The Ultimate Asset Protection and Tax Saving Plan
by David Tanzer
The Need for the Ultimate Tax Savings Maneuver
As you know only so well, taxes take a major bite out of your assets. Not so surprisingly, the top 2% of the major wealth holders pay over 30% of all taxes in the US, and the top 15% or so pay around 60% of all taxes. Seems rather unfair, don't you think?
With tax loopholes mostly long gone from
the earlier versions of the forever changing tax code, there is generally
little you can do to shelter your income once your assets are income producing.
However, if you are willing to make a significant change in your lifestyle,
and perhaps ready to
Is Retiring Abroad Right for You?
For some Americans, the American dream is being realized abroad. These individuals have pooled their money and taken their skills to over 100 different communities around the world. According to the U.S. State Department, more than 3.8 million Americans live aboard every year.
An estimated 250,000 Americans move out of the US each and every year, but most of them are not true tax exiles. The vast majority of the individuals qualify for tax-free income (under IRC 911).
Why are So Many US Citizens Leaving Their Homeland?
The US is facing a brain drain: 60 percent of Americans state that the US quality of life is degenerating and expatriates seek better lives; expatriates include some of America's wealthiest and most educated native born citizens; approximately 25% of college educated and 25% of income earners above $50,000 per year have considered leaving the US; more skilled workers are leaving the US than are entering. Increasingly, these individuals are searching for the American dream elsewhere.
Expatriating is Always an Option
The option of expatriation is the final step for the US citizen who is so completely fed up with US taxes, litigation, and severe limitations on privacy, that they are willing to leave this country. The only way that a US citizen can legally eliminate all US income tax and estate taxes, is by completely eliminating all connections to its greedy tax consuming Uncle Sam. In other words, you can expatriate yourself altogether from the US.
Those that have gone the final distance
include businessman John Templeton, of Templeton Funds, when he moved to
the Bahamas and saved more than $100,000,000 in taxes in his well known
investment fund. Other well known individuals include Campbell Soup heir
Becoming an expatriate means moving abroad
so that you are no longer a US resident for federal income tax purposes.
This also means that you will need to change your domicile to a suitable
foreign country so that you are no longer a US domiciliary for tax purposes.
And, you will need to give up your US citizenship so that you are not subject
to income taxes on your worldwide
Other factors to consider will include making certain that your status is not tainted by the status of your spouse. In other words, your spouse should take the same steps as you do to make sure that your jointly owned property is removed from the jurisdiction of the US. You will then want to make sure that all of your income is derived from foreign sources and that your property is owned in the countries other than the US.
Importantly, you will need to consider
the timing of making these property transfers, and consider how it will
affect your status as an expatriate. You will need to give consideration
as to the beneficiaries of your estate and the tax impact on them if they
do not become tax exiles.
Once you have removed yourself from the tax and privacy concerns you have, you can in many jurisdictions around the world live tax free, in relative privacy without onerous reporting burdens or concerns of litigants trying to remove your money from you. Expatriation can offer you the best of all worlds and an exotic lifestyle.
Your Choice of Paradise
For some individuals, and maybe you are one of them, picking up and leaving the US, whether as a US citizen living abroad earning tax free income from a foreign source, or going the final distance as an expatriate, can offer an exciting challenge to your life.
Whatever you choose do to, you should be
aware of your options. Only when you are educated about the alternatives
and make a voluntary choice based upon the options, can you be said to
be living a free life to its fullest. Maybe that choice is at home, or
maybe that choice is abroad on your island paradise. Maybe its a combination
of both. Whatever you do, take the necessary steps, to protect and preserve
your assets. "How to Legally Protect Your Assets" sets forth many options
for asset protection planning, some of which cost you little or nothing
to implement. Better yet,
Remember, the goal of wealth preservation is not simply the end result of hoarding money. Instead, it is the preservation and safety of that money that allows you the independence and freedom to make the choices in life that you wish to make.
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