Asset protection as a concept is very simple – you place valuable assets such as property, cash or even your business outside the reach of potential creditors or litigants. To enable you to do so you can physically place assets offshore or you can create some form of legal structure such as a trust to hold the assets for example; but actually taking the most appropriate action for the protection of your own personal assets is a very complex undertaking that requires specialist legal, financial and taxation assistance.
You might not think that this is the case however, because if you look online you’ll see a whole host of so called asset protection solutions available to you – some of which you can even buy same day, off the shelf! In actual fact such solutions are liable to strip your assets in terms of the capital you have to lay out to purchase them, and they may even be illegal or at least unsuitable for your own requirements. In this article we’ll have a look at how to avoid the most obvious offshore asset protection scams because there are a lot of them out there.
The very first point that needs to be made is that asset protection as a concept is legitimate and can be appropriate for many people. However, the way you as an individual go about handling your familial, fiscal and business affairs is a very personal choice dictated by a series of intimate factors relating exclusively to you and your circumstances, which is why you should not enter into any decisions or take any action relating to the protection of your assets offshore or onshore without taking qualified legal, financial and taxation advice. Please note, neither this article nor any of the content on this website constitutes advice of any kind.
Having made that fact abundantly clear, the first offshore asset protection scam you need to avoid is the one where so called advisers offer you their services. You have to check the legitimacy of anyone’s claim to be able to offer you advice. You need to check personal credentials, follow up on references and professional body membership or affiliation claims, and you need to determine how experienced they are in the field in which they will be advising you.
The next thing you need to be aware of when watching out for scams and false claims is that anyone who tells you that you will be able to legitimately avoid personal income tax by placing assets offshore should be avoided! Yes you can potentially protect your estate from inheritance tax with a specific asset protection plan but no, if you’re a US or British citizen residing in your nation of domicile for example, placing assets offshore will not in some way protect you from income tax! For expatriates and non-doms the situation can be different – but take qualified advice.
Another taxation false claim is that you will only pay tax if and when you remit income or bring assets back onshore. Again, this is not usually the case! Highly attractive potential taxation saving benefits of going offshore, offshore asset protection or any other form of placing or investing assets overseas are unlikely to be legally achievable, so tread carefully. One way in which your adviser might suggest getting around the issue of something not being ‘legally achievable’ is through non-disclosure. Some advice may be given along the lines of ‘what the eye doesn’t see the heart doesn’t grieve over’ – i.e., you may be advised not to tell your taxation authority about assets you hold offshore because they’ll never know and therefore never worry about it! Please note, non-disclosure is illegal! It is SO illegal that when you are found out you will face the back payment of taxation lost, fines and possibly even a prison sentence. So, don’t listen to anyone who tells you to lie.
These are the most common offshore asset protection scams that you need to be acutely aware of. There are a whole host of others that relate to illegal or unsuitable solutions being proposed and/or the use of less than ideal or even unscrupulous overseas jurisdictions for the depositing of assets or the registration of businesses or trusts for example. However, if you read and understand the above list of the most common scams you will quickly realise that finding the right, legal, most appropriate solution really comes down to finding someone you can trust and who is qualified to assist you. If you put all of your initial efforts into finding the right advisory you will hopefully be on the right path to creating the most suitable solution for your needs.
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