Offshore Trusts: A Guide to Asset Protection Strategies – Part 4

“The first rule of investment is don’t lose money. And the second rule of investment is: don’t forget the first rule. And that’s all the rules there are.” – Warren Buffet.

Growing your wealth is not that difficult. You just have to cut back your expenses, save, and invest wisely.

The challenging part is keeping the accumulated wealth in the coffers.

Creditors, litigators, and the government are just some of the threats to your assets. If given the chance, they will try to squeeze every penny from your bank account.

That’s why you need to have strong asset protection strategies. Crafting effective asset protection strategies are important to preserve as much of your estate as possible for you and your heirs later down the road.

An effective asset protection strategy will help you withstand and stay aloft during a financial storm. Asset protection strategies are created to protect your personal and business wealth from risks such as lawsuits, claims, bankruptcy, and divorce proceedings.

No matter what industry you belong to, you need to put in place effective asset preservation strategies. Whether you own a small business or a large corporation, creating asset protection strategies is a must.

And one of the most effective strategies that can help you preserve your wealth is creating offshore trusts.

But what exactly is an offshore trust? How can you protect your assets through offshore trusts? What are the limits of offshore trusts in protecting your wealth? These are some of the questions that we will attempt to answer in this article.

Offshore Trusts: An Overview

Offshore trusts are structures that are set up to protect your wealth in the event of a lawsuit and bankruptcy. They are created so that plaintiff and creditors could not go after your assets.

The trusts are designed to insulate assets and make it difficult for people to gain access to them.

You can think of offshore trust as an international account for protection of your assets. But unlike a bank account that you create to protect your money, an offshore trust is created to safeguard assets like stocks, precious metals, jewelry, loan capital, retirement account, artwork, and real estate.

But what does offshore mean?

Offshore simply refers to any jurisdiction that is outside your own. There are about 43 offshore jurisdictions that offer zero or low taxes.

Countries like Panama, Switzerland, Luxembourg, Belize, Cook Islands, Nevis, Cayman Islands, and the British Virgin Islands are the best destinations to create an offshore trust.

While the US is aggressive in going after offshore assets, the country is one of the best jurisdictions for creating offshore trusts, particularly for non-US citizens. Account information in certain states such as Wyoming, Delaware, and Nevada is not accessible by other jurisdictions.

Since the US is not a member of the Automatic Exchange of Information (AeoI), non-US residents can rest at ease that their account information will remain private and protected.

Offshore Trusts: A Guide to Asset Protection Strategies - Part 4Benefits of Creating Offshore Trusts

Countries that are considered the best jurisdictions for creating an offshore trust have strict legislation in place for the protection of assets.

While the rate of returns in these safe-havens may be low, you can rest assured that your asset will remain protected against plaintiffs, creditors, and the government.

According to Joel Nagel, the renowned international asset protection expert, offshore trusts are the ‘walls of protection’ that you create to protect your wealth.  Just like the walls surrounding the castle, the asset protection strategies serve as the first line of defense in protecting your assets.

Apart from asset protection, another major benefit of creating an offshore trust is that it provides diversification benefits.  

Creating an offshore trust can be a great way to diversify your investment portfolio.

Just like a hedge strategy, you can make the financial assets less vulnerable by creating an offshore trust. Your assets will be protected in the offshore account and remain immune to the worsening banking, economic, or political system back home.

Limitations of Offshore Trusts

One important thing to keep in mind is that the assets held in offshore trusts are not entirely immune. The litigation lawyers may decide to go after the offshore assets. However, the chances of them being successful are low.

The reason is that the effort required is much greater. Moreover, most trusts have a flight clause where they move to another jurisdiction in case someone tries to go after the assets.

Another important point you should note regarding offshore trusts is that you can’t simply take out money from the trust anytime you want.

The assets in the trust are kept until a specific date or an event. The event can be when you retire or when your spouse, child, or grandchild needs money in the future.

Your Next Move!

If you’re planning your finances, you should definitely think about creating an offshore trust.

To get started, you should consult with your financial advisor about the best international destinations for safeguarding your assets. Some of the factors that you need to consider when setting up a trust include the income and wealth tax rate and financial privacy policy of the target destination.

Once you have selected a destination, you should select assets that you want to transfer to the foreign trust for protection. This can be a savvy way to safeguard your assets while giving you peace of mind today as well as several years from now.

End Game —Strategies to Preserve Your Wealth

If you want to know more strategies to preserve your wealth, you can check out my new infographic report that I have co-authored with Joel Nagel titled 15 Global Strategies to Protect Your Wealth.

In the infographic report, I have mapped out 15 strategies to protect your wealth using international strategies. The type of intel in the infographic report is truly unique that you can’t find anywhere online. To access the guide, you can go to https://expatmoneyshow.com/protection/.

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ABOUT THE AUTHOR:

Mikkel Thorup is the host of The Expat Money Show podcast and the author of the #1 Best-Selling book Expat Secrets. He has spent nearly 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran.

His goal now is to help Expats just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again.