How Offshore Asset Protection Works
Protecting your assets offshore means controlling your assets through a business instrument in a foreign jurisdiction with more favorable laws. Just like a “tax haven” jurisdictions renown for favorable banking privacy laws, you can take advantage of asset protection jurisdictions. These offshore jurisdictions create a significant protective barrier between creditors and judgments, and your assets.
Offshore asset protection comes in many forms. As such, you choose your instrument(s) based on what you have to protect and it’s value. It’s very important to speak with a qualified offshore asset protection professional before choosing what’s right for you. Protection vehicles range from watertight privacy, to bulletproof protection. In many cases people implement a combination of jurisdictions to maximize both privacy and protection.
1. Avoiding a lawsuit
Lawsuit avoidance is as good as money in the bank. In a lawsuit, the only real winners are attorneys. Even the prevailing party incurs legal costs and the ordeal can be a time-intensive distraction. A lawsuit avoided is almost always a far more favorable outcome than a courtroom victory. The first step in offshore asset protection is financial privacy. Experienced creditors choose their targets wisely. So, before mounting a suit your opposing party has probably performed an asset search. Therefore, they already know what’s within reach if the courts award a judgment.
If you leave your assets out in the open, easily found by hungry creditors, it makes you are a prime candidate for a lawsuit. Therefore, you simply move your financial picture behind a layer of privacy. One you do so, an asset search is going to come up empty. Financial privacy is your first line of defense. You can achieve this by utilizing offshore jurisdictions for asset protection.
For example, you move your liquid assets into an offshore LLC in a safe international bank account. The best jurisdiction from our research is Nevis. So, form a Nevis LLC. Then hold your offshore bank account in the name of the company.
2. Judgment Proof Offshore Asset Protection
If the need ever arises to be judgment proof, there are asset protection vehicles available in jurisdictions with longstanding histories of providing strong protection for investors. The strongest legal tool is an offshore asset protection trust in the Cook Islands. The Cook Islands does not recognize foreign judgments. Moreover, their licensed bonded trustees are not subject to U.S. court orders. That is, because they reside outside of the US, they are not required to comply with US court rulings.
The US courts say, “Give me the money.” The offshore trustee replies, “Sorry, you do not have jurisdiction down here.” Thus your assets are safe and secure within a properly drafted offshore trust with provisions for legal duress. You are in full compliance with U.S. law. Plus, your trust provisions safeguard your assets from judgement creditors.
Here is how we structure it. Your trust owns 100% of a foreign limited liability company (LLC). You can maintain control as manager of the offshore company that is owned by a trust. When you are under legal duress, a foreign trustee can jump in as the manager of your company. In this position, the trustee is strictly bound to follow the trust and company management provisions to run the day-to-day activities of your company. Your assets remain safe while you are under legal duress, and once it is over, you are then re-appointed as your company manager.
This term indicates little to no income tax in the jurisdiction. However, people in the US, UK and various other jurisdictions are taxed on worldwide income regardless of the tax environment of the chosen jurisdiction.
Offshore asset protection works by removing your local court’s jurisdiction from your assets. There are certain countries, Cook Islands, Nevis, Belize, that offer asset protection laws superior to those of the US, UK, Australia, Canada, etc. So, you can take advantage of those laws by setting up offshore asset protection structures that keep your wealth out of harm’s way.
Last Updated on December 4, 2019