ASSET PROTECTION FOR A DANGEROUS WORLD
B y : J o e l M . N a g e l , E s q u i r e
The world is changing rapidly. The Coronavirus has provided cover for Governments around the world to exercise a level of authority and control over the populous only known previously in the most authoritarian regimes.
Combine this with a global crackdown on domestic and international travel and it is no wonder the demand for international legal structures as well as second passports has NEVER been higher.
Traditionally, asset protection was about insulating assets from future law suits for those in high-risk occupations such as medicine. Now the dangers from which we need to protect ourselves are too numerous to count and have grown exponentially. This requires us to take a new look at the dangers as well as the structures, strategies, and solutions necessary to combat them and protect your assets for yourself and for your heirs.
Below, in my opinion, are the top three dangers which we now face and the steps you should take immediately to protect yourself.
The Coronavirus and various countries’ response to it, especially the United States, has been nothing short of alarming. As in Trade Wars, the measures taken by one country are quickly replicated by other countries, which add their own draconian twists, making it harder and harder to travel internationally. The US passport, always consider one of the best in the world, has seen its visafree travel access fall from roughly 160 countries worldwide to only 26 countries today (most of which are small Caribbean and Latin American countries dependent on US tourist dollars to survive). As of this writing, it is not possible for a general American tourist or business traveler to simply pick up and decide to fly to West Europe, Eastern Europe, Asia, The Middle East, Australia, New Zealand, and most of Africa.
Only those with special permission are permitted to travel. The easiest way to circumvent these restrictions, however, has been for travelers with a second passport or residency in the country where they want to go or to have a passport from a country in which no such travel restriction applies. This has caused an avalanche in demand, especially for the Caribbean and European passport and residency programs. Some countries such as St. Lucia have even gone so far as to offer a “Coronavirus” special which is essentially a half-price Government bond that, when purchased, enables the buyer to obtain citizenship (in lieu of receiving interest payments on the bond). The Caribbean countries which have been open for business during the pandemic for passports include St. Lucia, St. Kitts / Nevis, Dominica, Grenada, Antigua, and Anguilla. In one case, our law firm was able to help expedite a US client to obtain a Dominica passport so he could travel for business to Russia (which requires no visa for a Dominica passport holder).
In Europe, we have seen the closure of the Cyprus Citizenship by Investment program due to political corruption and corresponding EU pressure to end the program in its present form. Cyprus, however, does still have a fast track investor residency program as does Greece, Spain, and Portugal. Montenegro, Moldova, and Bulgaria also still have fast track Citizenship by Investment Programs. Most of the other European countries also still have some sort of residency programs for investors or retirees which have continued to be processed for American applications even during the lockdown. In Central America, Belize and Panama remain the two most popular countries for Americans and Canadians for their various residency options. Panama’s program is expected to dramatically change and will require a much higher investment amount starting in 2021. Costa Rica also recently added a new investor visa program to go alongside its long-standing “Pensionado” Program.
For those with the ability to make an investment at very high levels (into the millions of dollars), the UK, New Zealand, and Austria also continue to be among the most sought after programs on the planet. And while global programs range in their requirements from as low as $20,000 to as much as seven million dollars, the reason to acquire a second residency or citizenship as a Plan B has never been greater than today. There truly is something for every investor or retiree at any investment amount.
Action Item: Assess your financial situation and personal lifestyle goals and select a second residency or citizenship program which fits your budget and your planning objectives.
Despite the current lockdown, one area of activity that has barely missed a beat has been litigation. A new federal lawsuit is filed in the United States every seventeen seconds of every minute of every hour of every day. If you add in State and Local law suits, this frequency falls to every seven seconds. Transferring assets to a separate juridical entity such as an international trust or foundation puts the assets inside those types of structures beyond the reach of potential plaintiff, and other types of “would be” creditors.
Beyond law suit protection, international structures can frequently help reopen the doors to a bank, brokerage, or other investment platforms which have been closed to American investors for a variety of regulatory reasons (such as FATCA or SEC concerns). And while we could write quite a bit here about offshore trusts and private interest foundations, the main take away for our clients is that if you legally and properly transfer assets to a separate legal and juridical person (i.e. the Trust) which is NOT you, then how can a future plaintiff, creditor or any government agency come and take that same asset away from you? Adding an international dimension by domiciling such a structure in the most protective asset protection jurisdiction in the world (including The Cook Islands or Belize), makes the job of a future plaintiff to go after your assets even more difficult. Action Item: If you have even modest wealth that you are concerned about protecting for yourself or stewarding for the next generation, then consider an international asset protection structure such as a trust or foundation. These structures can be individually drafted and customized by an attorney practicing in this area or less expensive and premade generic structures can be acquired from Trust companies, banks, and some international investment advisors offering these services.
CURRENCY PRINTING, THE DESTRUCTION OF THE DOLLAR AND THE COMING CAPITAL CONTROLS IN AMERICA
As the United States economy went into free fall last March, the Government’s response has been money printing on a scale never before seen in our history. Literally TRILLIONS — (can you even contemplate that number which is a “one” with twelve zeros following it? To put that number in context, if you handed out a twenty-dollar bill every second since Jesus walked this Earth, you would come up to one Trillion Dollars right now), — upon trillions have been printed and injected into our economy to combat unemployment and the substantial reductions in household spending.
Much of the money has fueled inflation, especially in financial instruments of all kinds. Whether the stock market, gold, or even Bitcoin, all “sought after” financial instruments, which are “finite” in nature, have gone up dramatically this year as infinite money printing continues to push up their prices.
These “finite” assets will continue to increase in value in direct response to infinite money printing, while the Dollar itself moves consistently lower and lower. When measured in terms of gold, for example, the Dollar has depreciated over 90% in the last 100 years and over 80% in the last 50 years and 50% in the last few years. In other words, the destruction of our currency is happening at a faster and faster pace and will eventually cause higher inflation (as people begin to spend again after the pandemic ceases) and massive devaluation of the dollar when measured by any honest measuring stick, will follow.
As the famous French Philosopher “Voltaire” said over two hundred years ago: “Every paper currency will eventually reach its intrinsic value and that value is zero.” How long it will take for money printing to lead to inflation, hyperinflation, and then mass devaluation is anyone’s guess. It has taken the US currency one hundred years to devalue 90%, but the process was for the most part orderly and controlled by the Government itself. The Germans who had one of the strongest currencies in Europe in 1920 saw the value of the Reich Mark fall during a two year period in the 1920s from 100RM for an ounce of gold to 100 Trillion Reich Marks (that is RM 100,000,000,000,000) for the same ounce of gold. And while the US Dollar is still sought after as the world’s reserve currency (especially in contrast with currencies which are far worse such as the Zimbabwe or Venezuela currencies) and therefore in a more privileged position, than the Reich Mark was in the 1920s, economics 101 says that you cannot keep printing dollars endlessly without the value of those dollars becoming worthless or eventually as Voltaire said “worthless.”
When the end of the Dollar may come, nobody can say for sure. My good friend, Jim Rickards, described it as the snowflake theory: Each individual snowflake is minuscule in nature and as the flakes come down, no one individual flake does very much. But over time the snow builds up, gets deeper and deeper, overhangs from high in the mountains, and eventually, one single snowflake lands at precisely the right spot, and a devastating avalanche is unleashed, destroying everything down below in its’ path.
And while some equities may be able to survive such aforementioned avalanche, I do not pretend to know which ones. Likewise, real estate will stand up to currency destruction and trade in whatever new currency eventually follows. We have seen this happen in Argentina whose Peso has collapsed from 1:1 with the US Dollar to 81:1 to the Dollar. Argentina real estate has been pegged to the Dollar rising inversely in Argentine Peso terms so as to counter the currency devaluation. Local politics, however, will determine such things as taxes, and even government expropriation to which domestic real estate may become subjected, thereby impacting your wealth. Instead, the best method of getting from the current broken financial system to whatever new financial system emerges is to have access to quality “finite” financial assets that cannot be easily printed by governments and which will be in demand by the vast majority of the population.
Historically silver and gold have served in this function, being tradable stores of wealth for the last five thousand years of human history. I believe there will come a point in the near future where it will serve in that function again. Having access to silver including “junk silver” from pre-1964 coins could very well enable you to buy food, gas, or other life necessities should the US paper currency collapse. Gold, on the other hand, will enable you to pick yourself up, take your family and your wealth and relocate to other better and safer parts of the world should that day ever come.
Beyond metals, I believe Bitcoin serves in largely the same way. Its numbers are finite, which is why we have seen it rise from $3,000 per Bitcoin to just under $20,000 per Bitcoin in 2020. It is also accepted progressively more and more by people for payment of all kinds, and to exchange virtually all goods and services.
Bitcoin also has the advantage that by simply memorizing your individual account phrase, you can travel anywhere in the world and access your Crypto wealth simply by typing in a few computer keystrokes. There is nothing for Governments to seize at international borders or nefarious characters to steal your wealth from you. You carry your wealth with you, literally inside your mind.
On the other hand, major civil unrest could bring about power or cellular outages which in turn could inhibit one’s ability to access and spend their Bitcoin, in a way having a bag of junk silver can simply never replace it. They obviously each have their own advantages, so for maximum asset protection planning (regardless of your preference) make sure you have exposure to both of these “finite” asset classes.
Action Item: Have at least some exposure to “finite” stores of wealth including gold, silver, and Bitcoin which can be easily used for life’s necessities or used to transport your wealth from one country to another should the need arise.
In conclusion, there are many ways to protect your assets from the dangers inherent in the world. Many of these options, such as having a foreign bank account or investing globally in diverse currencies and/or securities, have been utilized by wealth protection specialists for many years. Trusts have also been around for nearly one thousand years and they have withstood the tests of time. The current tax rules, as they relate to tax-free gifts to trusts (currently $11.5 Million per person), however, could change concerning taxation.
So to maximize your asset protection and stand up to all of the dangers the world can throw at you and your hard-earned wealth, you need to consider simultaneously both old solutions and new. Establish an asset protection trust in one of the world’s most protective jurisdictions. Establish a bank account there to move a portion of your wealth offshore and diversify it away from the Dollar. Fund your trust with at least some hard assets such as gold and silver to protect your current purchasing power and also acquire diverse digital assets, (especially Bitcoin, which in my view underpins and provide the foundation of all Cryptocurrencies), as another store of easily transportable “finite” wealth.
Finally, to protect your most valuable asset, you need to protect yourself, your right to mobility, travel and the right to live in other parts of the world should you so decide. The only way to preserve that right is to work actively to pursue a second (or third, fourth, or even fifth), residency or citizenship. When the borders close to others, they will not be closed to you and your family. Take these steps now to protect your assets and to protect yourself. Maybe you will never need this level of asset protection or require a second passport. You buy life insurance, not because you hope to die next week, but because you want to protect your family from an unexpected and untimely death. So it is with asset protection planning. Plan now and take the above three action items in order to plan for all the dangers this world may bring. You will be very happy you did, as will your family in whatever challenging and dangerous times that lay ahead.
About Joel Nagel:
Joel M. Nagel is an international lawyer and entrepreneur focusing his practice in the area of asset protection, cross-border transactions, second citizenship programs and global investment. He speaks all over the world on the topics of asset protection, global banking and investment, citizenship and residency and international legal compliance. He has served on several bank boards as well as dozens of corporate boards. He has also served as a bilateral and multilateral diplomat for the country of Belize.
Joel has written articles and has been quoted by Forbes, Fortune, The Miami Herald, Live and Invest Overseas, Hemispheres Publishing, Stansberry Research, Oxford Club, Pirate Investor, True Wealth, Islands Magazine, Business Times, Physicians’ Money Digest. Follow him on Twitter at @Nagellaw