Sticky Note: Why Go Off-shore

December 17, 2013

By: Paul Seymour, Director of Client Services

I typically receive about 8-10 inquiries per day from potential clients who are interested in getting their assets out of harm’s way in the US or EU.  Many of them start with the phrase, “this is somewhat new for me, so please explain…..”  So, as I’ve answered the same few questions a couple thousand times, I thought I go ahead and post a sticky for all to read.

We continuously update our readers on the political and financial dangers brewing in the US, and to some extent in the EU.  That includes the impending devaluation of the USD, likely drop in the stock market, and probable confiscation of your IRA or other pension funds, litigation that can immediately rob your wealth, and even government seizure of assets.

The solutions include an immediate shift to jurisdictions in which your assets aren’t within easy reach of these power-hungry, fascist-leaning bureaucrats, who will stop at nothing in order to increase their own power by getting their greedy paws on your hard earned cash.

If you don’t see the writing on the wall by now, then you probably deserve to have your assets legally robbed by your trusted elected officials.  If, however, it’s as obvious as the nose on your face what’s coming down the pike, then the first step is dead simple.

Establish an IBC or LLC in a jurisdiction like Anguilla, Belize, Nevis, Seychelles or the Cook Islands, amongst others.  These are sovereign nations which have an incentive to protect one of their top money-making industries; that being asset protection via personal privacy and a healthy disdain for frivolous lawsuits, and bureaucrats with an arrogant sense of over-reaching power, and lack of respect for personal privacy. 

I’ve said it before, and I’ll say it again—personal privacy is a basic human right.  Only animals in a cage are forced to live without it.  These bureaucrats have long forgotten that they work for us, and are paid by us.  It’s time they are reminded.  Meanwhile, they’ve been steadily passing laws allowing themselves to bypass the inconveniences of due process as provided by the Constitution.  Result?  Your assets and personal privacy now belong to them, as long as you leave them under their jurisdiction.

We are constantly presenting real-life nightmares experienced by people who thought they were living in a free country, and therefore protected by ideals such as “innocent until proven guilty”.  This is no longer the case.  A mere accusation by a public servant will now get your assets frozen in an American bank account. 

One of our bankers, who does business in one of our preferred jurisdictions, related to me that he received a letter from a US agency demanding that he freeze the assets of some US citizens who he believed had cash deposits at his bank.  The letter explained that they had been accused of crimes in the US, and that court cases were pending against them. 

Accused, not convicted.  I guess that would limit the ability of the accused to hire lawyers with their own hard-earned money in order to prove themselves innocent, thereby making a conviction by the public servant more hassle free.

The banker was very rightfully astounded by the sheer arrogance of the demand.  He happily replied that under the laws of his country, the aforementioned USG agency would have to go through the trouble of filing an action in a court in his jurisdiction, and actually prove a crime, or fraud, and thereby obtain a court order to freeze the assets of the accused.

In some other countries, a sleaze-bag contingency-fee US lawyer, for example, would be required to post a $50k bond, or half the amount of the proposed action, whichever is greater, just in order to file the action against an LLC registered within said jurisdiction.  If the action were successful, the plaintiff would be awarded with a charging order.  See here for an explanation of the benefits of this protection. 

Key phrase being, “attach distributions”.  As you are the manager of the LLC, and therefore elect to make or not to make distributions, you’ve merely achieved a stalemate.  Not very enticing for the above mentioned sleaze-bag attorney, who now will want a substantial retainer from the would-be client in order to take on the case.  Therefore, frivolous lawsuits go by the wayside.  Frivolous meaning the filing of a suit just to pressure you into a settlement to avoid legal fees.  Think that can’t happen to you?  Good luck avoiding it in the new, not so improved, US of A.

Furthermore, you need to establish a bank account in the name of the newly established LLC.  This would also be in a jurisdiction with these privacy-respecting asset protection laws in place.  For example, as opposed to the US, where the bailed out, too big to fail bankers now essentially work for the USG, these bankers are bound by law to maintain confidential the names of the beneficial owners of accounts.  The beneficial owners (BO’s) of LLC’s are also not public record, and divulging the names of the BO’s by the registered agents is also punishable under the law.

You can see the stark difference between these laws, and those of the US or EU, where much of your personal information is public record, and where the post-bailout bankers essentially work for the government, and will respond to an order to freeze your assets, based on a mere accusation by a public servant, with the stroke of a key, and the issuance of a dear John letter informing you that you’re now poor. 

Recall the banker’s story who received the arrogant request from the USG agency.  The agency apparently found the accounts of the merely accused because a US bank readily provided the information to them based on an accusation and the bureaucrat’s request for it.  Also recall the free countries’ bankers’ reply.  Where do you want your money?

Other obvious advantages to moving offshore, aside from the protection it offers from being stolen, are less defensive in nature, and allow for increased earnings.  For the most part, if your cash is in a US bank, for example, it’s usually restricted to US dollars.  That’s a fairly big risk exposure at the moment, for reasons which we’ve oft repeated.  

In a private, offshore bank, you could open accounts in a myriad of major currencies, and also easily do online Forex trading in any currency on the planet.  Equally as simple would be online trading of stocks and options in a wide variety of exchanges around the world.  Being limited to the US exchanges is another form of captivity, and is extremely limiting to your earnings potential. 

Also available at a private, offshore bank would be online purchasing of physical (not ETF’s) gold, silver, platinum or palladium with the option of secure storage in Switzerland.  We’ve reminded you of past gold confiscations by the USG, and the reasonable risk of it happening again under these dire current circumstances.

I recently espoused the risks of holding an IRA or 401(K) in the US or a similar pension related vehicle in the EU.  (That article is available through GWP Insiders.)  We can legally move those assets offshore before the USG confiscate them, in order to pay down the national debt, in order to in turn issue even more debt.  This has already happened in the EU.

That’s the very bottom-line essential asset protection, and diversification that you should be taking immediate steps to implement.  I could set up both an LLC and a bank account in as little as three weeks, and with no need to visit either the jurisdiction of the company, nor of the bank account.  Don’t believe the hype that it’s only for the rich.  If you have at least $50,000, you should be concerned with keeping it in your own hands.  The +/- $2,000 costs of doing so would be easily justified, as would the annual renewal fees of about $500 – $800. 

Note that there is absolutely zero reporting required in any of these jurisdictions, nor any local taxes due on revenues earned by the assets held there.  You would, though, most likely have additional required reporting in your home country, but there would be no tax effects caused by it.  Neither positive nor negative.  As of today, even US citizens can put their money in the bank of their own choosing, but the USG is taking steps to persuade foreign banks to not accept US clients.  If that doesn’t concern you, it should.

Other benefits of moving your cash to an offshore bank include the safety of being with a properly managed institution.  You should get your hands on the balance sheet of your current institution right now, and find the cash to deposits (reserve) ratio.  A typical US or EU bank will maintain this at less than 10%, and often as low as 3%.  The remainder of your money has been loaned out to others, and/or invested in some type of derivative. 

What Buffett calls, financial WMD.  So why are US banks so heavily invested in them?  They can afford to take risks with your money.  After all, if they screw up, you’ll be there to bail them out. 

The banks we recommend, and set up our clients in, have cash to deposits ratios at 70+%, and some at 100%.  Therefore, they do charge higher fees to cover the lack of investment income.  Basic business common sense.  Take your choice: 1) US banks risking your cash and your future tax dollars (bailouts/ins) or 2) Pay $35-50 a month for well-managed, low risk banks which offer opportunities to invest in higher yielding investments.

As I said, this is the basic front line of defense.  You might well want to also consider the added protection and estate planning opportunities offered by either a trust or a foundation.  These are a bit more complex and therefore more costly.  For people with $200,000 or more, probably.  Set up fees at $6,000, and higher annual renewals.  The key here is that you irrevocably gift at least some of your assets to beneficiaries, and therefore are no longer the legal owner. 

If you’re a high net worth person, gifting today could result in reduced taxes as the USG continues to examine the gifts and estates tax regs.  I won’t go into further details here about trusts and foundations, but if you think it’s right for you, we can set up one of these vehicles in Anguilla, Cook Islands, Belize or Nevis.  Again, under the laws of these jurisdictions, your assets will be virtually untouchable.

Another option for those who are willing to give up control for 100% anonymity would be a trust arrangement in which a trustee would be legal owner of your assets.  It’s a huge leap of faith, and certainly not everyone, but for those who demand privacy from the prying eyes of Big Brother, it’s at least available.  Obviously, this would require more legal fees to establish, and would require higher continuing fees for the trustee to carry out transactions.

Therefore, I think we’ve now not only covered continuously the whys, but the how to resolve questions as well.  If you’d like to engage a full-service firm to handle these issues for you, please contact me.  We can do some short-term free consulting, and then we’d require a retainer in order to continue with your asset protection planning.

Paul is an escaped former Big 4 CPA (financial statement auditor), and Corporate Controller/CFO who found a natural home in the offshore industry with Bobby Casey and the gang at GWP.   Contact him at [email protected] to learn more about the realities of economical offshore asset protection. 

An offshore company and bank account can be established for as little as $1,797, including my advice and assistance throughout both processes, and in both privacy-respecting jurisdictions, apostils required to open bank accounts, and courier charges to send original documents to you.  There’s never any need to visit the jurisdictions personally, although they’re very nice places, and I recommend a visit.  With our established agency agreements, we can do everything via e-mail.  We maintain long-term relationships with our clients, and remain available for consultation on an ongoing basis.