A ROADMAP TO TAKING YOUR MONEY OFFSHORE

Same trust concepts govern both.
Both support estate planning and wealth transfer.
Same benefits re: probate and avoidance of estate delays.
Accomplish testamentary objectives.
U.S. Estate/Gift tax neutral:
GST Tax Exemption Credit Trusts.
Credit Shelter Trusts.
Marital Trusts.
Estate Freeze –Minority & Lack of Marketability Discounting; Valuation Planning.
Offshore and Onshore
Asset Protection Trusts.

Law of other jurisdictions more favorable than USA.
Non-recognition of foreign judgments.
Favorable Statute of Limitations.
No contingency fee litigation permitted.
Confidentiality.
Other practical advantages.
Advantages of Offshore Over
Domestic Asset Protection Trusts.

Advantages of Offshore Over
Domestic Asset Protection Trusts
Plus:
Ability to use defined tax planning opportunities.
Access to international investment opportunities.
 
Equals:
Greater certainty.
Greater flexibility.
Better investment returns &
lower provider costs.
Better tax/estate position.

Trust Legal Definitions:
Asset Protection Trusts.
Grantor or Settlor

Beneficiaries

Independent Protector

Independent Trustee

The Trust

Belize.
Nevis.
The Cook Islands.
Bahamas.
Popular Foreign Jurisdictions with
Asset Protection Trust Statutes:

Borrow against assets in trust.
For Private Placement structure, withdraw from policy and/or take a policy loan.
Ask Trustee for distribution.
…but, once I set this trust structure
up, how do I get my $$ back?

Stella, age 60
Successful corporate exec, has accumulated significant personal wealth
Has invested after tax dollars in variety of investments
Investments have grown, but Stella is concerned about investment costs, consistency of returns and tax leakage
Planning retirement in 10 years
 
Two Goals:
#1. Protect her assets from the threat of litigation
#2. Build the largest nest egg possible
Case Study

Solution #1:
Basic Asset Protection Trust with Protector
Irrevocable
Discretionary Trust
CONS
Investment income
taxable in Stella’s
hands

Missing
diversification
opportunities

U.S. Investment Managers

Investment Assets ($)
Transfer of $ to foreign trust
Trustee
Protector
PROS
Enhanced protection of assets from future
creditors
Access to funds if needed
Protection & Certainty
Privacy
Beneficiaries
The Cook Islands/BElIze
UNITED STATES
Stella is a U.S. person
$

Solution #2:
Asset Protection Trust with Investment Benefits
PROS
Enhanced protection of assets from future creditors
Access to funds if needed
Protection & Certainty
Privacy

+ Greater diversification via international
investment managers
+ Institutional rates vs. retail investment cost

CONS
Investment income taxable
in Stella’s hands
PFIC tax issues from
non-U.S. Investment managers

U.S. Investment Managers

Transfer of $ to foreign trust
Stella Trust
XYZ Trust Co.
As Trustee
Investment Assets ($)
International
Investment Managers
Beneficiaries
The Cook Islands/BElIze
UNITED STATES
Stella is a U.S. person
$

Solution #3:
Asset Protection Trust with Investment & Tax Benefits
The Cook Islands/BElIze
Beneficiaries
CONS
Investment income taxable
in Stella’s hands
PFIC tax issues from
non-U.S. Investment managers

U.S. Investment Managers

UNITED STATES
Transfer of $ to foreign trust
Stella is a U.S. person
Stella Trust
XYZ Trust Co.
As Trustee
+ Tax free shifting amongst investment types
+ Tax free access to policy values
+ Tax free death benefits for portfolio assets
& true insurance benefit
PROS
Enhanced protection of assets from future creditors
Access to funds if needed
Protection & Certainty
Privacy
Greater diversification via international investment managers
Institutional rates vs. retail investment cost


Investment Assets ($)
International
Investment Managers
$
Pr. Placement LI

A. General Explanation:
1. Definition:
A. Transfer.
B. Protected Creditors.
2. Intent (Badges Of Fraud).
3. Effect of Court Finding for Fraudulent Transfer.
4. Effect of Court Finding for Transferee Liability.
5. Bankruptcy Issues.

Fraudulent Conveyance or
Transfer Statutes and Other Issues Involving Offshore APTs.

B. Potential Criminal Issues:
1. Concealment Of Assets.
2. Bankruptcy Crimes.
3. Tax Crimes.
4. Money Laundering Rules.
 
C. APTs Generally Do Not Work for Pre-Divorce Planning.
Fraudulent Conveyance or
Transfer Statutes and Other Issues Involving Offshore APTs.

Safety of assets when with carefully chosen trustee.
Enhanced protection of assets from attack.
Tax planning opportunities.
Access to best in class investment managers / greater diversification.
Supports overall estate and generational planning, and wealth preservation goals.
Is not the never-never plan.
Flexible, not inflexible tool.
Benefit Summary: Use of an
Offshore Asset Protection Trust.

Various Treasury Reporting Forms:

U.S. citizens and U.S. Resident Aliens are Required to Report their World-Wide Income Annually to the IRS.
Form 3520.
Form 3520 A.
FBAR Form.
Schedule B of Form 1040
“Check the Box”.
U.S. Treasury Reporting
Requirements of Offshore APTs.

Various Treasury Reporting :

W8/W9 Treasury Reporting.
Form 8832 -Entity Classification Election.
Section 6048A Statement & Annual Information Return.
Form 8858-Information Return of US Persons with Respect to Foreign Disregarded Entities.
Treasury Form 56.
Form 8865, 926.
Form 8938 and Form 8854.
Form 5471.
IRS Voluntary Disclosure Program

FATCA is a new US tax law enacted on March 18, 2010, as part of the HIRE Act. Final FATCA regulations where issued January 17, 2013 and provide various clarifications and alignments. Meanwhile, intergovernmental agreements (IGAs) are also being concluded with various countries to eliminate legal barriers and to facilitate execution of FATCA in these partner countries. FATCA will become effective January 1, 2014, so now it is time to prepare. FATCA impacts not only US persons (individuals or entities) but may also necessitate extra disclosure and compliance requirements of non-US entities ie foreign trusts, foreign companies, foreign LLCs and foreign partnerships, foreign private foundations and individuals.

Foreign Account Tax Compliance Act (FATCA)

Foreign LLC & Bank Account Combination/IRA Rollover:
IRA Rollover of Domestic Financial Account to Foreign Account: $3,500 US excluding custodian costs and fees.
Benefits of LLC Planning & Concerns of Utilizing LLC.
Establish LLC & Open Foreign Bank Account for
$4,500 US includes the following:
Establish Nevis LLC (first year costs and third party fees included);
Prepare operating agreement;
Assist with DD in Opening Account;
IRS Forms SS-4, 8832 Filing;
Advise on US Tax Compliance.

Designed to provide excellent quality asset protection in a cost-effective manner regardless of the net worth or complexity
of the Settlor’s personal situation.
Rainy Day Trust Structure
Objective:

Rainy Day Trust Structure
Step One:

Our firm, with more than 20 years of international tax, trust and estate experience, shall provide you with a Client Questionnaire, which you shall complete and we will review with you.

We will draft a Cook Islands or Belize international grantor asset protection and estate planning trust deed.

We will undertake the due diligence intake, know your client procedures and advise you on compliance with USA Treasury reporting requirements.

Rainy Day Trust Structure











Step Two:

We will communicate with the Trustee to execute the international grantor asset protection and estate planning trust as Trustee.
We shall hire only licensed and insured trust companies to serve as your Trustee; subsequently, the Trustee shall register, implement and manage your international grantor asset protection and estate planning trust.

The Trustee shall arrange for the appointment of a foreign Protector for your international grantor asset protection and estate planning trust.

The Trustee shall appoint a foreign investment advisory firm to serve as investment advisor to your international grantor asset protection and estate planning trust.

The foreign investment advisory firm shall then setup an investment account with a reputable foreign bank for your international grantor asset protection and estate planning trust.

The foreign investment advisory firm shall provide you with various investment strategies that fulfill your risk/reward requirements for your international grantor asset protection and estate planning trust.
Step Three:

An asset protection trust is not for all assets
Independent legal advice is important
Selection of Trustee/Custodian/Jurisdiction is important
Don’t keep control – if you can reach it so can your creditors
Reporting requirements
Establishment process/timeline
Protector, if needed
Other Practical Considerations

Many states have adopted Asset Protection
“self-settled” Trust legislation.

Alaska
Delaware
Missouri
Nevada, Oklahoma,
New Hampshire
Rhode Island
South Dakota
Tennessee
Utah, Colorado,
Wyoming


Domestic Asset Protection Trusts

Permitted Grantor Retained Rights:

Veto discretionary distributions from trust.
Replace trustee and other named advisors.
Receive income and/or principal.
Retain a limited testamentary
power of appointment.
Consent to or direct investment changes personally.

Delaware Asset Protection Trusts

Conclusion
What it is:

Structuring wealth and business affairs to:

Preserve accumulated wealth.

Meet overall estate planning and investment goals.

Minimize exposure to potential lawsuit.

Full transparency and reporting.

Conclusion
What is it not:

Structuring wealth and business affairs to:

“Hide” accumulated wealth.

Not report income, distributions or transactions
as required by the authorities.

Establish an offshore trust to protect assets, but then direct the Trustee on what to do with those assets OR reserving substantive powers.

Thank you!