I recently learned that the U.S. is actually one of the top three tax and asset protection countries in the world. The Tax Justice Network ranks the U.S. third in terms of the secrecy and scale of its offshore industry, behind Switzerland and Hong Kong but ahead of the Cayman Islands and Luxembourg.
According to James Henry, a senior adviser to the Tax Justice Network and former chief economist of McKinsey & Co., offshore isn’t so much a destination anymore as “a set of capabilities,” which include ensuring secrecy, minimizing taxes, managing assets, and providing clients security and access to their wealth from anywhere in the world. According to Mr. Henry, the U.S. has an onshore haven industry that is as secretive as anywhere else in the world.
Conservative asset protection and estate planning would still dictate that someone holding assets in the U.S. will want to have a trust company in one of the main asset protection states (such as Delaware, Alaska, Nevada or South Dakota). That company will charge a trustee fee just like the offshore company would. Depending on the amount of assets under management, the U.S. trustee’s fee could be much higher than that charged by the offshore trustee. And really conservative asset protection would dictate naming an offshore trust company as a successor trustee.
So, what’s the conclusion after all this discussion? I’ll give my lawyer answer: “It depends on your personal situation.” If you are a U.S. citizen and want to open a bank account in a foreign country, a possible solution would be to form an offshore trust (which can include asset protection features) that owns an offshore LLC. That offshore LLC can (I am told) then open a bank account. Otherwise, if you are a U.S. citizen and don’t have any interest in having foreign connections or a foreign bank account, just use one of the main states that have asset protection trust legislation. However, I would still suggest naming an offshore Cook Islands trust company as successor trustee just in case. I suggest Cook Islands because their law is more settled and therefore more predictable. Also, they have a higher trained court system.
WARNING: Proper asset protection planning is more complicated than simply forming an asset protection trust. You should NOT play around in this area. Good asset protection attorneys are expensive, but it is worth what you pay them. In future posts, I will discuss more of the details to good asset protection planning, including the use of insurance and business entities, as well as just following good business practice (if you are a business owner). Nothing I have written is intended as legal advice or forming an attorney-client relationship. Feel free to contact me if you want assistance with asset protection planning. However, do not send me any confidential information until I have conducted a conflict check and we have signed an agreement entering into an attorney-client relationship.
Feel free to contact Paul Deloughery at 602-443-4888 if you have any questions. Mr. Deloughery is admitted to practice law in Arizona.