There are many reasons as to why you want to move your assets offshore for protection. Moving your assets offshore protects them from debtors and also from the judgment of a lawsuit. Of course, before you move the money offshore, you need to do it legally and pay any necessary taxes.
You own a variety of assets and not all of them benefit from moving them offshore. For instance, you can’t move your home offshore unless you move to another country. However, there are ways to move some equity from your home offshore — more about that later. Here are some key assets that need to be protected offshore.
If you have a lot of cash, you need to move it offshore to protect it. This would be money that you have in savings and checking accounts. You may need to pay taxes on the money in order to move it offshore, and once it’s offshore, you want to arrange a trust for it. You can set up a tax-free trust or a private placement life insurance policy that’s also tax-free.
When moving cash offshore, you need to be careful about debts you already have or lawsuits that are currently in progress. You can’t legally move the money to pay off a large debt offshore, and if you’re being sued, you need to leave enough cash to satisfy the judgment. To move money to cover these debts is considered a fraudulent conveyance, and you need to avoid even the appearance of that to get a clean move offshore.
Once your cash is offshore, you need to decide where to invest it. If you’re moving around a million dollars offshore, then an international trust is your best option for protection. When the amount you’re moving exceeds 2.5 million, life insurance inside an offshore trust is your best protection of assets. Liquid assets that aren’t as high as the million-dollar mark are best placed in a Panama Foundation. This is a hydride type account that’s part trust, and it’s easily set up and managed.
Stock and Gold
If most of your assets are tied up in stock and a gold portfolio, you need to take steps to liquidate the portfolios before moving them offshore. To handle these accounts and move them legally, you need to sell your stocks and gold. You need to file the sales on your tax returns and pay any capital gains tax on the proceeds to the Internal Revenue Service (IRS). Now, you can move the cash smoothly and legally offshore.
Once it’s offshore, you can decide to place it in a trust or life insurance inside an offshore trust. Another option is to invest the proceeds from the sale of stocks and gold back into stocks and gold. You can purchase an identical stock portfolio if you prefer.
Another asset to move offshore for protection is your retirement funds. You can move your retirement accounts, including IRA or 401-k, offshore, and reinvest them in an IRA LLC. If you have a US defined benefit plan, you may be able to move it offshore. If the plan allows you to convert it to an IRA, you can move it; however, if the plan doesn’t allow the conversion, you can’t.
To take an IRA account offshore, it must be vested. A vested IRA is one that you’re in total control of after leaving your current employer. In some cases, it can take between five and ten years for an IRA account to vest with your current employer. You need to check with your human resources office or the company that manages the IRA to verify its current status.
There are five steps to successfully move your IRA or other retirement accounts offshore. They are:
- You need to verify that the account is vested, and you have full control over the account.
- If the current custodian of your account doesn’t allow international transfers, you need to move all the funds to a custodian who does.
- Create your offshore IRA LLC.
- In the name of your Limited Liability Company, open bank accounts offshore.
- Request that your custodian in the United States transfers the funds to your IRA LLC.
Real Estate and Homes
Real estates and property are little more complicated if you want to move them offshore. If you’re determined to move the real estate offshore, you can create a complex trust and then move the titles of all of your properties to the offshore trust. This will offer a certain level of protection to your assets but not as much as your other assets.
In the end, the land and the home are still within the borders of the United States. There’s no way to know how an American judge might rule on this property. Also, you may lose the $250,000 tax exemption of the house that serves as your family’s primary residence, and that can add up to a lot of money lost in education and an increase in your yearly tax bill.
One last thing to consider with moving the titles of the properties offshore is the US filing requirements to create the trust. These filings are many and complex. You’ll need to hire a professional to set this up for you.
So that’s it? There isn’t a way to move your equity in your real estate offshore? Well, there is one way. You can get a loan against the properties and their equity, and then move that cash offshore and move it into a trust. Of course, this essential creates new mortgages on the properties that you’ll have to pay monthly. It isn’t a good idea to default on these loans.
There are a lot of ins and outs of moving your assets offshore to protect them from lawsuits or creditors. You need the help of a professional to ensure that you do everything correctly and legally. At Silver Tax Group, we have the skills and know-how to help you move your assets without repercussions. Contact us to schedule an appointment.