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Answered only by Chris Rusch
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Offshore Asset Protection
The modern world is
highly litigious and creditors are receiving disproportionate judgments
from the courts. People who have worked hard for their entire life
are in danger of having their savings wiped out by spurious litigation.
Making things even more difficult, liability insurance for professionals
is becoming prohibitively expensive.
There are two levels of personal asset protection available offshore: 1)
An offshore company (such as Nevis Limited Liability Company) and 2) A
Cook Island Asset Protection Trust combined with an offshore company.
With a Nevis offshore company, you move your assets out of the reach of
creditors. They are transferred to the Limited Liability Company
in exchange for shares in that company. The LLC may open accounts
at banks and securities dealers around the world.
Issue:
You own shares of a Nevis LLC and thus, indirectly, the assets of the
LLC. It is possible for a US court to demand that you transfer
your LLC interest to a US creditor. This is avoided with the Cook
Island Trust.
A Cook Islands Offshore Asset Protection Trust provides the highest
level of security for personal assets. Should your Nevis LLC come
under fire, the Cook Islands Asset Protection Trust steps in and blocks
the creditor. Those who benefit most from a Cook Islands Asset
Protection Trust include persons in high-risk occupations (such as
physicians and lawyers), business vendors (particularly those close to
retirement), those with a high wealth profile, directors of public
companies, and almost anyone who has saved a significant nest egg for
their retirement.
With the Nevis LLC held by a Cook Islands Asset Protection Trust, assets
can be held by the LLC with all of the membership interest given to the
foreign trust. A U.S. resident can then manage the Nevis LLC.
Thus, it is possible for a U.S.
person to control the assets and own none of them for liability purposes.
Assets moved to a Cook Island Offshore Asset Protection Trust are kept
out of reach of future creditors. US Judges cannot compel the
foreign trustee to release funds to your creditor and can not compel you
to release the assets to a future creditor.
The offshore trust is best suited for brokerage and overseas bank
accounts (liquid assets). U.S. courts have jurisdiction over U.S.
real estate and might demand seizure of such assets. Accounts can
be opened with as little as $50,000, but A Cook Island Asset Protection
Trust is generally recommended for liquid assets exceeding $125,000.
Some of the features that make the
Cook Islands and Nevis the pre-eminent jurisdictions in the world for
Asset Protection Trusts include:
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There are firm time limits for actions against
trust assets.
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Intent to defraud must be proven to a criminal
standard in allegations of fraud.
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Foreign judgments relating to transfers of
property to a trust will not be recognized in the Cook Islands if
they proceed on law conflicting with laws of the Cook Islands.
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There is no bankruptcy law in the Cook Islands,
and therefore no claw back provisions. A creditor must rely on
common law fraud to void a disposition to a trust.
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Impediments to litigation in Nevis: To file a
case in Nevis, the plaintiff must put up a $25,000 cash deposit and
hire a local attorney.
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Assets may be moved between the Cook Islands and
Nevis.
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International Investments
Diversification using foreign investments can reduce portfolio volatility
while maintaining returns. Effective diversification requires investing
in non-correlated assets. At any given time, various regions of the
world are experiencing unique economic, political, and environmental
factors. Accordingly, markets in those countries will reflect local
conditions and will not be highly correlated with the markets in the
investor's home country. This important concept is essential to estate
planning and wealth management.
In addition to providing portfolio diversification, offshore investments
provide a high degree of choice and flexibility. A large percentage of
the over 80,000 funds traded worldwide are located offshore. Investing
in these funds must often be accomplished through an offshore entity due
to regulations in the investor's home country. The removal of domestic
restrictions allows fund managers to alter positions quickly and easily
thereby increasing the ability to accumulate substantially greater gains
for fund investors. Moreover, international funds may be denominated in
any major currency.
Not only does international investing provide additional choice and
flexibility, it provides an excellent level of privacy to financial
transactions thereby removing an investor's potential exposure to
frivolous litigation. Offshore investments are safer not only because of
the asset protection and privacy they offer, but also because fund
managers can use risk hedging techniques which are not available in some
domestic markets.
Chris Rusch provides expert advice on creating business structures to
best facilitate investment in international markets. We work with
clients to form business and estate plans which effectively provide the
most tax efficient access to international diversification. Our plans
are tailored to each client's individual financial situation and time
horizon.
The rules applicable to international investing are complex -
particularly for U.S. citizens and residents. The IRS has extensive rules concerning
passive foreign investing companies, controlled foreign corporations,
and other entities designed to function in the global marketplace. Chris
Rusch has the experience necessary to provide the most efficacious
operational framework that minimizes the tax treatment while
complementing the client's domestic wealth management plan.
We have developed relationships with professional money managers
worldwide in order to assist clients in formulating the most favorable
wealth management strategy within the offshore structures we provide.
However, it is important that clients do their own due diligence before
investing. We are not investment advisors and any published information
does not constitute investment advice.
US Tax & Other
Considerations
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Offshore
asset protection trusts and LLCs are disregarded for US tax
purposes. In other words, asset protection can not be used to reduce
US taxes. US citizens and residents are taxed on worldwide income,
including capital gains in offshore trusts and companies, in the
year earned.
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Offshore trusts and companies will not result in "double tax"
because
the US tax code allows a dollar for dollar tax credit of any
foreign taxes paid. However, most structures are not taxed
outside of the US.
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Offshore
asset protection entities and bank accounts require the filing of
various tax and informational forms with the US IRS and US
Treasury. A CPA or Tax Attorney familiar with offshore planning
should be used to prepare these returns.
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It is a
crime to use offshore entities to hide money from the US IRS
or other US government agency.
Click here for sample prosecutions.
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Offshore
trusts should not be used to protect you or your assets from US
government agencies or creditors claiming and proving fraud.
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Offshore
accounts should be funded with "after tax income."
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Offshore
asset protection is intended to protect your assets from future
creditors.
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A US
attorney can not assist you to transfer assets out of the reach of
an existing or eminent creditor. If your US attorney is aware of an
existing or pending legal claim against you, he or she must ensure
that you leave sufficient assets onshore to satisfy that creditor.
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Offshore
asset protection is intended for liquid assets, such as bank and
brokerage accounts. It is not meant to hold US real estate.
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Please click
here
to contact me via email or call my direct line at
(619) 557-0587. I will personally answer your call and advise you on the
requirements of offshore asset protection.
  
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