Establishing and growing offshore assets is something that you should seriously consider. Far from being a financial approach limited to the rich, it’s possible for those in the middle-class economic bracket also to make use of these resources.
If you’re wondering how to structure your offshore assets, there are three key elements to include. Each one will help you incrementally build wealth and ensure your future financial well-being.
1. An Offshore Checking Account
The foundation for your international efforts is an offshore checking account. The account will function much like the one you have at home. It’s possible to initiate international wire transfers from the account and make any payment that you like. These accounts also come with debit cards, making it easy to use them whenever the need arises.
What sets this account apart from your domestic checking? One has to do with the amount of interest that the balance generates. A checking account based in the right location will provide more interest on the balance if you maintain the minimum required by the bank. In some cases, the interest rate is tiered; that is, as you exceed a certain balance, the rate of interest increases.
There’s also the fact that using the funds in your offshore account when traveling could save money or make it possible to complete certain types of payments faster. Since you opened the account with a bank in a nation where you visit regularly, it’s easy enough to utilize that checking account during your stay.
Keep in mind that the account funds are not subject to seizure should you have any issues at home. Generally, liens and other types of legal issues don’t include the ability to touch offshore assets. Even if your checking account at home is seized for some reason, the money in your offshore checking account remains under your control.
2. An Offshore Trust
Like a domestic trust, an offshore trust is created for the specific purpose of allocating and controlling specific assets that ultimately serve the interests of intended beneficiaries. An executor or trustee is responsible for managing the assets pledged to the trust, including monitoring the assets and handling disbursements to one or more beneficiaries. Trusts can be structured so that beneficiaries begin to receive regular disbursements either before or after the trustor passes away.
There are several benefits associated with establishing an offshore trust. One has to do with the variety of assets that can be held within the trust. While most of them would also apply to domestic trusts based in the United Kingdom, Canada, or the United States, other assets may be based in the same country where the trust is located. Various forms of real estate holdings, investment accounts, and even artwork or jewelry may be placed under international trust control.
Another advantage has to do with tax obligations. Utilizing an international trust may allow the trustor and the beneficiary to lower the domestic tax due on any assets held in the trust.
The fact that the assets held in the trust cannot be touched in the event of financial trouble at home is also a good reason to consider this approach. For example, the trustor gets sued, and the court orders that all assets be turned over to settle the judgment. A trust that’s based in an international setting is under no legal obligation to surrender those assets. They remain in the control of the trust.
3. An International Business Company
International business companies are often a great solution to limit taxation. Depending on the venue, there may be no domestic tax obligation and only a minimum amount of tax due the country where the IBC is located. The fact that almost any type of business entity can be established in an offshore setting makes this a good idea for more than businesspeople.
You can certainly establish an operating company as an IBC. Depending on the laws that prevail, you may or may not be able to establish anything more than a business office in the country where the IBC is based. The type of business involved may also impact how much of a physical presence you can have within that jurisdiction.
One example of how an individual may decide to use the IBC model is freelance work. Creating an international business company as a way for the income from freelance projects to flow to you can help minimize the tax obligations. In effect, you would use business bank accounts for some purchases, while also paying yourself a salary. There would still be some taxes due on the amount you’re paid as a salary, but the obligation on funds that are held in company accounts would remain taxed at a low rate or not at all.
Can You Benefit from an Offshore Resource?
Consider how each of these resources could help you build a strong financial presence outside your country of origin. Whether to build wealth for future projects or with an eye toward making your retirement years more comfortable, these three will serve you very well.
I hope you got value from reading: 3 Offshore Resources That Should Be Part of Your Financial Planning. If you would like to talk with Luigi Wewege, please reach out to him HERE
Please note that Escape Artist is not a tax adviser and recommends that, if you are in any doubt as to your tax position, you seek independent advice from an accountant or other suitably qualified professional. Caye International Bank also operates in accordance with international compliance, anti-money laundering and know your customer regulations.
About The Author
Luigi Wewege is the Senior Vice President, and Head of Private Banking of Belize based Caye International Bank, a FinTech School Instructor and the published author of The Digital Banking Revolution – now in its third edition. You can follow his posts on trends shaping the banking and financial services industry on Twitter: @luigiwewege
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