Top Five Reasons You Need Offshore Asset Protection

Protecting assets can mean many different things to different people; it can also depend on what country you live in. In general, it means protecting your assets from financial enemies that wish to seize those assets for themselves for varying reasons whether they are private parties or a creditor agency.

It is important to make sure your assets are protected as in many countries laws make it is relatively easy for someone to seize your assets for any number of reasons. In order to ensure financial security and continuity one needs to make sure assets are:

• not in your personal name (nominee services)
• are not easy to locate (ie. offshore account or company structure) 
• are located in an foreign country  (ie. overseas jurisdiction )

Using nominee services enables directors and shareholders to hold shares and directorial power on your behalf, keeping your names off important company documents. (This situation is not suitable for every situation, so be sure to get legal advice before you incorporate)

Table of Contents:

• Top Five Reasons You Need Offshore Asset Protection
• Conveyance of Assets
• Statute of Limitations
• Offshore Asset Protection Solutions for Protecting Real Estate Assets
• Offshore Asset Protection Solutions for Liquid Assets
• Multi-Jurisdictional Offshore Asset Protection

The use of an offshore jurisdiction is important as corporate laws in these jurisdictions make it difficult for your enemies to fish around for information. For maximum protection, ideally, such jurisdictions are not a party to any information-sharing agreements with other countries and do not recognizes foreign court judgments. 

An offshore bank account, company, trust, or foundation located in an overseas jurisdiction gives you a reliable plan B in case there are domestic disturbances. Everything from governmental seizure, creditor harassment, fraudulent legal claims, professional malpractice suits to economic and political instability.

Top Five Reasons You Need Offshore Asset Protection

1. With very little effort almost anyone (a tax authority, someone who is suing you, a selfish ex-spouse, etc.) can get a clear picture of your personal and financial information.

• How? Simply by tapping into the vast amount of data that is stored on everyone. Detailed records are kept not only by the federal government but also by state and local governments, the census office, the credit bureaus, insurance companies, health authorities, financial institutions, internet companies, and so on.
• Such records include tax returns, various licenses and registrations, marriage certificates, deeds, court documents, credit reports, medical histories, marketing profiles, insurance applications, etc.
• What is worse is that you have little to no control over how this information is collected and disseminated. For instance, in many countries creditors, litigants, and private detectives are often allowed to find out how much money you have in the bank.

2. People who stand out as successful, wealthy individuals, may become targets of unwanted lawsuits.

• If your wealth and assets can be easily detected, you may be attracting unwanted lawsuits, be it divorce suits, damage suits, professional negligence suits, and nuisance suits. Once you get involved in a lawsuit such as these, it will not be long before your assets evaporate.

3. As a director or officer of a corporation, you may lose some or all of your personal assets if the corporation is sued.

• Most lawsuits these days will name the directors of the company in addition to the company itself and most countries courts now make it very easy to penetrate the 'corporate veil' and go after the directors of the company as well as the owners.

4. Retirement does not protect you from malpractice or liability exposure.

• You may be sued for events that took place many years ago, as long as the applicable statute of limitations did not expire.

5. In certain cases, the courts can allow your creditors to seize assets held in the names of wives and children, as well as retirement funds.

• In the case of wives’ and childrens’ assets they can be deemed to be 'fraudulently transferred' if done within at least three years prior to the beginning of the lawsuit. In certain cases if the court decided that they benefited from 'illegal enrichment', the court can order creditors to seize those assets of up to five years back, if it is seen that they financially benefited from you over a longer period of time.

Conveyance of Assets

The critical element in protecting assets such as real estate, if they are already in a vulnerable position under your personal name, is the ability to move those assets to safety.

If you are already in the middle of a lawsuit that you feel could go badly for you or you anticipate one shortly, the question of moving assets is very critical, because courts in many countries will deem the transfer of title on a property, to be 'fraudulent' if done anytime within the prior three years before the time of the filing of the suit. 

Each country and state have their own time limit to define what is a fraudulent conveyance, but in general three years is the minimum and sometimes it can be as many as five years.

A court can compel the repatriation of assets conveyed within those time periods and, to refuse, can put you in contempt of court. Since things like property deeds show a clear chain of title that is publicly available, there may not be many options available to you if you are already in the middle of a lawsuit.

However, if no lawsuit has been filed, the sooner you put in place an asset protection plan for those assets the easier you will sleep at night, even if you are not in any imminent danger.

Sometimes your financial enemy’s lawyers are lazy and they may only do a cursory public record check to see if there are any assets held in your name.  This they may do to first see if there are any assets to go after and a search that comes up negative may mean that the lawsuit never gets filed.

They may not have any leads to delve deeper into the ownership history on a particular property unless they have done their own investigative work and been furnished with other information about where you were known to have owned property in the past. Public records are accessible and stored at a local level. Unless that lawyer already has an inkling of where properties may be located and therefore knows what counties or specific records to look in, it could take much longer than any lawyer would ever want to spend. 

Statute of Limitations

Even if you are within the time limit for a conveyance to be considered 'fraudulent' you may still be safe, since public records will show that you do not own any property.

If a lawsuit does eventuate and a judgment against you is obtained, the court will then require a detailed examination to take place of your assets. Part of that examination would entail the disclosure of any assets sold or conveyed with the previous 3 or 5 years depending on the law of the state or country.

Since this information has to be provided to the court under penalty of perjury, it will put you in a difficult position because to not disclose information that subsequently gets discovered could expose you to criminal prosecution.  Cash and securities conveyed come under the same guidelines and the burden will be put on the transferor to show what was the purpose of the transfer and why they cannot be repatriated.

Protecting Real Estate Assets

For property, the best option is to use a local limited liability company (U.S. and Canada) otherwise known as a limited liability partnership (U.K. and Australia), which we can assist in setting up. Other countries not listed above, each have their equivalent to a LLC or LLP, which we can advise on. What we do is set up the LLC or LLP with the foundation as sole member or 99% member if a minimum 2 members are required, such as many U.S. states LLC’s or the U.K. LLP.

For the U.S. we recommend the Delaware LLC, which only requires a single member. The president of the foundation is appointed as General Manager who can then be the signatory on the other side of the conveyance transaction. 

The same solution can be used for vessels, vintage or luxury cars and depository storage of paintings, precious metals etc. or any other asset that entails a title record maintained by some governmental or private entity. Obviously assets stored in your own home would be harder to protect this way, because it would be harder to prove that some other entity actually owns the asset rather than yourself.

For this to work the property or other asset would need to be owned free and clear. Therefore, if there is an existing mortgage, on the property for instance, the lender is usually not going to allow you to transfer the property to a corporate entity without the loan first being paid off.

If this is not possible, then another option could be to try and refinance the property to the maximum loan to value amount possible. Even if you do that there is still probably going to be equity that needs to be protected and so another possible solution is to file a so-called a 'friendly lien' from an offshore company.

This has to be done carefully because courts have become familiar with this type of strategy and may possibly question whether or not you have any type of interest in the company.  For obvious reasons this entity filing the lien needs to be at 'arms length' from the property owner and not associated in any way.

We can provide so-called 'shelf' or 'ready-made' companies for this purpose, which have been set up for a few years and therefore have a history behind them. Please contact us for more information on using a shelf company for this purpose, as well as current shelf company options and pricing. 

See more: Offshore Company For Real Estate

Protecting Liquid Assets

In general the following are the general requirements to consider when considering how 'bullet proof' an offshore asset protection strategy will be:

Does the chosen country have information-sharing treaties? 

• Panama is an obvious choice, as it has none.  A few others like Belize are in a similar league, but watch out because many so called 'tax havens' are rushing to sign information sharing agreements to appease richer Western nations. Many of these countries are poorer nations that use such corporate tax benefits in their bid to attract foreign capital. Panama’s chosen strategy to appease is to sign far less damaging dual taxation agreements rather than entering into tax information sharing agreements that would institutionalize endless fishing trips for information from the U.S. and other advanced nations in a constant one way flow of information

Does the chosen country recognize foreign judgments? 

• Panama along with Belize, Nevis and a number of other offshore jurisdictions nations do not.

Does the chosen country have strict banking secrecy and prohibit 'fishing' expeditions (governmental agencies and private investigators being able to hunt down information on assets and their owners)? 

• Again Panama is at the top of this dwindling list.

Does the chosen country publicly disclose corporate shareholder information? 

• Panama and many of the other Caribbean and island tax havens still do keep this information private.

Does the chosen country make it easy for litigators to bring their suits to file in their court system? 

• Once again Panama and a few other jurisdictions such as Cook Islands and Nevis do not.

Does the chosen strategy provide a comprehensive director and shareholder solution and/or third-party managed solution? 

• At a minimum, we recommend the setting up of a foundation and one or more companies where it acts as sole shareholder. See more on our foundation owned company strategy and why. Some or all of these companies could be in different jurisdictions from the Panama foundation depending on what else needs to be accomplished besides just the asset protection.
• The general approach is the more 'arm’s length' the set up is from the original owner the safer one will be. Therefore a more comprehensive solution could involve the set up of an International Fiduciary Structure and/or use our professional management and signatory services option which will give another layer of protection of the assets and give distance from their original owner.

Multi-Jurisdictional Offshore Asset Protection

For protection of liquid assets it is vital to only use countries with strict financial privacy. The most effective way in dealing with this is using our multi-jurisdictional approach where one or more structures are set up with a bank account in a different country that has a number of benefits. Transfers out of your country first go to a different company bank account and country where they reside for a few months to keep that bank happy. 

Little by little, some or most of the funds can be then forwarded on to another company in a different country or they could go to a separate brokerage account held in another country such as Panama that has strict financial privacy. 

We have created a special package known as the multi-jurisdictional company / banking package that utilizes two different companies, one set up in Panama, the other in Belize, each with their own bank account in those respective countries.

Both companies are owned by the Panama foundation, which also can be a very useful vehicle for the repatriation of funds by the way of gifts to your children, for instance, as well as to manage and plan your global estate.

However, it must be clear that we are not endorsing tax evasion nor the non-reporting of accounts, but merely tax minimization and the proper securitization of accounts from any possible threat.