Going Offshore

Protection, Planning, And Privacy--How To Take Control Of Your Financial Future

Oct. 26, 2010, Delray Beach, Florida: Three reasons why you must make a plan now for going offshore with your assets, your investments, and your financial future.

Dear Live and Invest Overseas Reader,

"In Jonathan Swift's classic 'Gulliver's Travels,'" writes Correspondent Robert Bauman, "the hero washes ashore after a shipwreck and awakens to find himself a prisoner of the inhabitants of Lilliput - a race of people one-twelfth the size of normal human beings. The normal-sized Gulliver is tied down to the ground by hundreds of tiny pegs, ropes, and strings.

"Even Gulliver (who did manage finally to free himself) had an advantage over the average American trying to preserve his wealth.

"Gulliver awoke to discover his predicament all at once, whereas Americans are only now beginning to see the thousands of irrational political restraints that have hogtied and immobilized them stealthily over decades.

"It's time to wake up, folks. The politicians and bureaucrats who unfortunately control the U.S. government are doing everything they can to keep us - and our money - here.

"But it is our legal right to 'go offshore' financially.

"Big Brother can put as many roadblocks, detours, dead ends, and petty controls as he wants in your path, but that doesn't have to stop you - nor should it - from going offshore.

"The U.S. government - especially the IRS - has done all it can to keep you and your money at home.

"The U.S. Department of Justice and the IRS claim the SEC has extra-territorial magical powers. Apparently, SEC rules extend to all offshore financial activity involving U.S. persons, including banks and investment managers - even those located outside the United States.

"And the IRS, with its 'qualified intermediary' rules, claims U.S. jurisdiction over foreign banks with U.S. clients. The QI program obligates foreign banks to follow IRS disclosure rules - even if they go against their own nation's financial privacy laws.

"Then, of course, there's the recently enacted HIRE Act. This law contains the radical Foreign Account Tax Compliance Act (FATCA) that grants the IRS power to force foreign bankers to spy on their U.S. clients. Unless a foreign bank agrees to tell the IRS about the foreign financial accounts of U.S. persons, the IRS threatens to levy a 30% withholding tax on the bank's U.S.-sourced income. This includes any U.S. securities or U.S. dollars the bank may hold.

"And now, bit by bit, the U.S. government is also tightening the investment, capital, and currency noose, in effect imposing 'soft' currency controls without proclaiming them as such. That's why restrictive U.S. securities laws have hindered Americans from easily investing offshore.

"Here's the good news: Going 'offshore' is an effective way for you to circumvent restrictive laws and regulations - and even expand your wealth.

"The No. 1 reason to go offshore is not simply because you can. It's because you must. It's the only way to get around Big Brother.

"As the U.S. government flexes its regulatory muscle, offshore investing is one of the last remaining ways for smart investors to legitimately safeguard their wealth.

"Now more than ever, it's important to consider these opportunities. There are simply too many new global centers of wealth and power to be ignored.

"Indeed, for Americans, offshore tax savings can be minimal because 'U.S. persons' are taxed on all their worldwide income, no matter where it is earned.

"But you should still consider going offshore. Here's why...

1) Solid Asset Protection

"The United States leads all other nations in lawsuits. Lawsuits seek cash and assets. If your assets are located in the U.S., they're at the mercy of any state or federal court.

"But if they're located offshore, a plaintiff's attorney usually won't take the case. They know they're not likely to collect a judgment. (Sometimes it makes good financial sense to discourage a potential litigant by letting him know just how difficult it will be to reach your offshore assets.)

"Because of defendant-friendly local laws in asset protection and tax haven nations, foreign judgment holders have a difficult time enforcing it. To reach your assets, a successful creditor must start all over, using the foreign judicial process to press a claim. That means the expense of hiring foreign lawyers and paying for travel and witness transportation.

2) Flexible Planning

"Having some of your assets offshore allows more flexible tax planning and inheritance tax advantages, such as the establishment of an asset protection trust (APT), a private family foundation, or a limited liability company (LLC) for business purposes, each of which could have its own bank accounts.

3) Better Privacy

"Offshore accounts offer you a way of legally concealing your wealth from prying eyes (other than government reports that are required). In addition to avoiding becoming a target for extortion and kidnapping campaigns, you may well want to avoid news media attention or relatives or others looking for handouts.

"Protecting your assets offshore is a great way to preserve your wealth. But you can also invest your money offshore to increase your wealth. There are several ways to do this.

"An offshore bank account is an excellent platform from which to diversify investments, with instant access to the world's best investment opportunities, including currencies, precious metals, and real estate, and without being limited by Big Brother's anti-investment restrictions. Foreign stock, bond, and mutual fund trading is not covered by SEC rules.

"You can also buy foreign securities through a trust, a family foundation, or a corporation you have created offshore. Properly structured foreign legal entities are not considered 'U.S. residents, persons, or citizens.' These entities therefore have the right to buy non-SEC-registered securities (as long as the grantor who creates such entities includes income from these sources as personal income on annual tax returns).

"You can set up an offshore brokerage account. The profit potential of cross-border investment is enormous. Until the recession, U.S. stocks performed well over the years, but international stock markets historically have outperformed Wall Street as a whole. And now, a lot of American investors are also opening up brokerage accounts overseas so they can trade stocks directly on foreign exchanges and tap into the greatest possible returns.

"These are all compelling reasons to go offshore. Just remember, the IRS has a web of rules and regulations that aim to wring maximum revenue from Americans who go offshore. These tax laws are extremely complex, so move cautiously and only with expert professional advice."

Kathleen Peddicord

Editor's Note: Attorney Bob Bauman, editor of the Sovereign Society's Offshore A-Letter, will join us in Panama City in December for our Emergency Offshore Summit, where he and our other key offshore experts convened for this important and timely event will discuss in detail all the best current opportunities for protecting your wealth and safe-guarding your assets.

Full details of the program we're planning are here.

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