If you live or invest in the USA, hold a U.S. passport or green card, or have even the most remote exposure to U.S. dollars, you face many threats.
They range from a congressional proposal to confiscate your passport if you owe too much money to the IRS to cash seizures without trial by police.
But there are some threats reported by widely read "experts" that simply don't exist.
Here's a case in point. Recently, a major offshore newsletter reported that the IRS is refusing to issue tax ID numbers for limited liability companies (LLCs) that are 100%-owned by an IRA (so-called "single member" LLCs).
If it were true, that would be a catastrophe for those of us putting together an offshore asset protection plan. It’s such a fundamental strategy that offers important benefits:
#1 – Checkbook control and greater investment choice. With a corporate entity owned by your IRA, you literally have "checkbook control" over the IRA. You make investments within the entity without waiting for your custodian to approve each one. You also avoid the fees custodians charge for this service. And crucially, you bypass whatever restrictions your custodian might have in place to limit your access to non-traditional investments – such as investments outside the USA.
#2 – Asset Protection: If someone is trying to seize the assets in your IRA, they have to overcome state and federal laws that protect retirement accounts from creditors, plus protections built into the structure itself.
Thankfully, this so-called threat isn't true – at least, I've never run into the issue in my own practice.
But I wanted to be sure and so got in touch with one of the largest independent IRA administrators in the country, owned by one of the smartest guys in the business I’ve ever met. They've helped thousands of clients create self-directed IRAs. They checked out the claim and reported back that none of the numerous law firms they work with have had problems obtaining tax ID numbers for single member LLCs owned by IRAs.
In other words, the research shows that there doesn't seem to be anything to the idea. But, thanks to the nature of the beast, it looks like this new lie will now be spread out through the Internet and add some confusion to a perfectly legitimate asset protection strategy.
Unfortunately, such things are really common in the offshore world. Perfectly legitimate strategies get slammed, and dangerous, borderline illegal or just plain stupid ideas get picked up and passed around.
Naturally, this leads to a lot of misunderstanding in the market, causing people to make mistakes and get themselves in trouble.
And therein lies the takeaway for this article: Before you buy into any idea, check with the people actually doing it. All information publishers – even the big guys – can slip up from time to time. By verifying what you’re told, you will avoid making a mistake based on bad information.
Going offshore is already tricky enough. Why make it any more difficult?
Mark Nestmann
Nestmann.com
