Once, only the wealthiest investors could benefit from having an offshore bank account. Only they could afford the fees and legal advice. Now, after dramatic changes in international banking and communications, even a modest offshore account can be a quick, inexpensive entry into the world of foreign-investment opportunities.
A foreign bank account can be an integral tool in a two-part offshore wealth strategy. Part One: Increase your asset value by cutting your taxes and maximizing your profits. Part Two: Build a strong defensive asset-protection structure.
Your offshore bank account is not just for keeping your cash safe. It gives you the ability to trade freely and invest in foreign stocks, bonds, mutual funds and national currencies that are not available in your home country.
There’s another benefit. The existence of the account is not readily known to a possible claimant trying to collect a judgment against your assets. Sometimes, it even makes good financial sense to discourage a potential litigant by letting them know how difficult it would be to reach your offshore assets.
To find an offshore bank without domestic branches in your country, visit your local library and ask for the Thomson/Polk World Bank Directory (International Edition). This lists banks in over 212 countries, with updated sections issued twice a year. It also analyzes a bank’s financial size and strength, tells you how and whom to contact. The “Worldwide Correspondents Guide” section contains correspondent information for over 12,500 banks worldwide and includes city locations, phone numbers and routing numbers.
One of the easiest ways to invest in offshore funds is through an offshore variable annuity. What’s more, as a U.S. citizen you get deferral of taxes until you withdraw funds.
Variable insurance annuities offer significant asset protection. The policies are issued by offshore insurance companies with no affiliates in the U.S. and the policy’s underlying assets are held entirely outside your home jurisdiction. Any domestic investments are made in the name of the insurance company, not your name.
But offshore variable annuity investments typically start around $250,000, commonly exceeding $1 million or more.
An offshore asset protection trust (APT) is another way to protect your assets. In recent decades it’s become popular among those “in the know.” Places such as the Isle of Man, Bermuda, Panama, Belize, Liechtenstein, the Channel Islands, Hong Kong and Singapore specialize in creating and managing APTs.
The trust process can seem complex and difficult, but it isn’t. In fact, a trust is one of the most flexible yet efficient legal mechanisms recognized by law. A trust is just a formal legal arrangement created and funded by you, (the grantor) that directs another person (the trustee) to take legal title and control of your donated property, to be used and managed for the benefit of one or more other persons you chose (the beneficiaries).
The beneficiary of a trust receives income or distributions of assets from the trust and has an equitable title to the benefits, but does not control the assets or manage the operations of the trust.
A trust can hold title to, and invest in real estate, cash, stocks, bonds, negotiable instruments and personal property. The foreign asset protection trust (APT) is a targeted form of trust set up under the statutes of another country. Because the trust is governed by the laws of the nation in which it is registered or administered, it serves as a shield for your business and personal assets.
Editor’s note: Bob Bauman is one of the world’s foremost offshore experts. His new group—the Freedom Alliance—is dedicated to providing the most insightful and up-to-date information about protecting your wealth and freeing yourself from unnecessary taxes and government oversight. Find out how you can enroll.