Simple LLCs have long been popular asset protection tools in the US, but their effectiveness has been curtailed by recent court decisions such as the Olmstead case – see below. Peter Macfarlane looks at how an Offshore Asset Protection Trust can increase security of ownership on US domestic assets in an LLC.

From an asset protection specialist’s point of view, protecting US-based assets is becoming more and more difficult, with judges showing less and less respect for the nominal protection offered by entities such as domestic LLCs. Both the court system and the government there show worrying tendencies to override the inviolability of private property rights, on which the country was founded.

When asked by clients how to protect assets, the only sure answer is – to use the words of the late W.G. Hill – to “get your money out of the country, before your country gets your money out of you!” That means, taken to its logical extreme, obtaining a second passport, departing US shores and renouncing US citizenship.

I’m the first to admit, however, that this is not always practical. There are still compelling reasons why someone might want to own US based assets. This article is about how to protect them.

A caveat here: if assets are physically in the US, they can be controlled by a US court. What we can do is make it more difficult, and much more expensive, for any plaintiff to claim those assets – hopefully to the point where they won’t bother trying. In my view, if you have any substantial US assets, the cost of the structure I will recommend in this article is minimal and it’s a good insurance policy to buy anyway.

LLCs have been a very popular asset protection tool over the years. LLCs are an excellent invention – simple, flexible and offering the legal protection of limited liability, even for individuals who can create single member LLCs.

An LLC on its own, however, no longer offers sufficient protection. For example, in September last year the United States Court of Appeals affirmed a lower court decision in Olmstead, et al v. Federal Trade Commission that the district court may enter an order “compelling the defendants to surrender all right, title and interest in their single member LLCs.”

Effectively, the single member can be forced to give up the ‘asset’ vested in this right, title and interest – so the judgment creditor becomes the new owner of the LLC and can therefore choose to wind it up, continue it or sell of part of its assets.

Anyone who has been relying on the limited liability offered by such LLCs is now on notice – they need to restructure their affairs urgently, with the help of a good asset protection attorney. I say urgently, because if a claim arises in the future, the court will look back a number of years in order to determine whether the restructuring was detrimental to the creditors. The longer the structure has been in place, the safer it is.

Possible Solution: Using an Offshore Member LLC and Offshore Asset Protection Trust

The ownership from offshore of such an LLC is a viable alternative in many cases. Utilizing a second member (ideally with a substantial part of the ownership) in the domestic LLC will limit the ability of a creditor to take control of the domestic LLC. In this case, the creditor will be restricted to a charging order against the ‘transferable interest’ of the judgement debtor. The transferable interest is the right to receive distributions, but not the right to become involved in management.

Where this second member is an offshore LLC, the second member will be beyond the jurisdiction of the US courts in the event of litigation affecting membership interests. This is where the ‘offshore deterrent factor’ comes in. Nevis and the Cook Islands are recognized as the best offshore asset protection jurisdictions in the world. My preference is for Nevis, with its laws specifically written by and for US lawyers and business people.

Let’s say a Nevis LLC with a Nevis manager is a member of the domestic LLC – in this case, the creditor would need to proceed with legal action in the Nevis courts. Nevis courts are, of course, notoriously friendly for asset protection purposes. There are no contingent fee lawyers in Nevis – anyone seeking to take action there would have to post a substantial bond with the court, and it is frankly unlikely that such an action would succeed. Hence, the deterrent effect. (Further details, advantages and explanations of Nevis LLCs can be found in my free report, Untouchable Wealth.)

Setting up an Offshore Asset Protection Trust (OAPT) is feasible for Americans, since the compliance requirements are relatively simple. Such a trust is not a tax avoidance device – it is typically structured as a grantor trust. The person setting up the trust must report all the trust’s income on his or her US federal tax return, and comply with certain reporting requirements. (These reporting requirements are beyond the scope of this article, but any good US tax preparer should be able to help.)

The OAPT must be a discretionary trust, so that the trustee has the legal freedom to ignore instructions given by the client. This point is very important, as it removes the possibility that the US court can instruct the grantor to give instructions to the trustee to pay over assets to a judgement creditor.  There is, however, the possibility to use a Private Trust Company as a trustee. This is a special company, based offshore, that has no assets, bank accounts or income of its own. Its only role is to serve as trustee of the OAPT. This way, the client can maintain greater control of the OAPT without compromising its offshore asset protection features, and there is no need to retain the services of an offshore trust company.

The OAPT’s trust deed should also include some important provisions like a “duress clause” and a “flee clause”.  The duress clause specifically prohibits the trustee from acting under duress (ie, forcibly based on orders from a US court). The flee clause require the trustee to redomicile the OAPT to another jurisdiction and automatically replace the trustee in the event of an attempted action by a judgement creditor. The trustee is also forbidden to disclose to any creditor the details of the flee provisions, or the fact that they have been implemented. The creditor is therefore left with no idea where in the world the OAPT and its new trustee may now be located.

By having the OAPT own the offshore LLC that in turn is a member of the domestic LLC, you achieve a strong degree of asset protection for a relatively low cost. The membership interest in the offshore LLC is beyond the reach of the US courts and is in a holding structure that is not controlled by the ultimate beneficial owner.

Peter Macfarlane, offshore asset protection consultant and joint editor of The Q Wealth Report, has recently been visiting bankers in Singapore. Want to know how to open an offshore private bank account in Singapore? Or how to set up a brokerage account in Singapore with online trading, even if you are a US citizen? Here is a brief trip report. More information will be available in forthcoming issues of The Q Wealth Report, and at our Q Wealth Symposium in Hong Kong this October.

Singapore’s investor-friendly climate has consistently earned high scores in global and regional rankings. And it’s getting better.

I was not disappointed on my latest trip this April, as our local partner gave me a detailed explanation of the latest tax incentives over a cup of Chai tea, from his home office with a fantastic panorama of the city. The tax system in Singapore has been designed not so much to collect revenue as to encourage responsible investment. Investment in things like training and IT. Tax deductions of up to 400% are possible on such expenditures, meaning that a company can easily earn millions and legally pay no tax… but it equally means that a company that’s incapable of earning profits doesn’t get any handouts. Our local partner, for example, is just buying iPads for all his staff to claim the deductions.

After a successful trip, including a visit to the Shorex conference at which I had the chance to meet and network with a number of offshore professionals from around the world, I boarded my flight to Frankfurt. On boarding, I was handed a copy of that day’s FT Asia, with the headline: “America Lacks Credibility on Debt, Says IMF.”

We see news like this every day now. And that’s even somebody like me, who doesn’t watch much TV. Another example: US Treasury Secretary Timothy Geithner says borrowing more from China to finance tax cuts for the most affluent Americans would be irresponsible. But even mainstream Bloomberg says Geithner has got it the wrong way around: “The real question is whether Beijing is willing to double down on a nation whose balance sheet makes Italy look good. Holding $1.2 trillion of U.S. debt is a fast-growing risk to China.” This Bloomberg article was widely reported in media across Asia, though it seems less so in the US!

Richard and I have been writing for years about the rise of the east, but now the east truly has risen. Singapore is the financial hub at the heart of this. It’s a well managed place where people are happy and business can flourish. Of course, you need to be a certain type of person to live in a place, and Singapore would probably not be my first choice for a residence flag… but as a business base it’s just great and getting better!

I guess most people reading this blog already know why they want to get their money out of places like the USA and the west, and they are looking for practical information on how to achieve this. In other words, how to go about opening a foreign bank account, or a bank account in non-US currency… Here at Q Wealth we specialize in practical ‘how-to’ information, of the kind you can only obtain through on-the-ground reporting of this type.If this is your first visit here, feel free to browse our site for information on lots of different jurisdictions.

The good news is that if you just want to get part of your assets into Singapore and Asia, you don’t have to understand the complexities of the Singapore tax system, or worry about making deductions or the annual filing requirements. Here’s a hot tip: The easiest thing to do is just take a pure tax-free offshore company and open a bank account with it in Singapore. This is very easy to do. Singapore does not tax non-residents bank accounts. As long as you have no local Singapore income, you are tax free and can gain the full benefits of participation in the Singapore banking system, including excellent multi-currency banking facilities and access to precious metals like gold and silver.

A Nevis LLC, for example, is ideal for this purpose. I talked to banks in Singapore about this structure and the answer was universally “no problem, sir!” You might say as a company formation agent I am biased, but I personally do all my business and banking through corporations. I never hold any serious assets in my personal name. Some people have particular reasons for opening a personal offshore bank account, but I just wouldn’t feel comfortable thinking of my name being passed from bank to bank around the world every time I send or receive money. Much better to do it in a corporate name.

The great thing about LLCs is that they keep things simple – tax transparency* means that an LLC need not have any impact on your tax situation. By using an LLC you won’t be paying more or less tax, but for the few thousand dollars it will cost you, you will receive a substantial degree of privacy and asset protection. (Of course I am only talking generally here… different countries have different tax systems, so check with your advisors) If you are interested in learning more about Nevis LLCs, check out my free report Untouchable Wealth that covers them in detail.

For Americans, there is a special additional benefit to using an offshore LLC for banking in Singapore: and that is access to ‘forbidden’ investment markets. Very few international brokerages these days will accept US clients. The ones we work with in Switzerland, for example, won’t accept US citizens or residents, even if they are operating through offshore companies. We have one brokerage in Panama that accepts American beneficial owners, but they are – frankly – expensive, and they can no longer guarantee client confidentiality since Panama signed its tax information exchange agreement with the USA. Good news: in Singapore, it is possible for US citizens to control brokerage accounts. You cannot open a brokerage account in Singapore directly in your name as a US citizen, but an offshore LLC solves this problem rapidly and simply. We won’t name specific banks here because we don’t want to draw undue attention to the banks and brokerages that offer this, but if you are a Q Wealth member please feel free to contact the office for referrals to our recommended service providers who can help you out, or contact the office of Peter Macfarlane and Associates. Remember, provided you are a Q Wealth member we do not charge a penny for referrals.

So what about the practicalities of opening a bank or online brokerage account in Singapore? I wrote more than a year ago an article on How to Open an Offshore Bank Account in Singapore. Since then, things have moved on a bit, but read it for background info if you haven’t already. The constant is that you do still have to visit Singapore to get your account set up. Thereafter, of course, you can control it via highly sophisticated internet banking. I did hear that some banks are making moves towards opening accounts via video-conferencing, as the small Swiss private bank we work with now does, but this has not been fully implemented yet. HSBC seem the most advanced on this, perhaps unsurprisingly: they already have plenty of branches around the world equipped with video-confercing facilities.

The best offshore banks in Singapore for westerners are probably the ones with more of an Asian focus. In particular we like DBS Bank, formerly the development Bank of Singapore, set up in 1968 by the Singapore government but now present all over Asia. There are Chinese banks like OCBC if you are bullish on China. If you are more European in your investment outlook, you could choose the Singapore office of one of the Swiss banks. And then there are always the global banks with an international outlook such as HSBC and Standard Chartered. South Africa’s Standard Bank would also fit into this category.

I’ll be publishing more information on Singapore banking, including direct contacts, in the newsletter over the next few months. Remember you can either sign up for our free weekly Q Bytes newsletter, or go straight for the premium paid subscription that costs only $87: check out the list of benefits and order form here.

* What is a tax transparent entity? It’s an entity which is not taxed either in representative capacity or in its own capacity as a tax paying entity, but the tax is levied on the participants in the entity based on their share of income in the entity.

I continue to get lots of mail about the new USA-Panama Tax Information Exchange Treaty that was actually signed last week and was the subject of my earlier blog posting. This has certainly stirred up a hornets ne’st in terms of Panamanian offshore banks, law firms and corporate service providers.

One thing that is rather irritating as a writer is when people say “such and such a person doesn’t agree with you, here’s the link” … when in fact they don’t even know what I think, and the person writing the other link probably also has some hidden agenda like collecting taxes, or like selling consulting services to move to another jurisdiction.

What I said last week was in essence that while I hadn’t seen the treaty yet, I didn’t think there was cause for immediate alarm for my clients. I also explained that I had written an article explaining my position in the next Q Wealth Report that is due out next week in the Members Area.

Now the treaty is actually signed and published. You can download it here. Perhaps the most surprising thing about it is that it is retroactive to 2007. That is, the US can now demand information dating back to 2007 from Panama relating to tax investigations. Panama, in theory, can demand the same from the US on Panamanian tax evaders.

This is certainly bad news for those American taxpayers who may have set up non-compliant structures in the past and opened accounts with Panamanian banks. Such individuals need to take expert legal advice urgently. With the approaching holiday season the few US attorneys who actually know anything about this are going to be super busy/unavailable. I hate to say I told you so, but the people in trouble are going to be the ones who tried to save a thousand bucks on set-up fees by going with cheap internet-based ‘lawyers’ who try to sell important financial structures as if they were groceries.

In the case of our consulting firm, we can refer clients to licensed US attorneys if necessary, but we like to do a confidential consultation through our firm first. This generally saves the client a lot in attorney’s fees compared to going direct to an attorney, as we are able to brief the attorney fully on the situation. Sometimes we can even do so anonymously.

Let’s be very clear on one thing. Neither Q Wealth nor my consulting firm has ever recommended tax evasion. We find the principle of stealing people’s privacy in order to collect taxes to fund things like bailouts, unnecessary wars and high level corruption extremely distasteful. That is the direction we are coming from. But if you want to live in or be a citizen of a country, you have to follow its rules. Not to do so would be plain stupid, because they are more powerful than you are.

IT’S SO EASY TO OPT OUT OF TAXES LEGALLY

It’s really so easy to opt out of taxes and government control legally if you don’t like things the way they are. Americans have it slightly harder than our other readers because they have to opt out of citizenship, not just residence. This, of course, is unjust in itself. Anyone else can just make the move.

There’s a world of choice out there. First there are the well-known tax havens like Monaco and Andorra. Several of our clients have gone down to Nevis recently in search of instant second citizenship that come with purchasing real estate there. Then there are countries like Dominican Republic or Paraguay where it’s cheap to get a residence permit, you don’t have to stay there much, and there are no taxes on foreign sourced income. Then, there are mainstream countries like France, Spain or Canada where – with good pre-immigration offshore tax and asset protection planning – a foreigner can live almost tax-free and unmolested.

I would take this opportunity to remind you that if you are looking at citizenship and residence in Paraguay, I’ll be there in January. Why not make it your new year’s resolution to obtain an official foreign residence and start the clock ticking on a second passport, that could solve all your troubles once and for all and help you sleep better at night? Details here.

“THE OECD STUFF IS A FIG LEAF, A DIVERSION”

While we are on the boring but somehow important subject of tax information exchange treaties, here’s something interesting that happened this week, that was not widely reported.

Tax Justice Network is a group who want all the world’s governments to join together in collecting taxes. Apparently they believe that if there were no tax competition, no bank secrecy and a ‘level playing field’ when it comes to taxes, there would be no poor people in the world any more. Such utopian ideas may appear beyond help to pragmatic realists like us… but they do have an interesting blog.

This week, they finally admitted they might be wrong. An anonymous person, not me but someone clearly benefiting from an intimate understanding of private banking and politics, wrote them a tirade which I agree 100% with – and they admitted might actually be right. Here are some selected extracts:

The OECD stuff is a fig leaf, a diversion. The real power mongers want the whole system to keep going, and to put out these diversions. While they are all doing all this stuff for the popular press, for the NGO world and Civil Society who don’t know how it works from the inside – at the same time they are saying to their clients (as on the BFSB website) ‘all is hunky dory in the world of confidentiality.’ They are all saying to their clients: it is business as usual.”

It is a fee-earning opportunity too – I don’t have any statistics on this – but you can say to your clients: ‘just for an extra level of safety, we can restructure your accounts to this or that other centre, or in this other structure’, and then they can charge fees for it.

You can read the whole blog entry here. I suggest you do.

This is Peter again. Panama is a country with an amazing amount of intrigue. I think it has something to do with the heat and humidity. Personally, I love it. What is said on paper is not usually what happens in practice. Once you understand that, and combine it with other countries to create a multi-jurisdictional structure, you can turn it to your advantage. If you don’t understand how Panama works, it is dangerous.

All this hype about tax treaties, that came out of nowhere a week or two ago, is certainly a diversion. If the US had wanted tax information on US citizens from Panama before, they could have got it just as easily as they will now be able to get it. This is all about show. The way is now paved for another round of the IRS voluntary compliance program that has been targeting Switzerland and UBS until recently, and we will certainly see more of this and other jurisdictions targeted during 2011.

In the meantime the USA will continue to haemorrhage funds, because smart businesspeople (and Americans are nothing if not smart business people) see that their money will be better off elsewhere.

TJN ended by quoting the latest Le Carre novel:

“Money’s got no smell as long as there’s enough if it and it’s ours. Above all, think big. Catch the minnows, but leave the sharks in the water. A chap’s laundering a couple of million? He’s a bloody crook. Call in the regulators, put him in irons. But a few billion? Now, you’re talking.”

Bear all this in mind when you look to manage your wealth and offshore investments.

If you haven’t yet read our Free Report on Panama, do so now. It explains some of the hidden truths of doing business in Panama. It was written before the tax information treaty was announced, but it’s still essential reading for anyone looking to invest offshore in Panama.

Following is an edited version of our Press Release announcing the new 2010 edition of our ever popular Practical Offshore Banking Guide which is now available….

While the days of James Bond-style numbered Swiss bank accounts may be over, the world of discreet private banking and offshore wealth management is growing apace as financial uncertainty continues to make people seek safe havens.

Despite highly-publicized government crackdowns on tax evasion around the world during the past year, spearheaded by the G20-OECD “anti tax haven” blacklisting and the US attack on UPS after defection of Bradley Birkenfeld,  more billions are headed for offshore banks and tax havens than ever before – with good reason, and it’s all completely legal. That is the conclusion of the new Practical Offshore Banking Guide 2010, advising high net worth individuals and entrepreneurs on offshore banking and asset protection, that is released today. In it you will find information on nine of the best offshore banks.

In the 2010 update of his annual Q Wealth Practical Offshore Banking Guide, offshore banking expert Peter Macfarlane points out that tax evasion is far from the only factor encouraging smart individuals to go offshore. “There are more good reasons than ever to go offshore. Taxes are certainly a factor, but many people these days are motivated by deeper feelings – they just don’t trust the system any more,” said Macfarlane today. “Basically, they are demanding full control of their own money. The human right to privacy is definitely part of the equation. Why should an individual´s finances be an open book?”

“Bank failures and bailouts are on everybody’s minds, and rational individuals are looking to open accounts at conservative and respectable banks, in countries that respect the rule of law and private property, that do not have this toxic exposure. Clients seek to protect their assets not just against the perceived injustice of many lawsuits, but more fundamentally against a decline in the value of the dollar and other major currencies like the euro and pound. Expecting the imminent devaluation or collapse of the dollar, they are diversifying into better-backed currencies, and of course into precious metals like gold and silver – something made easy by offshore multi-currency bank accounts,” comments Macfarlane, adding: “We’ve all heard about the risks of keeping eggs in the same basket.”

The Practical Offshore Guide 2010 includes special sections for US and European Union citizens, explains information exchange in detail, and proffers practical advice on choosing, opening and operating an offshore bank account.

The Practical Offshore Banking Guide 2010 is published FREE for readers of The Q Wealth Report, a privately-published newsletter covering to offshore banking, asset protection and wealth management. The Q Wealth Report was established in England in 1996 and has a global readership. Englishman Peter Macfarlane, 38, is joint editor, besides running his own professional practice in Panama City, Panama and being a regular speaker at offshore events.  Further bio on Peter Macfarlane is here. The free Secrets of the Super Rich course edited by Peter Macfarlane and others is available here.

You missed out this time on our small, intimate Meet the Men Who Made Their Clients Millions event in Bantry, Ireland. Maybe next time.

Anyway, one of the topics of discussion was ‘Mass Production versus Custom Tailoring’. The decision to go offshore is very personal, and is something you should not entrust to mass production. It requires custom tailoring.

In other words, you don’t necessarily want to structure your offshore set-up with the help of the company that pops up first on Google. Mostly, these companies are so-called ‘corporation mills’ who have slick advertising but little regard for the financial well-being and privacy of the client.

You probably won’t read this advice anywhere else – because the best, most  convincing, well written websites and “offshore” literature is put out by the biggest outfits. But we like to tell it as it is, even if it upsets some people.

It is just common sense to assume that your private financial affairs will invite  more scrutiny if you are a customer of an outfit that actively sells offshore banking services thousands of people. And if that offshore banking outfit has problem clients who are up to no good (a typical problem when they take on all and sundry for fast profits) then those people’s problems will very quickly become your problems!

Let me give you a practical example of another typical problem with mass production offshore asset protection. Once upon a time there was a European Private Bank. They employed a special guy who did nothing but appear at seminars for wealthy people. He pitched offshore bank accounts, annuities, and other “tax favored” products of his  bank. The bank had a great website where the tax advantages of these  products were fully explained. For instance (modified for simplicity),  you could put say EUR 100,000 in an annuity that earned 4% a year. You got paid EUR 5000 per year as a “tax free return of capital” until the EUR 100,000 was paid back.

By then, 20 years later, you might be dead! But when you died, your heirs inherited the EUR 100,000 death benefit – also completely tax free. It was a nice way to move assets offshore where they were judgment proof, and killing two birds with one stone, earning EUR 100,000 tax free.

In my opinion, products like this were borderline legal at the time. However, due to the heavy marketing  the rules of the game were changed. This business came to an abrupt end. Why? Because the “authorities took notice” and eliminated this particular loophole for annuities.

That is one of the main reasons that we don’t “name names” when we talk about offshore banks in our public articles. This information is reserved for paid subscribers. You will find banks named (including contact information and other details) in our Practical Offshore Banking Guide that is available for instant download in our Members Area.

We purposely choose to deal with low profile but secure offshore banks – not ones that actively target foreigners or have great internet marketing skills.  And that, dear reader, is why I suggest – if you haven’t already – you invest the small $87 fee required for a year’s membership of Q Wealth. You can sign up online right now.

Still, if you’re not quite sure yet, why not check out without any charge or obligation our Free Offshore Banking Course?

We write a lot of articles about Panama as an offshore haven here. This is not an accident, nor an unreasonable bias. We still consider Panama to be an excellent jurisdiction in which to set up an IBC, Corporation, or Foundation… and possibly an offshore bank account. But a reader asked me a question the other day which made methink back to basics… what is the real advantage of a Panama corporation? And what kind of services to Panamanian banks really offer?

The most obvious advantage is that Panama offshore corporations are completely tax free. That’s right – as long as they do business internationally (as opposed to in Panama) they don’t even have to file a tax return, let alone pay any taxes. Some people love the simplicity this offers.

Perhaps surprisingly, however, tax is not normally the major motivation for my clients who choose to go offshore in Panama. This is partly because most major jurisdictions these days have so-called CFC or “Controlled Foreign Corporation” legislation that severely limits the tax advantages of doing business in offshore havens these days.

No, most clients these days are not tax evaders. Instead, they are looking for offshore asset protection or wealth management strategies – diversification out of the US dollar for example. (This may seem strange given that Panama’s national currency is the US dollar, but please indulge me for a moment – more on this below)

Panama Private Interest Foundations are an ideal vehicle for ‘family office’ type asset protection applications – similar in many ways to a common law trust, but with a strong offshore privacy advantage. Panama Private Interest Foundations are the instrument of choice for those seeking to pass on their hard-earned assets securely to future generations.

Panama Corporations are often used for trading activities – like import/export, consulting, or – increasingly – e-commerce. You’ll find lots more on these topics in my articles and free reports on this subject in the Members’ Area. You can start with my Report on Panama Offshore Corporations and Banking that you can download immediately for free, with no obligation – right now!

But what about setting up a Panama Corporation, Foundation or Panama LLC?

The initial process is straightforward. The cost can vary from about US$1,500 to US$5,000. You might find some a little cheaper, but many law firms in Panama have an unpleasant habit of adding hidden charges later for documents you didn’t know you needed – so beware. More on this topic too in the free report mentioned above.

Not nearly as straightforward, however, is the process of opening a bank account in Panama. Let’s compare this to the USA for a moment. The USA is still one of the easiest places in the world to open a bank account. Answer a few questions, sign some forms, and, hey presto, you’ve got yourself a bank account.

However, the OECD, American and G20 wars on terror, taxes, drugs, and money laundering have made opening corporate bank accounts in Panama very difficult. These days, Panamanian banks view opening an offshore bank account not as a right but a privilege – especially if you are an American! Expect to jump through hoops.

Up front, you will probably be asked for two bank references. If you have only one bank account currently, you can probably substitute a letter
from a credit card company for the second bank reference. You will also
need at least one local professional reference – in other words an introduction from a Panamanian law or accountancy office. “Who you know” is very important in Panama.

A really good introduction might even avoid the need for the bank references, but then your introducer had better be a personal friend of the bank manager! I’ve seen it done (and, yes, I know how to do it for my clients in need)

Then you will need two forms of government-issued ID with photo: your passport of course, then a second ID, such as a driver’s license.

Armed with those documents, make an appointment to meet with a bank
representative, and prepare your trip to Panama. During your meeting (which will seem more like a job interview), expect lots of questions. Why are you opening this account? How much money will you be depositing initially? Where is that money coming from? How much money do you expect to receive into the account on an ongoing basis? What will be the source of those funds? How much will you be withdrawing from the account each month?

Can you open an offshore bank account online without traveling to Panama? Yes, in certain special circumstances…but it is frowned upon. It is highly preferable to make the effort to get to know your banker face-by-face.

You might however question if you need a bank account in Panama at all. Of course, most Panamanian lawyers will want to sell you a Panamanian bank account. But do you really need one? If your aim is to diversify out of the dollar, for example, it makes a lot more sense to take your Panama Corporation or Foundation, then go ahead and open your account in an offshore bank in another jurisdiction – maybe Uruguay for example. You’ll find more on this and similar pieces of advice in my Panama Report available absolutely free for instant download. Click here to claim your Free Panama Report.

by Frank Suess, BFI Consulting

For centuries, gold has attracted investors seeking to protect their wealth and provide a ´safe haven´ in troubled or uncertain times. This remains a reality for modern investors too, although there are also a number of other reasons that underpin the widespread renewal of investor interest in gold. Gold can add an element of potentially outstanding capital gains to your safety-oriented portfolio. And, if structured adequately, gold will entail a minimal downside risk.

We consider buying gold “the right way” to be a HOT topic and unique opportunity in achieving the following benefits:

• Diversification out of continuously devaluing paper currencies, thereby protecting one´s assets against a loss of purchasing power AND, at the same time, setting it up for capital gains.

• Retaining liquidity and purchasing power for the next upturn in business cycles (which in our view has NOT arrived yet), thereby securing the opportunity of taking part and benefiting from it. It is important that the gold format one chooses is supported by a liquid market, i.e. you want to be able to buy and sell rapidly if need be.

• Safe haven: In volatile and uncertain times, there is typically a “flight to quality” as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among a handful of financial assets that do not rely on an issuer´s promise to pay, offering refuge from default risk. It provides insurance against extreme movements that often occur in the value of traditional asset classes in unsettled times.

• Paper Currency Hedge: Gold is often used as an effective hedge against fluctuations in fiat currencies. In particular, a close relationship tends to exist with the U.S. dollar. When it appreciates, the dollar gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price. While this may also be true of other assets, gold has consistently proved among the most effective in protecting against dollar weakness.

• Added asset protection and privacy: Structuring your strategy appropriately can provide a considerable level of privacy. Depending on the format gold is bought in, there are considerable privacy and safety related differences. More specifically, buying gold “the right way” can mean avoiding reportability and minimizing confiscation risks.

• Portfolio diversification: Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset or group of assets that react in a common fashion. Portfolios containing gold are generally more robust and less volatile than those that do not.

• Physical or virtual ownership: You can buy gold in its physical form and store the coins, gold bars or jewelry that you have acquired. However, storage fees must be considered. And, one must consider a lower level of liquidity compared to a gold certificate or metal account (also referred to as a claim account).

BUYING AND STORING PRECIOUS METALS “AT HOME” OR OVERSEAS?

A key issue that needs to be addressed is whether an investor should buy gold offshore or “at home”. The answer will not be the same for everyone. Depending on your specific objectives and situation, you may be better off keeping your assets in your home country and storing physical gold in your local bank´s deposit box. You might, however, be well advised to buy and store physical gold offshore. Or, maybe, you should consider a mix of both.

Buying Gold “At Home”

Obviously, this is (a bit) more convenient, simply for the fact that you are not dealing with time and language differences. Furthermore, you can have the gold delivered to your home or directly to the local bank or storage facility of your choice with more direct control over your assets. However, a key issue arises — and this applies to U.S. investors in particular – in regards to the risk of government confiscation when buying and storing gold “at home”!!!

How might a gold confiscation be possible nearly 70 years after the last one occurred? This question is best answered with a series of other questions: Firstly, how will the massive U.S. federal debt (nearly $6 trillion and growing) and the outstanding international dollar float (resulting from the U.S. trade and budget deficits) be reconciled?

Currently, the U.S. dollar (still) enjoys a special status around the world as the primary reserve currency. This status encourages central banks and individual investors around the world to hold it. Leaving the various circumstances and potential scenarios aside, what would be the outcome if the stilts that propped it up were kicked out from underneath this built-in dollar market?

How might the U.S.government react to an economic emergency in which individuals, beset by either a devastating domestic inflation or a deflationary nightmare — or both — were fleeing the banks and equity markets for gold as a means of preserving their personal capital?

Historically, confiscation has all too often been the option taken by governments beset by an economic breakdown. Just as gold is the asset of last resort for the individual portfolio doing service in the most financially threatening times, it is often times the asset of last resort for troubled governments as well. As recently as 1998, during the Asian Contagion, both South Korea and Thailand implemented “voluntary” gold call-ins. The temptation presented by its citizens´ gold holdings was simply too facile to resist.

No matter how you look at it, investors must beware of government confiscation risks that rise exponentially in times of a severe economic crisis (as seen under U.S. President Franklin D. Roosevelt in 1933).

Buying Gold Offshore

The advantages of buying and storing gold offshore are primarily related to PRIVACY and ASSET PROTECTION. However, what is required to reap these benefits is a structure that allows you to re-allocate your precious metals rapidly and store them safely. Ideally, this is done in an efficient and low-cost mode despite any geographic distance issues.

Some clients may prefer buying and storing physical gold over a “virtual” gold account or certificate. They perceive a higher degree of safety in this strategy because of the fact that they are allocated a specific and tangible lot of gold. However, storing physical gold is obviously more costly. And, it is generally less liquid than its “virtual sisters”.

Despite higher holding fees, in today´s environment, BFI ultimately recommends holding physically allocated precious metals, preferably in bullion coin or bar format.

Conclusion

Both options, buying gold offshore or “at home” have their advantages over the other. The offshore option is more complex in execution and requires a larger investment. This is not a “do-it-yourself” commodity, unless you have lots of time and like to travel. Therefore, we recommend taking advantage of a full service program as offered by BFI Consulting and some other firms.

When going the offshore route, beware of strategies that sound too simple. Think the process through. And consider the hefty fees and taxes (VAT) you will pay in some European countries.

The “at home” solution is more convenient and efficient. The key risk, in case of a severe crisis, is government confiscation. It appears, however, that if approached cleverly, these risks can be minimized.

Further reading: Frank Suess Jr is CEO of BFI Capital in Switzerland. His firm provides solutions for buying and storing physical gold bullion, as well as offering a range of excellent portfolio management services for high net worth individuals. He can also assist with Swiss Bank account opening.

If you would like to read more about how to buy, hold and store physical gold bullion offshore, visit our Offshore Precious Metals page. You will also find good information for free here on Gold and Silver Investments.

If you’ve been studying the offshore and asset protection arena for a little while, you might well have heard a lot of good things about the strong privacy benefits of the Panamanian Private Interest Foundation. As an asset protection and estate planning vehicle, it’s second to none.

Most of my consulting clients who choose this vehicle are seeking to create a legal structure that will reduce tax liabilities, protect their hard-earned assets from lawsuits or claims, and make sure that on death, their estates pass to their chosen beneficiaries without unnecessary legal disputes or fees.

The Panama foundation is based on the legendary Liechtenstein Foundation or Anstalt, the preferred wealth management choice of generations of continental Europeans. But it is not so well known or understood in the English speaking world. And these days, Panama offers better offshore secrecy and confidentiality than Liechtenstein.

You might well have Googled a few websites and read articles about Panama Foundations in rather confusing terms. Such articles are often written up either by internet marketers who have little idea about law, or by Panamanian lawyers who have little idea about Anglo-American common law and whose first language is not English.

But few people understand what kind of legal animal a Panama foundation really is. That’s probably a very good thing for those of us using them! The difficulty for many clients is of course deciding upon the best course of action or structure to use. But I am about to let you in on the secret… my new free report sets out to demystify the Panama Foundation, explain the concept in plain English, and explain the differences between a Foundation and a Trust of the Anglo-American variety.

Should you set up a Corporation… or a Foundation? Or both? You will find the answers in my latest report specifically about Foundations. It’s called “Panama Foundations: Use and Benefits Manual” and subtitled ‘Panama Foundations and Trusts Demystified.’

Once again, this report is FREE OF CHARGE. I will explain below how you can obtain your copy.

But what exactly is a Foundation? A Panama Foundation combines some of the best parts of a trust, and the best parts of an IBC or Offshore Company into one legal entity. A Foundation is typically set up to passively hold assets like bank accounts, stocks and shares, and real estate.

The key thing is that, unlike corporations, Foundations do not have owners. They have beneficiaries instead (for example, your heirs). The interesting thing about this is that in most countries it legally sidesteps reporting requirements.

Even in the USA, there are ways you can structure a Panama Foundation to legally avoid IRS reporting requirements. Because US tax law doesn’t specifically recognize Foundations, it is quite flexible on this – you decide how to declare your Foundation. (This only applies to US taxpayers. Other nationalities have it much easier…)

In my report I also explain the ultimate asset protection strategy… by keeping the assets in another country on another continent, you are protected not just by strict Panamanian secrecy and asset protection laws, but by something even stronger… what somebody doesn’t know, they can’t tell. You can make sure that your Foundation are structured so there is absolutely no record held in Panama of what the assets are and where they are located.

This new report, free of charge to registered Q Wealth members covers five topics. You will learn:

• What is a Panama Foundation. What is the difference between a trust and a Foundation, and why is a Foundation often more secure and private than a trust?

• Panama Foundations for Estate and Inheritance Planning

• Panama Foundations as an Asset Protection tool

• Banking for Panama Foundations

• Taxation of Panama Foundations

As always, I’ve kept things simple. This report is written in plain English, designed to explain legal concepts in simple terms. It is not an in-depth legal textbook…. But it has been reviewed by both Panamanian and British lawyers.

This report on Panama Foundations could be yours free in the next five minutes or so. All I ask in return is that, if you’ve not already done so, you sign up as a full member of The Q Wealth Report. You will be granted instant access to the Members’ Only section where you will be able to download this report in pdf format. Of course, if you’re already a QWR member you’re ahead of the game – just log in as usual and you can download it right now.

Of course, this brand new report is only one of the many benefits you will receive as a Q Wealth member. We’re not just about Panama – we’re focused on protecting and creating wealth internationally. We do all the hard work, costly research and due diligence for you – to take you from the overload of the information age directly to where you need to be. As a publishing company, not an offshore services provider, we deliver impartial advice from a global perspective – not biased advice from a Central American perspective, which is what you might well find elsewhere. Need I say more?

As a member you’ll also have access, for example, to the Practical Offshore Banking Guide, the report on buying and holding Precious Metals offshore, a report on Due Diligence on High Yield Investment Programs, and much much more… including the free consultation benefit I mentioned above. You’ll also receive every quarter our flagship publication, The Q Wealth Report.

All this, for less than a good lawyer would probably charge just for talking to you and giving you a fraction of this information. $87 per year to be precise. And if you are not 100% satisfied, you can cancel your subscription at any time and request a full refund. No quibbles, no questions asked.

To sign up right now you just need a Visa, Mastercard, American Express, JCB or Discover card. (If you prefer you can also download a mail-in subscription form to pay by cheque or money order)

Sign up online right now at http://www.qwealthreport.com/signup.php

Kind regards,

Peter Macfarlane

Offshore Banking Consultant and Joint Q Wealth Editor

P.S. Don’t forget we also offer separately an absolutely free report on the Hidden Truths Behind Panama Banking and Corporations. You can obtain the Banking and Corporations report without any need to sign up even. If you haven’t got yours yet, get it at the link above.