STRATEGIES
Presented
aT
The Oxford Club & The Sovereign Society
International Investment
Seminar
Bermuda Brain Trust, Bermuda |
 |
As the U.S. has the ugliest tax and
litigation environment in the world, most of my clients
are U.S. citizens. Let me apologize in advance to those
of you who are not citizens of the United States because
I am going to focus mainly on issues for Americans. However,
if you read this material, you will probably find some useful
advice for yourselves.
You've probably heard bits and pieces
about becoming non-resident, expatriation, and economic
citizenships/ second passports. Well these are the topics
within this material. I'm going to expose the realities,
blow apart some of the myths, and look at possible benefits
to you. I have attached article that will cover everything
I will be reporting in exhaustive detail. With this material,
I hope to open your eyes to some new possibilities
STRATEGY
Let's start with a quick overview of
the two ways that an American can move out of the U.S. and
gain significant tax and asset protection benefits.
1. Remain a U.S. citizen but establish
a foreign tax home.
2. Expatriation.
The article is a"Leaving
on a Jet Plane" complete guide to the benefits
and implementation of these two strategies.
In short, a U.S. citizen who moves offshore and establishes
a foreign tax home can save income tax on about the first
75 to 80 thousand dollars in income. This may be all they
need to do if they can deal with their additional income,
capital gains, gift and estate tax liabilities in other
ways. It may also be a stepping-stone to the second strategy
- expatriation.
In a tax sense, an Expatriate is someone
who not only establishes a home outside the United States,
but who also gives up U.S. citizenship.
At first blush, giving up American citizenship
seems like an extreme measure that's unthinkable. If the
financial benefits in tax savings are significant, however,
it is an extremely viable strategy. After all, most people
in the world appear to get along quite nicely without American
citizenship. They also do without the almost unique U.S.
rule of taxing individuals simply because they are citizens.
Every other major country has tax rules that say, "If
you reside here, then we start talking about taxation".
The U.S. says "Even if you haven't even visited the
U.S. in years, we will still tax you and your estate, because
you have the original tax sin of being an American citizen".
In the article "H.
Alger sets himself free" I have mapped out
a possible expatriation strategy that some of you in this
room may want to consider.
Generally, expatriations is worth a serious
look if you have more than $350,000 in annual income or,
if you are married and have an estate of greater than $3,000,
000 or $1,500,000 if you are single.
To explode a common myth - expatriates
are generally not trust fund babies, athletes or movie stars
- although I have a few of them as clients. They are, for
the most part, people who built up their own wealth one
dollar at a time, and have the radical notion that they
would like control over how it is spent.
You may have read in Forbes or the Wall
Street Journal that the U.S. government passed a rule, barring
expatriates from ever visiting the U.S. again. It is a complete
sham. Although I am an avid reader of those publications,
I wish they would be a little more vigilant and avoid being
part of the propaganda machine.
My article "Can
U.S. Expatriates be Barred from the U.S." outlines
a way to legally avoid any problems in this area.
This strategy has been acknowledged,
in writing, by both the State Department and the INS as
being an absolutely accurate interpretation of this toothless
law. My clients also have the comfort of an opinion letter
from the largest U.S. immigration law firm on this issue.
So - whether you are simply establishing a foreign tax home
or expatriating - your new residence must be one that fits
your personal and business lifestyle. For some people, Bermuda
or other traditional tax havens are the right answer. However,
a booming part of my practice is bringing people to non-traditional
destinations like Canada, the U.K. or New Zealand. These
places are generally thought of as high tax jurisdictions,
but they can be low tax jurisdictions with some proper tax
planning.
The article entitled "Canada:
A Non-Traditional Tax Haven" gives you more
information on this topic.
SECOND COUNTRY PASSPORTS AND/OR ECONOMIC CITIZENSHIPS
Second Country Passports and/or Economic
Citizenship programs do carry a price tag, but in the right
situation, a second citizenship may pay for itself many
times over. My clients are purchasing economic citizenships
for tax, privacy and security reasons.
The article "Economic
Citizenships/Passports: Myths and Reality"
will help you decide if they are right for you.
If you read nothing else in my materials
package, read the article "Your
Passport Portfolio". It is a paradigm shift
for most people. It looks at citizenships and residences,
not through the rose-colored glasses of patriotism, but
through the clear clinical analysis of business.
In considering economic citizenships,
a simple but critical point to understand is that passports
are the travel documents issued by a country to its citizens.
First you become a citizen, and then you get the passport.
Some enterprising "consultants" are actually trying
to sell "passports for non-citizens". This is
an oxymoron, but I suspect that they have managed to separate
some people from their money.
"Economic
Citizenships/Passports: Myths and Reality " gives
you a step-by-step guide to becoming an informed consumer.
HISTORY OF ECONOMIC MIGRATION
I'd make an educated guess that most
of you can trace your ancestors to another country. They
probably left for some of the same reasons you're sitting
in this room today - conditions in their country of origin
were becoming intolerable and they wanted to live a better
life.
So, this really isn't a new story, although
the 20th century has made life easier for travelers and
immigrants. Planes are a big improvement on weeks at sea
in overcrowded leaky ships.
Purchasing an economic citizenship is
much more pleasant than buying tracts of land that have
to be cleared and planted. But in the end, it amounts to
the same thing - people are in search of the freedom to
conduct their own affairs in line with their values, without
undo outside interference.
The decisions your ancestors made -
to look beyond their homeland - have had a profound effect
on your life. They had the courage to ignore the dire warnings,
sneers and guilt of neighbors, landlords and rulers. They
acted in the best interest of themselves and their families.
Your ability to have this same courage
will have just as strong an impact on your heirs.
Do you have the courage to look beyond
the U.S.?
