Spreading Your Life Around, Country By Country, Flag By Flag
To diversify your life internationally, as I am most strongly recommending you make a plan to do, you need to take a look at what has traditionally been called the Five Flags approach.
Coining fanciful terminology is a marketing technique, but it also helps to create a shorthand for referring to a concept that can be hard to speak of otherwise. In this case, the “five flags” are residency, citizenship, banking, assets, and business. Some have recently added a sixth flag–cyberspace.
These flags are simply reference points, and several overlap. Residency and citizenship are related, banking and assets are related, business and banking are related, business and cyberspace can be related. But that’s not the point.
The point is that taking this Five Flags approach allows you to create an outline you can use to simplify the very big-picture concept of “internationalizing your life.” The process of “planting” your flags is the process of choosing which country(ies) work best for you, flag by flag.
Offshore banks are available in dozens of jurisdictions. Most people take the approach of trying to choose the “best” offshore banking jurisdiction, but the reality is that the “best” depends on the person and the goals. More important, you shouldn’t just find one bank in one jurisdiction and call it a day.
The real problem in the current climate is that banks and even whole jurisdictions worldwide are closing accounts owned by Americans. In many cases, the banks are providing no explanation or ridiculous ones for the abrupt closures. I know of several Americans personally who have had accounts closed in different places and been presented with a check from the bank where they had been holding money (in some case, for many years). These people have ended up with a local check, maybe for a considerable amount of money, that may or may not be able to be deposited in a bank in another country.
As recently as a few years ago, I never would have predicted this kind of conundrum, but it’s part of the current reality of banking around the world, especially for the American. And it’s the kind of situation that you need to protect yourself from by internationalizing your life.
Having different bank accounts in different jurisdictions, holding assets in different countries, creating options for legal residency, and organizing your business in friendly jurisdictions (both tax-friendly and regulation-friendly) all allow you opportunity to “bob and weave” should someone, somewhere throw a spanner into your works.
There is no such thing as a magic pill for how and where to plant your flags. Everyone’s situation is different and requires different options.
Furthermore, internationalizing your life as I’m describing isn’t something you can do overnight. The first step is to educate yourself on the options available to you so that you can determine which ones best fit your needs.
Your plan will evolve as you learn more and as your needs change and grow. The process of internationalizing your life is an ongoing effort.
Fundamentally, what I’m talking about is creating options and protecting yourself from unforeseen circumstances–whether it’s a bank closing your account, a government seizing your assets, or a natural disaster destroying your house.