How to Keep Your Money Away From the Grasping Hordes

International Living Postcards-- your daily escape

Friday, Nov. 3, 2006
On the outskirts of Panama City, Panama

Dear International Living Reader,

"Turn out the lights, the party's over." And I'm sorry to see it end. After four fact-packed days of learning more about offshore investment opportunities than most people will even hear of in an entire lifetime, I'm sorry to see them strike the sets, kill the mikes, and bring the curtain down.

After all, how often do you get to spend dawn to dusk with 55 of the world's top international investment experts all gathered under one roof? How often do you get to hear the inside insights into how to reinvent yourself by resettling in a tropical paradise and living like a king for pennies on the dollar?

Today, we learned how to Profit from Offshore Opportunities. And equally important, we learned how to keep those profits far away from the out-stretched hands and upturned palms of greedy lawyers, grasping spouses, lien-hungry litigants, and the ravenous hordes of IRS agents who would gladly follow you to the grave (and beyond!) to pick your bones of your last nickel. (Just in case any among those ravenous hordes are reading this copy, allow me to add, as Seinfeld would say, "Not that there's anything wrong with that.")

In short, Day 4 of the "Ultimate Event" was the ultimate resource for learning all you will ever need to know about offshore asset accumulation, allocation, and protection. And while I can't fill you in on all of the details, we can at least hit some of the high points. So, let's get started…

A Surefire Formula for Financial Success
in the World Beyond the Next Horizon…

My favorite international business lawyer (and one of the few I can actually understand), Joel Nagel, started off the day at 8.00 a.m. with sharp advice about what it takes to strike it rich in an offshore business.

In a word: Knowledge.

As Joel explained it, you either need to have it…you need to acquire it…or you need to buy it. It's just that simple.

He gave the example of a close friend of his who called one day to tell him he had decided to buy an offshore teak wood plantation. When Joel pointed out to his friend that he didn't know teak wood from bamboo shoots, his pal replied, "No, but I can learn." Which he did.

The friend spent two full weeks in the Library of Congress studying every book written on teak since Noah built the deck of the Ark. He then hired the finest experts he could find--and followed their lead to make a fortune.

He also followed Joel's five-step formula for finding success in the offshore world. And, so should you. Here it is:

1. Explore and exploit your own real interests--Starting an offshore business is not for dabblers who happen to think they'll "give it a shot." As the Scarecrow told Dorothy about the trek to Oz, "It's a long journey through a dangerous country." So, if you're going to invest your time and money, make sure it's something in which you have both your head and your heart.

2. Do your homework--You may not have the Library of Congress within easy driving distance. But you do have the local library--and the Internet. And both can help with your due diligence. Check out every aspect of your new offshore endeavor--including locations, supply and demand, potential partners, local laws and regulations, and likely competition.

3. Get the right help--You may have to pay experts a little more--but in the long run they cost less. In other words, if you're going to start a piano moving business, you don't want to settle for Stan and Ollie. Enough said.

4. Make friends--Starting a new business on a distant shore is not a smart move for tight-lipped loners. To be successful, you need to be warm, open, humble--and unafraid to ask for help.

5. Be over-capitalized--Joel's advice is to take half as many clothes and twice as much money as you think you're going to need. And be willing to face the tough, hard-nosed fact that you probably won't turn a profit for the first three years.

It's Joel's opinion that, in all likelihood, if you aren't willing or able to follow that formula…well, sadly enough, you may quickly learn that the surest way to make a small fortune is to start with a big one.

On the other hand, if you are willing to follow the offshore formula, you could soon be in for the most exciting--and rewarding--offshore adventure of a lifetime!

Safely Protecting Your Hard-earned Assets--
It's All a Matter of Trusts…

Whether you make money offshore, or take money offshore, the next important step is knowing how to protect it from the prying eyes and prancing fingers of governments, grifters, and other clamoring claimants and creditors. And as you may already know, they are, indeed, legion.

That's why Day 4 featured one of America's leading authorities on shielding your assets by "Holistic Wealth Protection Planning," Michael G. Chatzky. With nearly 40 years experience in the fields of foreign and domestic trusts, Michael has helped thousands of clients save countless millions of dollars through virtually impenetrable wealth preservation structures.

I don't think I have to tell you too strongly that in today's world, one of the most important things is to protect the nest egg you've worked long and hard to build. As Michael explained in his opening remarks:

"The need to protect your wealth has become more acute as our society has become more litigious. An estate that has taken many years to accumulate can be instantly evaporated by a single adverse judgment."

To help prevent that instant evaporation, many savvy estate owners--large and small alike--are turning to offshore havens offering essentially ironclad asset protection trusts (APTs). Among these well-established APT haven nations are: Antigua, Barbados, The Bahamas, Belize, and the Cayman Islands.

Which one you choose is up to you and your financial advisor. But, whichever one you choose, here are five key criteria to consider when making your APT decision:

1. Make sure the country in which you have established your trust doesn't honor foreign judgments against your assets. After all, that's the whole point of an APT, isn't it?

2. Make certain the country has reasonable "fraudulent conveyance" rules. Belize has, perhaps, the strongest protections in this respect, assuring immediate cut off of creditors' claims at the time the trust is settled.

3. Avoid the "self-settled trust" restriction. Some countries require you to relinquish the right to be a beneficiary of your own trust in order for it to protect against future creditors. Again, that defeats the point of the APT.

4. Look for countries that have eliminated--or, at the very least, ameliorated--the rule against perpetuities. The Cook Islands is a case in point.

5. Make certain the country does not tax the income, earnings, gains, or profits of the trust or the parties to the trust. In addition, make sure the trust is designed to minimize or avoid any taxation under the tax laws of other countries relating to the trust.

Now, I know that all of that is pretty complicated. So, as they say on TV, "Don't try this at home." The bottom line, in Michael's own words, is this:

"Because a well-designed trust instrument must be custom-tailored to your personal needs and objectives it is important that it be drafted by a competent attorney who is aware of your desires and the relevant legal options and opportunities."

That's not a disclaimer. It's simply a word to the wise. From someone you can trust.

The Pros and Pitfalls Of International Real Estate

Lief Simon is IL's resident "Global Real Estate Guru."

With nearly 20 properties in 14 countries, Lief has never lost a dime on an offshore real estate investment. And on Day 4, he once again showed why, with his off-the-cuff overview of the pros and pitfalls of international real estate investing.

I always like to dispose of the bad news first, so let's start with the pitfalls…

* International real estate agents tend to work for themselves rather than the buyers or sellers. Especially in Latin America, they are not necessarily licensed or regulated--so they can jack up the prices they get from owners.

* There is always the danger of being stuck with a non-freehold title--so be certain to purchase title insurance.

* In some countries, there can be fairly exorbitant hidden costs of buying, such as transfer taxes (10% in Italy)…registration fees…legal fees (an additional 0.5% to 1.5%)…and notaire fees.

* There can also be hidden costs of owning, including unexpectedly high utility bills…maintenance…security (especially while you are away)…and home association fees entirely at the discretion of the association.

* Many countries, particularly in Latin America, lack financing.

* Some countries still have restrictions on foreign ownership, forcing you to purchase with a local partner or through a corporation.

* You run the risk of market inefficiencies, such as no multiple-listing services…no comps…no sales histories…and highly illiquid markets.

There, that wasn't too painful was it? So, now, let's get to the good stuff…

* Real estate is a hard asset--it can't go to zero and it's an excellent hedge against the volatile U.S. stock and real estate markets.

* International real estate is a great hedge against fluctuating currencies in your own country.

* International real estate provides exceptional asset protection: You can move your assets offshore without having to report the purchases…there are no reporting requirements for holding offshore real estate…and you can own the property in your own name, in a trust, or as a corporation.

* With real estate, unlike stocks, you can control the productive assets by changing the assets to meet changing market demands. With a few constructive changes, you can add to the value of the property. And if the market changes, you can change the use of the property.

* With proper purchasing and property management, you can and should expect a solid 30% annualized return on offshore properties.

Now, you can see why Lief has put together offshore property deals the rest of us can only envy…like in Argentina, where he flipped one property for a 50% profit in less than five months…in Nova Scotia, where he enjoyed a 150% appreciation in less than one year…and in the Galapagos, where his property appreciated a full 300% in just two years.

Will you do that well? Only time will tell. But it sure helps to have a guru guiding your way!

"Good Night. And Good Luck."

So, that's it. In the past four days, we have shared what seems like a lifetime of information about how to traverse the globe for fun and profits. That's the premise and the promise of International Living. And I think you'll agree that the "Ultimate Event" has upheld both.

But now the party's over. And it's time for me to leave the sunny shores of Panama and head back to Baltimore. Though I have to admit that after all I've seen in the past four days, Bonita Honduras is increasingly beckoning me to pick up my better half, pack up my laptop, put Baron (my four-legged friend) in the back seat of my ragtop Sebring, and reinvent myself where the sun never sets on "the good life with a twist of lime." And, of course, you're invited to join me by the beach!

Until then, this is your "Ultimate Event" Roving Reporter bidding you "Good night. And good luck."

Onward and upward!

Carter L. Clews
On-the-scene Conference Reporter, International Living

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