This article is meant to give readers general information about moving their assets offshore.

Before anyone decides to move offshore, they shouldn’t do so based upon false information that moving offshore is the ONLY way to protect their assets and, even more importantly, to move offshore will save them from having to pay federal income tax. As has been stated again and again in this newsletter, any advisor that tells his client that the client can move his assets offshore and avoid paying taxes is a scammer and, as such, is a person to run away from!

Another thing to take into consideration about offshore asset protection is that the majority of people needing asset protection can get this protection through the use of LLCs. Moving assets offshore is more complex AND expensive. So, once again, the client should ask himself if offshore planning fits his situation.

So, most people who use offshore planning are those who have a lawsuit pending. By transferring their assets offshore and giving notice to creditors is the only way to protect assets from upcoming litigation. That is, of course, dependant on whether the person transferring assets offshore isn’t in violation of fraudulent transfer rules. Remember, if an offshore plan is done correctly, it will not run into conflict with U.S. courts. However, if there is an inkling that a transfer to an offshore entity is with intent to defraud, then the debtor will be in trouble.

Regarding investments: Taking your investments offshore will not do you any good if your offshore LLC invests in U.S. stocks (i.e., Hewlett-Packard, General Motors, etc.). Many people think that they can transfer all U.S. company stocks and/or mutual funds based in the U.S. and then those assets are protected. This is wrong, because should you have U.S. securities/mutual funds managed by U.S. companies, then a judge can issue an order to these companies that require them to freeze your assets. If the companies fail to do so, they will be held in contempt and will face fines and possible jail time.

If you aren’t interested in liquidating your stock portfolio and purchasing only non-U.S. stocks or mutual funds, then going offshore is not for you.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.