August 2, 2005
By John Dietz Senior Advisor, Trustmakers

Do governments compete with each other? History shows classic wars being fought over differences in ideology, but when it comes to money wars, the battle lines are not so clear. Its been said that when you follow a story it may be interesting, but when you follow the money you find out what's really going on!

The untold economic wars would blow all of our minds. These money wars never show up on the six o'clock news, and even when they do, you may not even recognize the sound bite. We could all name a war in a small nation that was funded by the good guys that ended up making them look like the bad guys. Which ever side you may fall on does not matter. Countries must deal with each others political and economic policies. Wow, politics and economics; what a mess.

Here's the question: What if Australia—a country with a bigger land mass than the US with one fifteenth the population—decided that they would like to open their borders to US citizens with the caveat that if you arrive on there shores, for the first five years you pay no tax? Sounds good so far… the US has good relations with Australia . What do you think would happen? What would our government be willing to do to stop that?

Recently, David McCullough has been all over the airwaves promoting his new book “1776.” Any chance I get to see him interviewed, I ease up on the clicker. I truly believe that he is one of modern times' great historians and storytellers. David truly makes history feel as though you are standing with the greats that have passed before us. In a recent visit to congress, he pointed out that history is not being taught any more in schools. His cautionary tale was to point out that a text-book-look back in time is always with 20/20 vision. Our policy makers should heed David's warning on the importance of teaching history.

Policy changes made because of popular opinion never stand the test of time. How about the 1974 HMO bill? It was originally designed to make sure inexpensive health care was available to all. Good intention; bad result. It's estimated that currently over 50 million US citizens still don't have health care. Thirty-one years still hasn't made a difference.

To get to the point:

We generally never think of governments—state, national, or global—as competitors. Well, they are! Just look at all of those tempting state slogans on license plates. The “Sunshine State” sounds pretty good in the dead of winter, don't you think? Are governments using elected officials to change policy to compete for your money? The answer is: YOU betcha! Real economic growth stems from free enterprise, not well healed lobbyist. More competition in the market means goods and services are less expensive. Mmmm…I wonder why oil prices are so high…

More to the point:

Everyday someone asks me where is the best jurisdiction to have an offshore trust. Well, if you can bargain for most goods and services, why not bargain for your best country.

There is an ongoing, full-frontal assault on the large economies by the smaller economies. In essence, governments do compete. No one in congress knew where any of these island nations were until they bargained for your dollars. The simple truth is that most of us wouldn't know either. Forget about countries; what about states. Each state would like you to do business in there jurisdiction too. Even Alaska is vying for your dollars with self-settled trusts.

There are as many asset protection ideas as diet plans. From no tax schemes, to free capital gains, to no estate taxes! Some are full blown scams, and some are well thought out plans to amass non-taxable wealth. It can be difficult to sift through the rubble.

Scams are usually the to-good-to-be-true things. The others are not so easy to distinguish; or are they? Each time some other place around the world is looking for money they advertise policy changes to be very business friendly: Until they cross the line. That line is public policy. Call your IRS office up and ask them about some structure your forming that will legally net you out with a whopping 0% tax bill. What do you think the agent is going to say? Ok, so you don't want to make that call and alert the agent… I get it; stealth. You're learning!

Back to the real world. You may not be the test case for what you have set, and your plan may slip through the cracks. The big question is that do you want anything that may be against public policy? Do you want anything that does NOT have case law and history with it? Did you ever try any new ice cream that looked great and tasted yucky? Don't have your wealth be somewhere that looks good and ends up yucky. I commend the folks out there who are fully willing to role the dice. They are true frontiersman. But the question still remains: do you really think you can fight and win?

At the end of the day, don't fight with any governmental body; save your shekels and implement a tried and true estate and asset protection plan. You can legally pay the least amount of taxes, and pass money to your heirs from plans that have the blessings of the IRS. Time honored tax preparation and estate planning does work. And if you are a US citizen, you pay tax on your worldwide income. Without planning, you pay tons; with planning, you pay your fair share!

That is public policy. Don't stray from it. Don't get fooled by things that are against PUBLIC POLICY! Don't be the one that gets hit by the bus.

Until next time,

John

One the other hand, don't forget what the immortal Samuel Clemens said.

"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover."

--Mark Twain

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