Open a Bank Account Offshore – Plant Your First Flag Abroad
The simplest way to gain experience in the offshore world is to open a bank account. There are a number of international banks that accept US persons. Services range from advanced investment and trading facilities to simple checking accounts. Some allow you to open an account by courier and some require you to visit their offices.
In it’s simplest form, an offshore account allows you to build a beachhead offshore. Put some of your cash abroad for a rainy day. Add to that an account held in a foreign currency, and you create a hedge against a weakening of the dollar. Combine this with a gold storage account and you have a solid offshore foundation and a place to land if necessary.
Accounts can be opened under your name or a corporation or LLC. Adding a structure to the mix increases privacy and protection, but you can plant that first flag… get your feet wet as it were… with a personal account.
Take Control of Your Retirement and Move Your IRA Offshore
Often the first major step in to the offshore world is to take control of your retirement account and move it out of the United States. If your IRA, 401k or defined benefit plan has vested, or is from a previous employer, you have the right to take control over that account and invest it in just about anything you like.
Whether you’re concerned with privacy, the possibility of government confiscation, or just want to increase your returns and diversify your investments, taking your IRA offshore is a quick and easy way to plant your flag offshore.
Protect Your Assets with a Foreign Trust or Foundation
Once your retirement account is out of harm’s way, you might consider placing the rest of your savings behind a protective barrier. That’s what offshore asset protection is all about… moving your assets behind a wall… a fortress guarded by archers and cannons… that can’t be breached by any civil creditor. The height and complexity of that fortress is up to you and depends on the level of risk (probability of litigation) balanced against the amount of capital being protected.
Asset protection is not hiding your cash in some banana republic or simple secrecy. It’s about devising a custom strategy that fits your needs and keeps your savings safe from future creditors. Even if those creditors have a map of your castle, they’ll have no way to scale the walls.
In most cases, offshore asset protection is tax neutral. You should not pay any more or any less US taxes because you’ve diversified and taken steps to protect whats yours.
One of the exceptions to this rule is that offshore asset protection can reduce or eliminate your US estate tax (death taxes). In certain cases, contributing your assets to a foreign trust moves them out of your US estate. If your total estate is over $5.43 million in 2015, an offshore trust or foundation might save you (or your heirs) on estate taxes.
And there are other exceptions to this rule. Advanced asset protection systems that include captive insurance companies and/or offshore life insurance contracts can reduce your US taxes by hundreds of thousands of dollars a year or more. These advanced planning options typically require an investment of $1 to $3 million or the need to shelter at least $1 million per year in active business income.
Second Passports and Foreign Residency Options
Record numbers of Americans renounced their citizenship in 2015… 1,335 during the first quarter alone. Expatriations have nearly doubled from the first quarter of 2014 and are up 10 fold from the early 2,000’s when the US began it’s attack on expats and international investments.
If you’re considering giving Uncle Sam the boot, or just want a backup travel document should the stuff hit the fan, then a second passport is for you. Remember that you must have a new passport in hand before giving up your US citizenship.
There are two paths to a second passport. You can buy a passport from countries like St. Kitts, Austria, and Comoros. If you don’t have the cash, you can become a resident of countries like Panama and Paraguay for a few years and then apply for citizenship. The cash for passport program is quick and easy but expensive. The residency path is slow and steady with minimal costs.