Offshore and Your Wallet

wallet Offshore strategies which have traditionally provided effective legal defense of personal property include:

Structures

Discretionary Trusts
International Business Companies (IBCs)
Limited Liability Companies (LLCs)
Private Family Foundations
Companies Limited by Guarantee
Bearer Share Companies

Contractual Arrangements

Option or Agency Relationships
Bailment
Offshore Variable Life Insurance Policies
Annuities

Offshore Planning: No long just for the wealthy

Traditionally, offshore planning has been – justifiably – associated with the wealthy. But ...

as society has grown more litigious,
as governments have grown more predatory,
as the investment marketplace has become more globalized, and as people have become aware of the benefits of internationalzing,

... demand for these tools and strategies have increased sharply.

For many years, the premier offshore planning vehicle has been the Discretionary Trust. Industry specialists estimate that some 40% of all assets held offshore are held by offshore trusts, amounting to as much as a quarter of the world’s total investment wealth.

Prohibitive costs have made using offshore trusts financially unfeasible for most people. Exorbitant set-up fees frequently range anywhere from $5,000 to $25,000. Annual trustee fees are often assessed as a percentage of the assets held under management. (The percentage usually decreases as assets under management increase.) For the small to mid-sized investor, these fees can easily amount to several thousand dollars per year – in ADDITION to standard operating costs such as transfer fees, broker commissions, etc. – making the trust vehicle impractical.

Wealth International, Ltd., however, has made the Discretionary Trust – the premier financial planning vehicle and the top choice of the world’s wealthy – economically practicable for almost everyone. Becoming a client costs only $950. In addition, the Trustee is one of the few firms that charges FLAT annual fees (currently set at $150 per year, levied in quarterly installments), which amounts to drastic savings to the medium and larger investor.

W.I.L.’s inexpensive fees are cost effective when compared with other offshore trust offerings, and with alternative structures and contractual arrangements such as those mentioned above.

Doing everything “by the book”: In addition, our years of expertise in the field coupled with our highly adaptable, cutting-edge approach to asset protection, personal attention to each client, and strict commitment to doing everything “by the book,” allows us to provide a level of service that is rivaled only by the services of the most savvy (and costly) trust attorneys. This effectiveness – even before considering costs – makes W.I.L. an outstanding choice for your planning.

Count the Costs

wallet The following table compares the economic impact of taxes on a client portfolio with the costs of establishing an offshore presence. The average offshore trust provider and Wealth International, Ltd. are both listed for comparison purposes.

Fees are listed in terms of a percentage of the client’s total investable wealth (“TIW”). For example, in our illustration below, a client with a TIW of $25,000 could expect to pay $500 (2% of TIW) each year in taxes on investment profits (for calculation purposes the tax rate is left constant across all TIW levels). However, for a one time fee of only 3.8% of TIW and annual fees of only 0.6% of TIW (both percentages decrease as the client’s TIW increases), the client effectively obtains insurance against lawsuits and confiscation, access to international investment opportunities, and some tax benefits as well.

If you were to consider the following economic benefits from going offshore:

Avoided liability insurance costs
Whatever value you would assign to the decreased danger of asset expropriation in its many possible forms (direct insurance against such losses is not available to our knowledge), and
The incremental after-tax investment returns made possible

then you might well conclude that the benefits decisively exceed the costs.

Total Investable Wealth	Taxes* (On funds invested onshore)	Standard Offshore Providers** (Initial Cost / Annual Fee)	W.I.L.*** (Initial Cost / Annual Fee)
$5,000	$100 (2%)	50% / 40%	19% / 3%
$10,000	$200 (2%)	25% / 20%	9.5% / 1.5%
$25,000	$500 (2%)	10% / 8%	3.8% / 0.6%
$50,000	$1000 (2%)	5% / 4%	1.9% / 0.3%
$100,000	$2000 (2%)	2.5% / 2.0%	0.95% / 0.15%
$250,000	$5000 (2%)	1.0% / 1.0%	0.38% / 0.06%
$500,000	$10,000 (2%)	0.50% / 1.0%	0.19% / 0.03%
$1,000,000	$20,000 (2%)	0.25% / 1.0%	0.10% / 0.02%
* For purposes of the illustration, investment growth is calculated at 8% anually and taxes are calculated using a 25% marginal rate. The 8% figure is slightly below the long-run average 9% annual return of the U.S. stock market -- actual results will obviously vary based on an investment portfolio’s asset composition and market trends. The tax rate is believed to be moderately conservative, in the sense that it does not impose an artificially large penalty for staying onshore. Actual tax rates will vary based on your level of taxable income and your residence for tax purposes, not to mention the often haphazard effects of tens of thousands of pages of tax-code minutiae. Taxes must be paid on offshore earnings once they are repatriated. However, note, e.g., that $1000 compounded at 6% (8% less a 25% tax rate) per year for 10 years is $1791, while if $1000 is compounded at 8%/year for 10 years and the cumulative gain is then taxed at 25% the resulting amount is $1869. The difference is equivalent to earning an additional 0.75% yield per year over the 10 years. The listed initial cost is based on a $2500 set-up fee -- a price that one might expect to pay when utilizing a reputable wholesale/direct offshore trust provider. This would not represent the lower prices of a trust-mill that might merely sell you a “do-it-yourself” piece of paper with no follow up service, nor would it represent the much more costly, but more personalized services of a trust attorney. Such outfits often charge annual trustee fees in the range of 1% of the total assets held, with typical annual minimums running in the $2000 range. A worthwhile trust attorney would normally charge much more. * Based on $950 set-up cost and $150 annual trustee fee.