Offshore Money Book, The : How to Move Assets Offshore for Privacy, Protection, and Tax Advantage

339 Pages·2000·20.19 MB·English

by  Arnold Cornez

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to Noue Rssets Offshore
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Library of Congress Cataloging-in-Publication Data
Cornez, Arnold.
The offshore money book : how to move assets offshore for privby,
protection, and tax advantage IA rnold Cornez.-2nd ed.
p, cm.
Includes index.
ISBN 0-8092-2517 -4
1. Tax planning-United States. 2. Estate planning-United States.
3. International business enterprises-Law and legislation-United
States. 4. Tax havens. 5. Foreign trusts. I. Title.
KF6297.5.C67 2000
343.7304--dc21 99-36082
CIP
This publication is intended to be an accurate, academic, entertaining, and educational pre-
sentation on the very complex subjects of international financial matters, ideas, operating
styles, theories, and related global topics. It is sold with the understanding that the author
and publisher are not engaged in rendering legal, accounting, or any other form of profes-
sional services. If ideas presented herein are to be used by the reader, legal advice andlor
other expert assistance is required; the services of a competent professional person should
be sought.
Caveat: Offshore finance is an extremely complex topic and a likely trap for the unwary
or unsophisticated-avoid the school of hard knocks! Some of the content may beconsid-
ered controversial or too aggressive by some persons. By being presented, it is not in any
way being endorsed.
The author, editor, publisher, and/or their agents and employees shall not be held
responsible for any damages as a consequence of any party utilizing the materials contained
herein.
Cover and interior design by Rattray Design
Published by Contemporary Books
A division of NTClContemporary Publishing Group, Inc.
4255 West Touhy Avenue, Lincolnwood (Chicago), Illinois 60712 U.S.A.
Copyright O 2000 by NTClContemporary Publishing Group, Inc.
All rights reserved. No part of this book may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of
NTCIContemporary Publishing Group, Inc.
Printed in the United States of America
International Standard Book Number: 0-8092-2517-4
05 MV 15 14 13 12 11 10 9 8 7 6
To JUDIE, MY WIFE.
MY THANKS FOR YOUR SUPPORT
DURING THE SOLITARY PROCESS OF
WRITING THIS BOOK.
Acknowledgments xi
...
Introduction to the Revised Edition Xlll
A Note from the Author xix .
Terminology
Are You a Reluctant American?
The Structures
The Participants
The Costs
International Services and Setup
3 WHYG O OFFSHORE?
Reasons to Stay Onshore
Reasons to Go Offshore
Guidelines for Evaluating Offshore Options
Legal Issues and Terminology
Transferring Assets
APT Costs
Basic Offshore Entities
What Can an IBC Do?
IBC Features
Applying for Company Formation and Agreement
An IBC Comparison Checklist
Other Forms of Companies
The U.S. Living Trust
The Evolution of the Trust
Who Needs an APT?
The Parties to the APT
A Trust with a Dual Nationality
Costs
Trust Terminology
Technicalities
Industry Trends
The Swiss Banking System
The Caribbean and Neighboring Nations
Other Offshore Financial Centers
Offshore Credit and Debit Cards
General Banking Rules
Private and Numbered Accounts
Monetary Policies and Exchange Controls
Swiss Postfinance Services
Offshore Foreign Currency Accounts
Private Banking
Privacy
Going Offshore-the Swiss Annuity
The Private Annuity
Offshore Exempt Companies
Demystifying Residence: Domicile,
Citizenship, and Passports
Renouncing U.S. Citizenship
The Living Trust
The Family Limited Partnership
Real Property Equity Stripping: An Asset
Protection Tool
The Unincorporated Organization or
Unincorporated Business Organization
Proprietary Triple-Trust Structure
,
Contemporary Three-Tier Structure
The Pure Trust Scam
The Business Trust
The Pure Equity Trust
Providing for a Child in a High-Risk Profession
Offshore Charitable or Private Foundations
Bankruptcy with an Asset Preservation Plan
Foreign Income Exclusion
Determining Where Your Tax Abode Is Located
Viatica1 Settlements
Foreign Sales Corporations
Offshore Betting and Gaming Licenses
Tax Implications for U.S. Persons
Tax on the U.S. Grantor
Special Tax Concessions by Local Jurisdictions
Excise Tax
Taxes on Annuity Proceeds
U.S. Taxes on the IBC Investing in the U.S. Stock Market 174
Tax on Renouncing U.S. Citizenship I74
I
IRS Requirements for an Offshore Principal Office 176
Applicable IRS Forms I77
Classifying Tax Havens Based on Tax Attributes 185
Passport Review and Travel Agent Records
Telephone Records
Frequent Flyer Programs
Wastebaskets and Garbage Cans
Computer Files
Business Associates
Encryption
Costs, Formation Fees, and Capitalization
Typical Statutory Requirements
Global Insurance Resource on the Web
A Case Study: Putting the Pieces Together 201
A Test for the Reader 203
Avoiding Offshore Scams: Greed-0-Nomics IOI 204
Pitfalls of Bribery 215
Farewell to the Reluctant American 215
Selected Tax Havens of the World 220
I WAS THE "coach," and this book is my "team's" effort, though
most of the people involved didn't even know they were players on
my team. They were my mentors and skeptics; they flattered me in
discussions, but were the very advocates of the devil. And indeed, the
credit for this revised book should go to the hundreds of people who
have most graciously shared their priceless knowledge and secrets
'
with me over the last fourteen years. I was an insatiable dry sponge,
and this book is the essence of the efforts of those years, my "give
back" to those who have helped me along the way. From simple
grape juice comes vsor cognac; from the lowly potato comes Abso-
lut; and from sifting through my daily journals and lifetime experi-
ences for grains of knowledge comes the update to The Offshore
Money Book.
During the final, formative months, the following persons
onshore and offshore directly contributed to this work, and my
acknowledgments are in order.
Vernon K. Jacobs: CPA, CLU; editor, Offshore Tax; from Prairie
Village, Kansas. My unending thanks for your major contribution on
the complex issue of taxes in Chapter 11.
David S. Lesperance; barrister and solicitor, Dundas, Ontario,
Canada. My thanks for a major rewrite of Chapter 10,o n the sub-
ject of second passports and citizenships.
xii THI OFFSHORE tiOH[Y BOOK
My thanks also to the following for materials used in this book:
Jay D. Adkisson, Esq., Irvine, California
E. L. Bendelow, Basel Trust Corporation, St. Helier,
Jersey
Terry Coxon, Petaluma, California
J. Richard Duke, Esq., Birmingham, Alabama
Barry S. Engel, Esq., Engelwood, Colorado
L. Burke Files, Tempe, Arizona
And last, but certainly not least, my thanks to my loving wife of
nearly thirty-five years, Judie, who served as editor in chief (with due
apologies to Danielle Egan-Miller, my editor at ~~clcontemporary
Publishing Group, without whom this revised edition could never
have been finalized). Judie was my unabashed critic and distant com-
fort during the periods of necessary solitude for the research and
drafting of this revision-everything I needed my best friend to be.
Introduction to Reuised Edition
the
So MUCH HAS transpired in the offshore world since the first edition
of this book . . . an entirely new industry, the offshore financial ser-
vices business, has grown at a hyperbolic rate. 1 am not exaggerat-
ing; you will see for yourself.
Daily we are faced with business, financial, and personal deci-
sions that must now factor in instant worldwide news, events, and
needs, both good and bad. Even your vacation plans can include a
. diversion-exploration of offshore business sites, locales for off-
shore wealth preservation and privacy, or perhaps even foreign
retirement as a future expatriate. How would you like your retire-
ment and Social Security checks going to your bank in Nassau while
you're bone fishing in Andros?
Airline magazine ads attempt to seduce you with slick color
advertisements of allegedly tax-free (don't you believe it!) tropical
paradises, while the Wall StreetJournal carries advertisements in its
Thursday classifieds encouraging you to buy or form your own pri-
vate offshore bank in some unpronounceable or unlocatable South
Pacific jurisdiction. What is one to do?