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Offshore Banking and Asset Protection, Offshore Trading
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Offshore Banking and Asset Protection, Offshore Trading

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Offshore Banking and Asset Protection, Offshore Trading

I've been doing a lot of research on offshore banking and asset protection.

I am presently looking at several options, one such option is the combination of a Nevis LLC that holds the assets, and a Cook Island Trust which holds the LLC.

These two articles offer summaries:

International Trust - Offshore Asset Protection Trust for US InvestorsPremier Offshore Investor


Premier Offshore.com
International Trust and Asset Protection Trust Structures
International Trust and Asset Protection Trust

An offshore asset protection trust or international trust is considered by many experts to be the strongest asset protection vehicle on the planet when done right and fraught with risk when done incorrectly or for the wrong reasons (ie. tax evasion).

The foundation of the asset protection trust is simple enough: assets are conveyed out of your name and in to the international trust. You designate the trustee, settlors and beneficiaries and you control the assets in the international trust for the benefit of the trust / settlors.

Only a few jurisdictions have laws that were written to support this level of international protection. These are the Cook Islands, the Isle of Man, and Belize. All three jurisdictions have international trust laws that provide very strong asset protection and are politically and economically stable. Legal experts agree that the Cook Islands has the strongest and most tested case law history, and thus is my country of choice. A very close second is Belize, where privacy is maximized and costs are much lower than the Cook Islands. Both of these countries are leaders in the creation and management of the asset protection trust.

The two major advantages of an international trust are 1) asset protection 2) while maintaining control over your assets. Investments are kept out of the reach of civil creditors because U.S. judges do not have jurisdiction over foreign citizens (your trustees or protectors), nor do they have jurisdiction over an international trust. Local judges cannot legally compel the foreign trustee or asset protection trust to release funds to someone who claims you owe them money (ie. a civil creditor). The Cook Islands, Belize, and Isle of Man do not recognize judgments that originate in a foreign country, such as the United States. Either of these options can be combined with a LLC organized in Nevis or elsewhere for maximum flexibility.

Note: This article refers to civil creditors only, and does not contemplate government creditors, such as the U.S. IRS or other agencies.

This means that a creditor would be forced to sue you in the country where you maintain your Trust in order to reach the assets. However, Nevis, Cook Islands, and Belize put up significant barriers to initiating or proving such a case, and are “defendant friendly,” a state of mind that has not existed in the United States for MANY years.

For example, in Nevis, a creditor must post a $25,000 cash deposit to bring the suit against a Nevis Corporation, or Limited Liability Company. In the Cook Islands, the suit must prove beyond any reasonable doubt that assets were transferred into the trust in order to defraud the creditor in question (also called a fraudulent conveyance). If the assets were transferred to the trust prior to the debt being created, or before the problem arose, then it will be nearly impossible to prove intent to defraud.

In another example, the Cook Islands statute of limitations law holds that the time limit for your opponent to claim fraudulent transfer is one year or two years after the underlying cause of action, depending on a number of factors. Therefore, when the lawsuit is completed in the U.S., the Cook Islands statute of limitations will usually have expired. Even if the creditor succeeded in the U.S., it is likely their claim will be barred in the Cook Islands.

See, there is a benefit to the horrifically inefficient U.S. legal system. It allowed the clock to run out of the plaintiff while your assets are safe behind an asset protection trust.

In a final example, a plaintiff in the Cook Islands must prove that your intent in creating the asset protection trust was to defraud that particular creditor, and they must prove this beyond the shadow of a doubt. This means that the issue in question is so obvious, or has been so thoroughly proven, that there can exist no doubt. “Beyond a shadow” might refer to the fact that doubt could be nowhere in the vicinity (completely expelled from the issue), or to the thoroughness of the argument (a shadow being even less substantial than a doubt itself). This is a very tough burden on the plaintiff indeed…one reserved for criminal trials in the United States.


I believe both the Cook Island Trust and Belize Trust provide the strongest and most tested foundation for an international asset protection strategy. The preeminent structure combines the Cook Island Trust or Belize Trust with a Limited Liability Company from Nevis, which allows you to maximize the benefits of both Cook Islands or Belize and Nevis, and further diversifies your international trust structure.

In this structure, assets, such as offshore bank accounts, can be held by the Nevis LLC, and the LLC can be held by the Trust. A U.S. resident (you, the Settlor) can be the manager of the Nevis LLC, while the Trustee of the Trust is an international person. The LLC manager has all legal control over the LLC and signature authority over the bank accounts. Thus, a U.S. resident settlor has control of the assets, has full access to them, and yet owns none of them.

If you, your Nevis LLC, or your Belize Trust or Cook Island Trust, come under attack, you temporarily transfer management duties of the LLC to the licensed and bonded trustee. This trustee will administer your trust and bank accounts per your wishes, which you have provided to him or her well in advance of the problem arising.

When you diversify your structure, a creditor may need to maintain a legal case in both Nevis and Cook Islands or Belize, which will prove extremely difficult and costly, and you are making the most of the benefits of both defendant friendly jurisdictions.

The benefits described above are meant to protect you against a very motivated creditor who is willing to go to the expense of pursuing your assets in to multiple international jurisdictions. These barriers to attack also mean that a more reasonable creditor plaintiff is likely to assess the costs and probability of success against your international trust and either drop the matter or settle for pennies on the dollar.

In other words, these barriers to litigation created by the asset protection trust act as deterrents to lawsuits and creditor collection action, motivate the creditor to settle, and exhaust your opponent’s determination and resources – pursuing a well-constructed asset protection trust is expensive and disheartening for the creditor.

Now that you have an idea of what an international trust can do for you, let’s talk about what offshore asset protection is and is not.

A properly constructed asset protection plan places a portion of your net worth behind multiple barriers…the more barriers, the greater the protection. It allows you to level the litigation playing field and move out of the creditor friendly United States and in to a defendant creditor friendly jurisdiction, such as Belize or Cook Islands. An asset protection trust makes you a hard target, which may eliminate the case altogether or put you in a better bargaining position.

Asset protection does not:

1. help you escape your current or reasonably foreseeable future creditors. You should not transfer assets out of the United States or in to an international trust to avoid a current creditor as this may be a fraudulent conveyance.

2. reduce or eliminate your U.S. tax obligations. You (the U.S. citizen and settlor of the trust) must report your international trust, your international bank accounts, and pay taxes on the gains in your asset protection trust, to the U.S. IRS. U.S. citizens are taxed on their worldwide income, including income earned inside an international trusts.

3. allow you to hide assets. Asset protection is not based on secrecy; it is focused on putting up barriers to collection. Even if your creditor had a detailed road map of your structure, they should not be able to reach the underlying assets.

4. work well with U.S. real estate. The an international trust is best suited for offshore bank and brokerage accounts and other assets outside of the United States. U.S. courts have jurisdiction over U.S. real estate and can simply ignore the asset protection trust and demand seizure the property. While it is possible to hold titles to domestic real estate in a Belize Trust or Nevis LLC, this is not recommended because it provides limited asset protection and will result in significant tax consequences.

5. a total solution to estate planning. An international trust will facilitate transfer of international assets upon death, but should be used with a complete estate plan that is compliant with your home countries estate and tax codes.


Diversification through international investments, which are held in an international trust, 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 events.

Accordingly, markets in those countries will reflect local conditions and will not be highly correlated with the markets in your home country. In other words, just because times are tough in the U.S., and banks are paying minimal interest, does not mean there are not deals to be found in other countries. This important concept is essential to international estate planning and wealth management.

In addition to providing portfolio diversification, offshore investments held in an international trust 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 efficient 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.

With this in mind, an international trust may be the only vehicle that a non-U.S. investment manager or brokerage will accept when dealing with a U.S. citizen. The advisor will want to be representing an entity, such as a trust or LLC, rather than directly working for a U.S. citizen or resident.

Contempt of Court:

A U.S. court can exercise jurisdiction and control over people and assets in the United States. When a defendant is in the country, but his or her assets are outside of the reach of the court, the judge may attempt to force the defendant to return those assets to their authority.

If a defendant refuses to return the assets, a judge may hold him or her in contempt of court. This means that the court will impose sanctions for failing to comply with the judge’s order. A defendant might be held in jail, fined, or both, until the assets are returned.

If the transfer of assets to the international trust is deemed to be fraudulent, it is likely a U.S. judge will order those assets returned.The only way an asset protection trust can be breached by a U.S. judge, and contempt of court ordered, is in the case of a fraudulent transfer or conveyance.

Legal Cites: Morris v. Morris, Case No. 502005CA006191XXXMB (Circuit Court, 15th Judicial District, Palm Beach County, Florida, 2006), Bowen v. Bowen, 471 So. 2d 1274, 1277 (Fla. 1985), Federal Trade Commissioner v. Affordable Media, LLC (Anderson), 179 F3d 1228 (9th Cir. 1999), and In re Lawrence, 238 B.R. 498 (Bankr. S.D. Fla. 1998).

Fraudulent Conveyance:

A transfer to an asset protection trust will generally be respected if it is done well before a debt is incurred or a creditor files a claim against the settlor (trust founder). If a transfer is made to the international trust after a debt is incurred, or after a creditor’s claim can reasonably anticipated, it may be considered fraudulent.

For example, if you create and fund an international trust on January 15, and on January 20 you injure someone with your car, the transfer of assets to the trust should be respected. This means that it is unlikely the injured party will be able to breach your asset protection trust.

If the dates are reversed, you injure someone on January 15, and fund an asset protection trust on January 20; the transfer is going to be considered fraudulent. A judge will order you to return the assets to pay the claim and, if you refuse, may hold you in contempt of court.

This is a simple example for illustrative purposes. Each State has their own rules, and there are Federal statues at work. The bottom line is this: Form and fund your asset protection trust as early as possible, well in advance of any claim arising or legal proceedings.

Jones Clause:

This is a clause placed in the international trust to protect you against Fraudulent Conveyances. It tells the trustee to pay any claim that comes in from a certain creditor.

For example, just about any transfer, regardless of timing, that prevents the IRS (see: United States of America v. Raymond and Arline Grant, Case No. 00-08986-Civ-Jordan (S.D. FL 2005)) or State taxing authority from collecting, is going to be considered fraudulent. Thus, I always include a section instructing the trustee to pay the IRS or State Franchise Tax Board. This protects both the drafter (me) and the settlor (you).

In the car accident example above, you could create and fund an international trust after the accident, so long as you added a Jones Clause instructing the trustee to pay the injured party.

Letter of Wishes:

A Letter of Wishes is an informal and confidential letter from the settlor to the trustee telling him how to administer the international trust. Because a Letter of Wishes is not part of the trust, it is confidential, is revocable (most offshore trusts are irrevocable), and can be easily amended.

Transfer Clause:

An international trust can be formed in a number of jurisdictions. For example, a client may prefer Cayman Islands because of the large number of banks and investment advisors available. However, when that trust is attacked by a creditor, Cayman may no longer look so good.

If the trust has a transfer clause, it may choose to move to a more advantageous jurisdiction when it comes under attack, such as Belize or the Cook Islands. In other words, if a creditor seems to be making headway in Cayman, the trust may move to Belize, and the battle will begin anew.

The transfer may be automatic or conditioned on a certain event (such as a claim being filed in Cayman), or the trustee may be given the power to move the trust.



Reminder of the Benefits of an Asset Protection Trust
I would like to close by reminding you of the benefits of an asset protection trust formed in Belize or the Cook Islands with a Nevis LLC.

It is possible for you to protect your assets and maintain control over bank accounts and investments.
There are firm time limits for actions against trust assets.
Intent to defraud must be proven to a criminal standard in allegations of fraud.
Cook Islands and Belize courts will not recognize or give effect to certain judgments of foreign courts in relation to International Trusts
There is no bankruptcy law in the Cook Islands or Belie, and therefore no claw back provisions. A creditor must rely on common law fraud to void a disposition to a trust.
Barriers to claims for fraudulent transfer being brought in a Cook Islands or Belize Is court include strict time limits, requirement of proof of fraud beyond a reasonable doubt (criminal standard), and no bankruptcy law.
Procedural law prevents ‘fishing expeditions’ by creditors, restricting the use of interrogatories (discovery, etc).
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.
Assets may be moved between the international trust (Belize or Cook Islands) and the LLC (Nevis).
A Cook Islands or Belize offshore asset protection trust with a Nevis LLC provides the highest level of security for personal assets. Those who most benefit from these international trust structures are persons in high-risk occupations (such as physicians and lawyers), those looking to diversify their investment portfolios, business vendors (particularly those close to retirement), and almost anyone who has saved a significant nest egg and considering moving themselves and/or their assets outside of the United States.

The bottom line is that a properly drafted and maintained international trust formed in Belize or the Cook Islands will tilt the legal scales in your favor by providing the ultimate in asset protection.

The Formidable Foreign LLC Asset Protection Attorney | The Presser Law Firm, P.A.


Asset Protection Attorneys.com
The Formidable Foreign LLC

The international trust has been the traditional protective entity. Now it is only one of several that you can use. For example, we frequently use a foreign LLC to protect our international clients. However, the international trust is still useful for clients who need international estate planning, or want to avoid the tax problems from transferring appreciated assets to other international entities. We also use it in other special circumstances. Oftentimes, we use both the international trust and a foreign LLC as its subsidiary.

The Nevis LLC is a powerful wealth protector. It may give you more protection than the OAPT — and at less cost.

Nevis, a small Caribbean British Commonwealth nation in the Leeward Islands, gained its international reputation for financial privacy and asset protection because of its progressive and debtor-friendly laws. The Nevis LLC demonstrates this tiny jurisdiction's innovation for wealth protection.

The U.S. and other foreign jurisdictions have limited liability companies, but the Nevis LLC is particularly good for protection because it has features that you won't find with other LLCs. The Nevis LLC uniquely combines the most protective features of the international trust, limited partnership, and Nevada corporation into one remarkably protective entity.

A Nevis LLC can be either member-directed or managed by a foreign director. For asset protection your LLC should be controlled by a foreign (Nevis) managing director. You contribute your assets to the LLC and become the LLC member. Your rights then compare to the rights of a member of a domestic LLC, corporate stockholder, or limited partner of a limited partnership. As a member you own, but do not manage, the LLC. Management rests with the director. This transfer of control protects the LLC assets from U.S. court orders.

As an LLC member you no longer directly own the contributed assets. These assets are instead owned by the LLC. A U.S. court cannot order you, as the LLC member, to repatriate the LLC assets because the manager, not you, controls the LLC assets. Moreover, a foreign managing director would be beyond U.S. court jurisdiction. Your creditor would be limited to a charging order against your LLC interest. This would give your creditor only the right to claim profits or liquidation distributions due you from the LLC. Your creditor cannot seize your membership interest. Nor can your creditor vote or exercise your other membership rights, such as the right to inspect books and records. Thus, the Nevis LLC compares to a U.S. limited partnership or LLC. A U.S. court order to transfer or seize your LLC interest would be ignored by the managing director who, under Nevis law, need only recognize a creditor's charging order which can only be obtained through the Nevis courts.

If you are a debtor-member who owns a substantial interest in the Nevis LLC. Your managing director would withhold profit distribution that could be seized by your charging order creditor. If you own a minority interest, and if withholding distributions would conflict with the interests of the other debtor-members, you can title your LLC interest to another self-owned Nevis LLC. This would then safely receive your distributed profits. As you have seen with an American LLC or LP, a debtor-member of a Nevis LLC can access funds other than distributions of profits. The charging order would not apply to salaries (e.g. as investment advisor), loans, etc. made to you from the Nevis LLC.

Under certain circumstances, Nevis law and IRS regulations impose U.S. income tax liability on a charging order creditor for LLC profits attributable to the debtor-member. Your charging order creditor can incur a tax liability even if your creditor recovered no distribution. You have seen this same poison pill feature with the U.S. limited partnerships and LLCs (but not other international entities). This is another protective feature of the Nevis LLC.

Your Nevis LLC would delegate important powers to your managing director who would ignore U.S. court repatriation orders. If your LLC has multiple members, (which we recommend), your operating agreement should require a unanimous vote to change the managing director. This would overcome a U.S. court order to compel a single debtor-member to replace the manager with a manager appointed by the court to repatriate the LLC assets. The Nevis LLC can be structured with similar protective duress provisions that you would find with the international trust − except that the debtor-member of an LLC retains a membership interest in the LLC and, derivatively, its assets.

A Nevis LLC is significantly more protective than the international trust if you now have creditors because a transfer of assets to your trust would be a fraudulent conveyance contestable in the trust jurisdiction.

If a Nevis LLC member has an existing creditor, the Nevis LLC ordinances allow the member to transfer his or her assets to the LLC without it constituting a fraudulent conveyance − if the debtor-member's interest is proportionate to the capital contributed. This transfer is then a fair value exchange and expressly exempt from the Nevis fraudulent transfer statutes. Interestingly, under Nevis law a mere promise of a future investment by an existing or future incoming LLC member can be used to measure this proportionality. A debtor-member can then own a small interest in the LLC subject to the charging order, although this member contributed all or most of the LLC's assets. This dilution strategy lets you further discourage a creditor from obtaining a charging order. This is one of several features unique to the Nevis LLC.

U.S. limited partnership and LLC laws remain unsettled on the question of whether your present creditor can recover assets that you transfer to a limited partnership or LLC, even when you receive in exchange for your contributed assets, a proportionate share in the limited partnership or LLC. (Some courts have ruled that impairing a creditor is sufficient for a transfer to be fraudulent.) However, you have no ambiguity or uncertainty under Nevis law. Whatever money you invest in your Nevis LLC will not be a fraudulent transfer, nor challengeable by an existing creditor.

For that reason, we suggest the Nevis LLC is more protective than a foreign trust or domestic limited partnership or LLC. You can legally and ethically invest in the Nevis LLC — regardless of your financial situation.

The Nevis LLC is also a more attractive option for the attorney whose clients have existing creditors and where the attorney or professional advisor has concerns about their own professional liability from a fraudulent transfer. And, as mentioned, in more serious cases, we can maximize your protection by establishing a Nevis LLC as a subsidiary to an international trust. Layered protection combines the strength of both type entities.

The Nevis LLC has several other benefits:

- The Nevis LLC has minimal IRS reporting requirements. You are not subject to U.S. foreign trust reporting requirements. If you are a U.S. member who owns 10% or more of an LLC interest, you must follow the IRS' foreign corporation ownership reporting requirements.

- The Nevis LLC is tax neutral. You can elect to have it taxed as a partnership or C corporation.

- Nevis imposes no taxes on their LLC's.

- You can structure your Nevis LLC so that its profits flow to its members in whatever proportions you specify in its operating agreement. This can differ from the actual ownership interest.

- You can appoint a protector to oversee the managing director, as you can with an OAPT.

- Your LLC agreement can include the same anti-creditor poison pills which you can adopt with a domestic LLC. For example, a member's interests can be assessed by the managing director — these same assessment rights would apply against a charging order creditor.

- Your LLC operating agreement can include a flight or Cuba clause so that your manager can expatriate threatened LLC assets to another protective entity in another IFC.

- The managing directors and members of the Nevis LLC are immune from company liabilities.

- Nevis LLCs do not require minute books, annual director or member meetings, or compliance with other customary corporate formalities.

- Your Nevis LLC can be owned by an international trust or combined with domestic entities − FLPs, LLCs, and irrevocable trusts. These multi-entity arrangements strengthen and coordinate your domestic and international estate planning and liability protection.

- A Nevis LLC is less costly to organize and maintain than an international asset protection trust.

While the Nevis LLC is rapidly gaining popularity, the international trust is still useful for select international wealth protection purposes such as estate planning, forced heirship avoidance, and other special purposes that can only be achieved with a trust. Unquestionably, the Nevis LLC is more protective than a foreign international business corporation (IBC). The IBC gives you considerably less safety and no corresponding advantages. The Cook Islands LLC is relatively new and is also one we are now using.

Other IFC's are developing new protective entities. For example, the Bahamas limited partnership parallels the Nevis LLC. Liechtenstein's and Panama's private foundations compare to the international trust. St. Vincent and the Isle of Man hybrid companies are often substituted for an international trust or Nevis LLC. Asset protection IFC's are always developing that better mousetrap.

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Mike

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Does anyone here have experience with such a structure?

Is there any issue with brokers like InteractiveBrokers opening accounts for Nevis LLC's?

Mike

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Need help?
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3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
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Another consideration is an offshore brokerage. This might have tax advantages in some situations. I don't want to post too much about this because I am not an accountant nor an attorney. But if anyone is operating under this structure, I would like to hear from you.

Mike

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http://www.apintertrust.com/offshore_company/nevis_tax_haven.htm


Quoting 
Nevis LLC's are exempt from local capital gains taxes and income taxes based upon income or assets originating outside of Nevis or in connection with other activities outside of Nevis.

Mike

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For the moment, I've excluded Panama from consideration, primarily because of this:

Panama loses its tax haven status for 24 hours


Quoting 
Is Panama a tax haven? At the moment, we could still can consider it as such … But for how long? We have already got used to Governments just changing laws overnight.” We saw it in Cyprus, where during a bank holiday in a hurry the Government passed a law to skim deposits at the country’s two largest banks in order to bail them out from its disastrous financial situation. The latest “Government outrage,” however, happened in Panama.

On December 30th, 2013, the whole offshore industry of this well-known tax haven got shacked up by the So-called Law 120, which was published in the Official Gazette of the country without any prior notice, just before the New Year’s Eve. The new law, more or less abolished the existing territorial taxation system which had existed in Panama since decades. Individuals and companies domiciled in Panama would from this day forwards be taxed on their worldwide profits and not only for income from local source. In other words, the new law would mean the end of Panama as a tax haven and also for the whole offshore industry of the country that employs around 30,000 people. The announcement caused such an outcry within the financial community throughout the country, that it was no surprise to read on the Presidency’s website the next day:

” The Director of the National Revenue Authority, Luis Cucalón accepted having been wrong by proposing to the Members of the National Assembly, the inclusion of Articles 2 and 3 of the law 120 of 2013, concerning the territoriality of the foreign income earned by Panamanian natural and legal persons .” “Although incorrect things were said about the scope of this law, I must admit that I was wrong in thinking that Panama was ready for this step,” he said.

And indeed, as most experts predicted, on January 2cnd, 2014, the Panamanian Government Council passed a resolution repealing sections 2 and 3 of Act 120, which provided for the payment of taxes on income earned outside Panama. With this, everything was back to normal.

However, this episode has seriously eroded the image of Panama and the seriousness of its Government. Firstly, because a measure of such significance, that changes the whole tax structure of a country, cannot just be passed overnight, without discussion, through a backdoor on the Eve of a main bank holiday. Such an approach not only denotes improvisation, but also a total lack of respect for the professionals working in the financial and corporate services industry, as well as for the thousands of investors who hold the ownership of companies or bank accounts in Panama. It also provides important clues about the intentions of the Panamanian Government in the future, in respect to its status as a tax haven. It is expected that Panama will follow the footsteps of other jurisdictions such as Gibraltar or Andorra and seek to abolish the offshore sector and territorial tax system, becoming a conventional low-tax country. The Government of President Martinelli has shown a clear commitment and intention to promote other income streams for Panama, dropping the offshore sector, may it be little by little (as supposed until now) or once and for all. The question is: will Panama be able to offset all the income, deposits and jobs generated thanks to its current status as an offshore jurisdiction? May a loss of confidence in the country trigger a massive flight of capital that even could compromise the traditionally high solvency ratio of its financial system? The latter is hard to guess, but what seems clear is that Panama will no longer be perceived as a stable and safe place in the eyes of the international investment community, who does not like surprises or instabilities. Thus, the decline of Panama as a tax haven seems inevitable…

Mike

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Wealth Protection

hello Big Mike....this is very interesting information....i have did some research on the General topic of Wealth Protection in different forms.....but from what i have discovered is there is less & less ways to do it with current rules.
Especially for us/Dollar Denominated assets.
The LLC.....idea sounds Great, and i am going to follow your thread, and see what i can find to maybe help with information that is out there.
I know in General...Singapore is a Good place for Wealth Preservation, as far as their Structure set up concerning Tax on Investment..... from what i have read.
All this is becoming almost impossible for us....."we the people".

Articles:
http://www.globalwealthprotection.com/end-series-llc/

http://www.globaladvisors.org/global-ap-structures/

http://www.privatewyomingllc.com/gwp-advantage/

http://www.sovereignman.com/


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@bigmike take a look at hong Kong but the only issue you may have is a us passport / citizenship a lot of banks will / are not too keen to have to comply with us citizen reporting requirements. For me the former British colony's generally seem to have the best setup and most secure and some reporting requirements would be less onerous.

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Mike,

Be very careful with any sort of offshore entity. I don't know your situation at all and I can't give you legal advice but you need to consult an Attorney who specializes in this type of arrangement. Nevis LLCs like many other foreign LLCs do indeed provide an extra layer of protection against creditors, etc. They can be expensive to set up and its best to appoint a 3rd party to serve as manager of the LLC rather than being your own just as it would be with an LLC in the US.

I guess the question would be, why go through all the trouble? Usually a Delaware or Wyoming based LLC is good enough. The concern with being an owner of an LLC and you are being sued by someone is to have a charging order against the LLC. This means that whatever income/distributions come out of the LLC to the owner are redirected to the creditor until the charging order is fulfilled.

From what I recall, if and when a creditor were to win a suit against a defendant's LLC, the creditor will immediately assume phantom income for the entirety of the awarded amount. But because the assets are held in an LLC, the creditor cannot force the owner of the LLC to sell or distribute the assets which makes it a very difficult pursuit for creditors. Basically, the creditor would win the case, get the charging order, assume phantom income and after all that, no guarantee they will every get any money out of the LLC. Not sure if this is still the case but that's how I recall it being.

There are other alternatives for those looking to protect assets while gaining some sort of preferential tax gain while maintaining control of the assets and keeping them "onshore".

One would be establishing a charitable remainder trust (CRT). These trusts are commonly used by those with assets that want to protect and gain income from while maintaining control. A CRT is a trust set up where the grantor transfers assets to this trust for the eventual benefit of a named beneficiary (which can be changed as needed). Let's say someone has $5 million that they want to eventually gift to their favorite charity. But they want to maintain control of the assets and continue to receive income during their lifetime. Many high-end executives will carve out a chunk of their company's stock that isn't doing much for them and transfer those shares into a CRT. They can then sell the stock with no capital gains tax and diversify the assets so that they can begin taking an income stream from them. The distributions can be taxable but its best to speak with a CPA about that. This type of trust is irrevocable and cannot be touched by creditors although again the income could potentially be.

You can even take it a step further and make the beneficiary foundation your own family foundation.

Another very simple method of asset protection is to simply encumber the assets with a credit facility. This is probably the most basic form in that the individual will have their account(s) at a broker or private bank and encumber their accounts with a credit line. The bank would then have first right of those assets in the event of a liquidation or whatever. All other creditors would be SOL basically. Even if the line isn't drawn, those assets are encumbered and bound by the loan's underlying covenants.

Again, this is not legal advice. Just a general discussion but the best thing to do though is speak with an estate planning attorney and CPA that specializes in these advanced asset protection and tax advantaged strategies.

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I may one day renounce citizenship so I don't want to create more US based entities.

In addition, I would like to discourage idiotic lawsuits which waste both time and money even though I ultimately win them. My current understanding is a Nevis LLC would help in this regard.

I believe there are also possible tax advantages in terms of foreign or IBC companies with regards to capital gains taxes for traders. I am only a layman on this and am still researching.

I am speaking with several attorneys and accountants. But they all have their preferred structure, I need to make the ultimate decision on how to direct them. Some want to use existing relationships with banks or brokerages, whereas I am more comfortable selecting my own based on my own research.

Things are further complicated with my residency in Ecuador but citizenship in USA. I will be an Ecuadorian citizen one day but the complicated tax and reporting requirements are on the US side. I need asset protection, tax consideration, but also reporting requirements/annual fees in the decision.

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