Every sensible and forward-thinking investor should be able to confidently map out an "offshore nest egg" strategy to ensure you not only protect your assets, but allow your wealth to grow unfettered with complete privacy. Central to this is understanding the "offshore world" and how it works and what the advantages are.
Offshore Companies & Trusts and How to Use Them
There's been a lot of talk recently in the "alternative" press about the benefits of "Offshore" companies and trusts for the small business owner and investor. Some of this information is correct, and some of it is incorrect.
One of the major myths that I hear is that it is expensive and not viable for the average person and in my opinion is simply not true. The cost of establishment can be as little as a $2,000-$3,000.
Another myth is, setting up a company or trust in a so-called "tax haven" is illegal. Again, this is not true.
There are over 50 so-called 'tax havens" in the world today and the number is actually growing as the competition for "globalized" financial services heats up. These jurisdictions have their own laws which you must abide by, but they tend to be far more liberal and protective of you than possibly the government you currently live under.
The problems of legality only arise when your offshore structure contravenes laws in the country you are a tax-paying citizen or resident, or "tax slave", if you like. However, if the structure is set up correctly, these potential problems can be avoided.
Many people I speak to, and get letters from, are mainly interested in an offshore company or trust for investing purposes. For these people, an offshore company is one of the most intelligent financial decisions they will ever make. The benefits of taxation deference or minimization, participation in investment opportunities not otherwise available, privacy and confidentiality, are some the main reasons, but let's have a look at those, plus other reasons people use offshore companies and trusts.
Taxation - If you structure the offshore company correctly (and this is vitally important), you can gain substantial tax benefits, and I mean very substantial!
In some cases, taxes can be reduced to zero, legally. There is also the problem of inheritance taxes in some countries and the looming possibility of inheritance taxes being introduced elsewhere. A properly structured offshore company can eliminate this threat to your heirs' finances.
Investment Opportunities - You can gain access to investments that, as a citizen of one of the "tax slave" countries, you're not otherwise able to invest in. An offshore company in the right jurisdiction will allow access to just about any investment that you choose. The problem exists in government regulation regarding foreign prospectuses being sent to some "tax slave" countries like the US, UK, Australia and Canada, however they can be sent to "offshore" companies.
Business - An offshore company can be utilized for a wide variety of uses that will allow business many substantial benefits. Businesses such as importing, exporting, consulting, e-commerce, manufacturing, professional services and shipping can all benefit from an offshore company strategy.
Asset Protection - Asset protection from creditors, hostile governments, litigants, nasty ex-spouses, professional negligence claims, product liability claims and other malevolent people and organizations who would just love to take all your assets off you.
Privacy & Confidentiality - For some privacy seekers, this is good enough reason on its own to establish an offshore company or trust. If you establish your offshore entity correctly, nobody can find out what you are doing with your money, regardless of who is trying to find out, due to the secrecy laws in place in many of the countries that host "offshore" entities. And when I say nobody, I mean nobody. This includes nosy relatives, spouses, ex-spouses, hostile government organizations, business partners... nobody!
You may be thinking to yourself, "I still don't think I need an offshore company or trust". This is a common way of thinking until something happens and you realize your whole world could fall apart, financially speaking. Losing a large percentage of your assets is never pleasant and it's at this point you realize that an offshore company could have saved you from financial oblivion. If you need any more proof, look at the courts these days, divorce rates and not to mention your government's efforts to tax you to within an inch of your life!
However, before you charge out and buy any old offshore company or trust, you should realize they are not all the same. There are good ones, bad ones, wrong ones and right ones. It takes time to set up a structure offshore and to get to know how to use it.
You should spend a little time researching the subject and when you do commit yourself to doing something, do it once and do it right! If you try to set it up in a rush when you need it - it's already too late because, if you did, you could be guilty of "fraudulent conversion" or tax evasion.
Planning ahead is the answer. We never know when something will go horribly wrong in our lives. We never know when circumstances will turn against us, and sometimes it's unexpected and you'll have little or no recourse.
Who knows, somebody reading this right now could be about to have a very bad tomorrow... could it be you? In America, for example, police can now freeze your assets and even confiscate them - before any proof of guilt or admission of guilt is made! Similar ability is also maintained in other "tax slave" countries like Britain, Canada or Australia.
Could the day come, when certain governments regard the assets of their citizens as "their own"? Has that day already come and gone? As we all know, the future is impossible to predict, but there are certain things we can predict with a degree of certainty, and that is, our privacy and freedom will be continually compromised by our elected governments.
More and more laws will be enacted to restrict us, to control us and to intimidate us. Wealth is the only antidote to these practices. Wealth allows you the freedom to come and go as you please. Wealth gives you the option of opting out.
Governments know this, which is why they try to control your wealth, in an effort to control you! The offshore company or trust "short circuits" the system and ensures your wealth is under your control and therefore your options remain intact.
However, apart from all the sinister reasons, you may just wish to spend the money on yourself overseas – and nobody back home has to know about it. You can also invest offshore to facilitate the running of your own "Offshore Business" and the tax breaks that come along with it. There are also great opportunities to invest offshore with returns that make local investment returns seem fairly miserly.
One thing to keep in mind when considering an offshore entity as an investment "vehicle" is, when an investment compounds its return without the burden of tax, it takes half the time to reach your financial goals. So, even if the returns weren't higher than local investments, your goal will be reached in half the time.
This could mean you'll be retired on a yacht ten years earlier!
Think about that.
Peter MacFarlane is a regular contributor to the Q Wealth Report. He is an asset protection specialist and a firm believer in the Six Flags PT Theory. Visit the site to learn all about how the PT theory can help you attain health, wealth, and happiness.