Why Go Offshore In The First Place?
Yesterday we looked at options for forming an offshore structure and wondered:
Who needs an offshore structure anyway?
Depending on your circumstances and your objectives, maybe you need never mess with the hassle and the expense of an offshore corporation or a foreign trust.
With the help of offshore pros from jurisdictions around the world in the room with us in Panama City for this week’s Offshore Wealth Summit, we’re talking through the reasons you might want to invest in an offshore structure. The benefits include a layer of privacy and protection and the potential to eliminate probate for your heirs.
Asset-protecting structures are one of the flags you can and maybe should plant overseas.
Let’s back up a little, though, and consider the bigger-picture question:
Why go offshore in the first place?
That is, should you be thinking about taking some or all of your life, your investments, your assets, your future, and your legacy “offshore”?
While you may or may not want or need an offshore structure, I posit that every one of us should be diversified overseas.
Beyond offshore entities, what are your options and opportunities for diversifying your money and your life across borders for potentially dramatic benefit?
Traditionally, these are broken down according to the Five Flags theory, which suggests five broad categories of action: Residency, Citizenship, Taxes, Banking, and Structures.
We refer to it as creating a Plan B.
It’s about redundancies. In today’s world, you need backups, big and small. Just as you should carry more than one credit card and more than one debit card in your pocket, I’d suggest you might also want residency in more than one country, a passport from more than one jurisdiction.
For sure in today’s world you should have more than one bank account with more than one bank in more than one country. In our age of uncertainty, you don’t want all your liquid assets sitting deposited into one basket.
Yesterday morning, for the opening discussion of this week’s Offshore Wealth Summit, I welcomed four panelists to the stage. These guys are heavy hitters in the offshore world, each bringing decades of experience living and investing overseas and counseling others as to their best options to do the same to the conversation.
On stage with me were our favorite legal eagle from Colombia Juan Darío Gutiérrez… our attorney from Portugal João Gil Figueira… residency and citizenship attorney Evgeny Orlov… and resident offshore guru Lief Simon.
You could say that the world has entered a state of emergency. I was looking to my assembled team of offshore pros for help creating a priority short list for how to survive and even thrive in the face of whatever lies ahead.
“If you were to make specific recommendations for how to go about creating a Plan B,” I asked my panelists, “what would they be?”
Here’s how these guys replied:
Juan Darío: Think immediately of securing residency somewhere else. Having the ability to exit voluntarily is mainly determined by your ability to be welcomed somewhere else, meaning residency is the first priority for any Plan B.
Also critical is the ability to transfer money. An offshore bank account and the ability to transfer funds from wherever you are to wherever you want to be… that’s the second fundamental pillar of any Plan B.
João: I agree. A second residency and I’d add citizenship are very important nowadays. With a second citizenship in Europe, you can travel and thereby diversify your time and your money throughout the region.
Lief: We’re all worried about the state of the world right now, but I think we need to flip it all on its head. The world has changed in dramatic ways in recent decades, and I think for the good. It’s easier today to take advantage of global opportunities than it’s ever been. In our world today, you are limited only by your own imagination. You don’t have to stay where you were born or where you grew up. You can be wherever you want to be. You can manage your entire life from your phone.
We enjoy tremendous flexibility today…
Evgeny: Yes, it’s a strange but exciting world. In truth, it’s always been that way. In 1492, Columbus discovered and created an empire that changed the world and the course of history. We’re living through change on this scale again right now, and this is presenting some exciting opportunities.
I’d say that the first step to any Plan B is to pick a place you really love and then start a business there. I’ve created businesses all over the world in places where I wanted to spend time. Starting a business gives you an opportunity to meet people and to create your own reality. A business means an income, it can mean wealth, and it also translates into an exciting life.
Lief: I agree that any Plan B should start with lifestyle. Don’t select your Plan B destination country based solely on where you think you can make the most money or pay the least in taxes. Begin this process by thinking about where you’d like to be… about what you’d like your life to look like.
Then make investments and, as Evgeny suggests, start businesses in those places. Your goal should be multiple income streams in multiple currencies in places you look forward to visiting.
Next I asked:
“If the world spiraled out of control as the doomsayers suggest it will, where would you want to be? Where would you prefer to ride out the storm… and why?”
Juan Darío: I’ve thought about this question many times… wondering in a mystical way why I was born where I was born.
I come from a place with a difficult history. After having the opportunity to live abroad (Canada for a year, Paris for a year…) and after having traveled the world and seen how things work in so many places that are so different from my home country of Colombia, I’ve had a kind of eureka insight that has helped me to appreciate my country and to have enormous respect for Colombia.
When I was growing up, my country was a horrible place to be. Today it is transformed. Today it is legitimately one of the best places in the world to live.
So I choose Colombia. Colombia is where I’d want to be if things turned very bad on a global scale. I say this because I have a unique perspective on what the Colombian people have been able to accomplish over the past three decades.
I am where I’d want to be.
João: Like Juan Darío, I feel very fortunate because I happen to have been born in the country that for me is the best place to live. I say this after having had the chance, like Juan Darío, to travel the world and to live other places.
I’d choose Portugal. Why?
Let’s start with the wine. That’s the first and main reason…
Seriously, Portugal is a small country that is right now generating 48% of the energy it needs through renewable methods. We have sunshine 10 months of the year. Everything grows well in Portugal. We have game for hunting and no shortage of good water.
Everything required for good living is found in Portugal… beginning, again, with the wine…
Evgeny: I recently returned from the Ukraine where I spent time in a place where people are breaking into homes and shooting and killing in order to steal assets.
My point is that, in some parts of the world, an end-of-days scenario is already playing out. You want to be able to protect yourself.
You need drinkable water.
I think you want to stick with places with small populations. Look at Detroit. Big cities will collapse. I would recommend seeking out a place with small, tribal communities… Vanuatu, for example.
On the other hand, I also like Panama because it has sun and water and fertile land. Plus, in Panama City you have lots of rich people who are going to protect their wealth.
Lief: My ideal Plan B destination is a country that’s self-sufficient when it comes to energy, food, and water and that has some manufacturing base. If every country becomes isolated, you want to be in a country that can produce all the necessities of living.
I’d also say that I want to be in a country where either everyone has a gun or no one has a gun.
I’ve got more than one Plan B in place… situations where I own property where my family and I could live self-sufficiently if we needed or wanted to… including here in Panama but also in Belize and Colombia…
We’re only just getting started. More live from the scene tomorrow…