what we have. JP is a stocks and options trader, and his income from this activity supports us and will have to do so for as long as we live. We are facing a possible judgment from a mortgage loan default. The foreclosure has been filed, but a default judgment case has not (and may never) been filed. Should we consider putting assets in an offshore trust or IBC and then opening an offshore account at the same brokerage house in this new name? I appreciate your help.
Dear JP & MP: Once you are threatened with a major claim against assets, the options for asset protection planning are narrowed. This doesn't mean there are no options, but that caution and planning must work around any claims, to the extent legally possible. The key at this point is assessing all risks and creditor’s rights, against your rights to your assets.
From WD in Las Vegas
Regarding my Roth IRA, can you advise/help me move my Roth IRA offshore?
Dear WD: We are familiar with moving IRAs offshore and have worked with clients that have taken these steps. There are several individuals that concentrate in this type of planning, however, this not a primary focus of our services. However, depending on your other needs, we may be able to assist if this was part of larger picture planning. Please provide further details.
From VD in North Dakota
I need legal help to collect on a judgment on assets in France. I think my sister who stole my parent’s inheritance has used your book to move her assets to France. I just won a Final Judgment. She has real estate assets in her name in France. How do I go about finding someone who can help me collect? I realize your books help people against people like me, but maybe you help people from my side of the problem. Do you have any advice or can you actually help me?
Dear VD: Sorry to hear about your dispute with your sister. Even if you are correct regarding your sister's wrongdoings, it is doubtful there is specific sufficient information in the books to assist your sister. Unfortunately we will not be able to assist in any recovery, as that would be best left to a litigation attorney that specializes in recovery of assets.
From Your Wife
Are you available for a dinner date on Saturday evening?
Dear Wife: Yes.
The different offshore and asset protection email topics from our readers is almost endless. The questions differ as much as you differ from your neighbor. And it’s this reason that we believe that planning is not one-size-fits all, and must be customized to the needs of each individual.
If you are interested in learning more about protecting your assets, or offshore living and investing, start with the planning tips on our site. There is also a posting of many Past Articles covering a long list of topics. Or feel free to contact me to learn how we might be able to assist you with implementing a planning strategy to accomplish your goals.
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.
(c) Copyright by David A. Tanzer & Associates, P.C. All rights reserved. Except as permitted under the United States Copyright Act of 1976, as amended, and pursuant to the laws of all countries, no part hereof may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, electronic or otherwise, without the prior written permission of David A. Tanzer & Associates, P.C. Reprint in whole or part strictly prohibited unless prior written permission is granted. International Copyright protected under the Berne Convention, Universal Copyright Convention and laws of all other Copyright protected countries, and consistent with the World Trade Organization TRIPS.
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