Even though offshore structures are perfectly legal, they are often controversial and misunderstood. But there are valid and strong reasons for using them.
This article briefly discusses four legal reasons to use an offshore structure, like LLCs or trusts.
Four Valid Reasons to Use an Offshore Structure
- Buying international real estate. Many nations impose restrictions or outright prohibitions on foreign ownership of real estate. Using an offshore structure to hold the property can overcome this obstacle.
- Avoiding probate. Many countries require assets held in your own name to go through a time-consuming and expensive probate process before conveying them to your beneficiaries. Again, an offshore structure can avoid this nightmare.
- International tax planning. It’s unpopular to point this out: The US Tax Code and the laws of most other high-tax countries offer incentives for domestic companies to do business internationally. What’s more, corporations have a fiduciary duty to their shareholders to not pay a dollar more in tax than is legally required.
- Asset protection planning. 50% of the world’s lawyers practice in the United States. Over the years, they’ve influenced legislatures and courts to view the wealthy as easy targets for lawsuits. A 2007 study, for example, concluded that America’s runaway legal system imposes a “lawsuit tax” of nearly $900 billion annually on the US economy. Though the study is from 2007, its findings still resonate today, as litigation risk remains high—especially for professionals and entrepreneurs.
That’s why it’s wise for doctors, business owners, and others who’ve worked hard to build savings to set aside—or encourage their loved ones to set aside—some “nest egg” assets offshore. In many cases, this involves using an offshore structure such as an LLC or trust to make those protections more effective.
To sum it up, it’s perfectly legal to invest and do business abroad. Moreover, in many cases, an offshore company or trust can make it easier and more efficient to do so.
Nevis LLCs: Are they worth it?
The Caribbean island of Nevis offers some of the best asset protection in the world. But are Nevis LLCs a good idea for Americans? Get the full story here: Nevis LLC.
Is it right for you?
Offshore structures can be a useful part of your wealth protection plan. Just make sure you understand what you’re doing.
And, of course, we’re here to help.
Since 1984, we’ve helped more than 15,000 customers and clients protect their wealth.
The best start is to schedule a consultation with a Nestmann Associate. They will answer your questions and see if an offshore structure fits with your wealth protection plan.
