Why Go Offshore?

An international financial plan accomplishes all of the goals of a traditional domestic estate plan ... and often does so more effectively

An international financial plan is a tested, proven strategy that uses a centuries-old English common-law device to achieve more effectively the goals of every good estate plan. Creating an offshore trust offers three distinct benefits:

• asset protection,

• income tax deferral or elimination, and

• estate tax reduction or elimination.

Asset protection. The likelihood of being targeted for litigation has never been higher than today. You do not necessarily have to lose a lawsuit to be a loser. The mere cost of defending oneself can be financially devastating, and the protection of your personal assets should be of paramount concern. We can recommend an offshore asset protection trust and other tools that, if properly set up, will position your assets legally beyond the reach of potential creditors.

Income tax. One of the principal reasons a person should consider an offshore strategy is income tax deferral or elimination. If you are not spending every dollar you earn, the proper offshore structure may help you defer or eliminate a significant amount of U.S. income taxation. If your business extends beyond U.S. borders, income you earn abroad may not be subject to U.S. income tax. As a result, you could have up to 35% more money with which to operate, compared to the manner in which you are presently investing or conducting business operations.

Estate tax reduction or elimination. Along with the deferral or elimination of income taxes and the protection of assets, an individual who has accumulated significant wealth should be concerned with the preservation of his or her estate. Current U.S. law still imposes onerous tax rates on the value of one's estate at death, possibly resulting in up to 48% of your estate being paid to the government in taxes. An offshore strategy can achieve very favorable results in the estate tax area; we routinely develop offshore strategies that effectively preserve for one's heirs the largest estate legally permissible without sacrificing control over the assets.

Advantages

Compared to a domestic estate plan, an international financial plan is:

• simpler;

• more certain;

• less vulnerable to changes in the tax laws;

• less likely to be challenged by taxing authorities;

• more likely to withstand any challenges that are raised; and

• more protective of the assets placed in it.

Equally important, an international financial plan:

• generally insulates from your current situation your provisions for the future protection of your family;

• provides privacy, since assets that are held offshore are not part of the U.S. banking or reporting system;

• expands your investment options and allows your trustees to take positions in investment opportunities not available in the U.S.;

• can provide for your children's and grandchildren's education;

• allows you to acquire assets in the U.S. without anyone knowing who controls them;

• discourages litigation by creating a financial profile that is unattractive to potential claimants;

• materially improves your settlement posture should litigation occur;

• provides a safety net in the event of financial disaster;

• maximizes your control over your assets after you place them beyond the reach of creditors;

• gives you the maximum enjoyment of the assets you place into the structure; and

• allows you to employ quickly the assets in new business opportunities without structural barriers.

Disadvantages

Although an international financial plan is the best and most effective asset protection structure for many persons, it is not for everyone and is not without risks. International strategies:

• are not fully tested in U.S. courts;

• may raise suspicion among taxing authorities;

• are less effective for assets placed domestically;

• involve loss of some asset control;

• involve additional IRS reporting; and

• may involve slightly higher professional fees, both in creating the plan and maintaining it.

When we counsel clients on asset protection strategies, we weigh the benefits against the risks and disadvantages of each particular structure. In many cases, we find the benefits to the high net-worth individual significantly outweigh the other considerations. ●