Offshore Myth-Busters Needed

Thursday, Dec. 1, 2005
"Live from the Live Overseas Conference"
Fort Lauderdale, Florida

Dear International Living Reader,

I really got ticked off recently by an article in the usually reliable Wall Street Journal by writer Rachel Silverman. Her article (you can read it below) correctly reported that in response to the IRS clamp-down on tax shelters in general (wildly so, I say), professional tax advisors are turning to more conservative tax avoidance tactics, though the writer suggested that some advisors still might be pushing the limits of the tax law. (And, as my friend Bill Buckley, often says: "Why should they not?")

The WSJ article contained a useful list of possible tax savings devices, including family limited liability partnerships, charitable remainder trusts, private annuity trusts, private placement life insurance, and restricted management accounts, plus combinations thereof suited to individual needs.

But what stirred my ire was a box adjoining the article entitled "Warning Signs"--factors that the author thinks may indicate an abusive or illegal tax shelter.

Listed with the established warning signs of a possibly illegal tax transaction (having no economic substance other then tax avoidance, being asked to sign non-disclosure statement by the shelter seller, etc.), was this supposed indicator: Beware, the author says, if "The shelter involves an offshore trust, partnership or life insurance policy."

Beware such stupid statements.

Whoever wrote this statement knows little about U.S. tax shelter law--and even less about offshore financial devices and arrangements. This bald assertion appeared without any explanation for this wild claim, nor any reference to what it might mean, other than its inherent warning: "Stay away from that terrible place called offshore."

The truth is that all of the devices the article touted for legal tax avoidance can be--and are--successfully used offshore. When they are offshore, they have much more valuable guarantees of stronger asset protection, far greater financial privacy, and no foreign taxes.

Offshore asset protection trusts are not only legal under U.S. laws, but they provide superior protection for estate plans and investments. Offshore life insurance and annuities provide not only wider and more profitable investment possibilities, but they also allow deferred taxation and a reduction of U.S. estate taxes. (Offshore equities have done far better than the U.S. market in recent years).

For as long as I can remember, the IRS has engaged in a deceitful, false campaign to brainwash the American people into believing that "going offshore" financially is somehow wrong, even unpatriotic. But pressed, even the IRS admits that Americans have every right to have offshore bank accounts, foreign investments, as well as offshore trusts, annuities, and life insurance. Of course the IRS wants to keep you where they can keep their eye on you and get to your cash. And U.S. brokers, bankers, and insurance salesmen want your money here, not offshore.

We expect this kind of bilge from the Left, but it's about time the Wall Street Journal and other "conservative" publications get the offshore story straight. They might start by reading the excellent series of articles in the May 2005 issue of Worth magazine (you can read the issue below).

There they can learn about offshore bank accounts, tax havens, safe harbors for asset protection, investments, and insurance--and the leading role Worth assigned to The Sovereign Society, based on our many years of experience and our fidelity to U.S. reporting and tax laws.

Bob Bauman
Editor, The Sovereign Society's A-letter

Editor's note: The Sovereign Society is an offshore publishing and research group and an affiliate of International Living. Bob Bauman is writing from the Bahia Mar Resort in Florida, at Day Two of IL's Live Overseas Conference. Mr. Bauman will share with attendees the complete A to Z of going offshore--he'll cover everything.

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