You might be wondering if you need to think about offshore asset protection. Especially, if you are not rich. You might be thinking to yourself, what do you need to protect? You do not have many assets. Offshore asset protection is only for the rich, right? Beside, is not it illegal?
Or you might be thinking you are happy with your current tax burden. Or you are thinking if you are careful, you never have to worry about a lawsuit.
But, after you have finished this article, you will know asset protection is something everyone should consider. No matter what your current financial situation.
Offshore Asset protection means basically one thing. You are taking your assets, and legally separating yourself from them. You still have control over those assets. But, they do not belong to you, so they can not be taken away.
The reason you need to think about this now, when you may not have many assets, is the extra layer of protection you will have when you do.
Let's look at a couple of assumptions you should NOT make. So you understand why asset protection is important.
Being Careful will Protect You
Sorry, this is absolutely untrue. There are scores of baseless lawsuits filed in the US every year. In most cases, even if you win, it will end up costing you thousands of dollars. Worse, you could be wiped out overnight. Even if it is not your fault.
In the case of a settlement, your asset base will still drop several thousand dollars.
But, if you do not have many assets, because they are offshore and untraceable, corrupt lawyers will stay away. They will not waste their time chasing you.
My Children's College Fund is Safe
Wrong again. If something happens to you, and this account is in your name, it could be taken. Think bankruptcy, lawsuit, or a million other things.
You might be thinking you're safe from foreclosure, but imagine this scenario. You are 60 years old. You have saved all of your life. You are about to retire.
Then the economy crashes, and now your house is worth less than you owe. A lot less. You are not working, and now you are forced into foreclosure.
Not possible? Over 60% of all mortgages in the US are currently “underwater”. This is not the homeowners fault. Even “responsible” owners who put down large down payments are losing their homes.
What if that happens at the wrong time in your life? Your children's inheritance could be taken from you at a point in your life where there is no way you could ever make it back.
If you had a trust fund or other offshore structure setup for them, they would be protected. Even if you were suddenly forced into bankruptcy or other financial hardship.
My Children will have an Inheritance
This is the topic of an entire other article, where I can describe how a 10 million dollar inheritance could amount to nothing left over for your children.
Is your children's inheritance really safe? First of all, you have the death tax, so almost 50% of that inheritance is gone already. Then, any creditors that you have when you pass away will get a chunk of the remaining assets. See the above paragraph for examples of how this can happen.
Once you have worked hard your entire life, you should not have to worry about all of your remaining assets being taken. With the right offshore structure, you do not.
The Tax Structure in my Home Country will stay Reasonable
Maybe you are happy with current rate of tax that you are paying. But what if tomorrow the government decides to tax you 90% of your current, existing assets? Even if you are living out of the country? To fund something you find morally wrong?
You do not believe it could happen? Hopefully it will not, but it has happened in other countries. It is your responsibility to protect your family. Prepare for the worst, and hope for the best.
The fact is, if you do not do proper asset protection now, it is very unlikely your children will see even a small portion of your net worth. This is true if you are worth 10 million dollars, or only 100 thousand dollars.
Offshore Asset protection is just like insurance. You hope you never need it. But it can save you from catastrophe if you ever do.
With laws and government spending out of control, the only person you can rely on to keep your family safe is you. The government certainly is not going to do it for you.
Offshore asset protection, when done correctly, is perfectly legal. It has this aura of somehow being wrong, but if you are not using it to “illegally” move around your assets, and do it right, it is fine.
The largest thing is to make sure you follow the proper tax reporting requirements. You need to make sure you have proper legal help. In both your home, and the offshore country.
Now is the time to get protected. Because once you need it, it is too late. At that time, moving your assets offshore might be illegal. For example, after a judgment is placed, since it has already been appropriated for creditors, etc.
Society is changing. Many people are looking for a free ride on your dime. It is up to you to protect your assets. In fact, it is your responsibility.