This week I am attending an investment conference in Zurich called Fonds 2010.  I spent the day walking through the exhibitor area speaking to Swiss private banks, investment firm managers, hedge fund managers, and most any other type of investment professional you can think of.

I approached one unnamed banker and asked if his company accepted US clients.  There were four of them standing in the area when I asked the question, and after asking, three of them scattered as if I dropped a grenade in the middle of them.  The remaining guy apparently was the low guy on the totem pole so he stayed to chat a bit. 

He told me that if I walked into his bank with a briefcase full of 100 dollar bills, he would have to ask me to leave.  He said it was just too burdensome to accept a US client.  They just weren’t interested.  He said the amount of money I would need to deposit and the fees they would have to charge, would be so high, it would offset any possible benefit.  The Swiss don’t want  your money.  And this is new under the Obama administration.

This was a common theme today.  I found investment advisors and bankers throughout the day that turned quite cold when they realized I was American.  I spoke to one very nice woman who worked for another unnamed Swiss bank who asked me to talk softer once she found out I was American.  She told me it her bank wasn’t interested in US clients no matter what the deposit amount would be.

I did however, find 2 banks willing to accept US clients.  I spoke with one of them at length today and have another meeting again tomorrow with them to discuss more details.  I have a meeting with the other arranged for later in this week.  Hopefully I can find a solution for clients interested in legal banking relationships in Switzerland.  I will update you again later this week.

For those of you serious about asset protection, you should seriously be considering a banking relationship outside of the US.  Maybe Switzerland is right for you, maybe not.  There are other countries where this is still possible, but I find it increasingly difficult to find banks willing to accept US clients. 

I am not suggesting tax evasion or hiding money, but keeping a portion of your wealth, legally, in a non-US bank makes it virtually impossible for  your account to be reached by creditors pursuing unscrupulous lawsuits.  And it gives you investing opportunities you may otherwise not have access to.

I know that headline is a bold statement, but I have been researching this for quite a while and there is a way for US citizens to defer income taxes on business income.   While this program is certainly not for everyone, for those of you that meet all the requirements, this can be huge.

Let me use a simple example to demonstrate.  Lets assume you have a business that earns $100,000 per year in profit beyond your salary and all expenses.  In the US your undistibuted profits will be taxed.  For simplicity sake, let’s say you pay 30% tax or $30,000 per year.  We will also assume your business does not grow or shrink, but only maintains. 

If you invested your after tax profits from your business earning 10% per year, you would have about $1.2m after 10 years.  If you paid no tax on those profits and invested the full $100,000 at 10% per year, you would have about $1.7m after 10 years.  Or about $50,000 per year extra which is more than you actually paid in tax!!!

There are several restrictions for this to work, but if you structure your existing, or a new business, properly, you can see truly remarkable results.  You are required to pay tax once you repatriate this income back to the US.  What  this means is once you begin taking distributions of the profit, you pay your personal income tax on it as you normally would.  

There is a bit of additional reporting for this to work as well.  Under no circumstance do you want to find out you have run afoul of the law.  The  IRS is certainly not an entity you want to battle.  But with proper reporting and proper set up, this may be a perfect solution for many of you.  I will be discussing this in further detail in my free newsletter later this week.  If you have further questions or would like a free 30 minute consultation, please don’t hesitate to contact me.

Live well.

As I mentioned in my previous post, there are two ways.  The other is holding precious metals in an offshore vault.  Gold has historically been a consistent use of money and will continue to be used that way long after we are gone.

Paper money no longer has any value and is only guaranteed by the faith of the issuing government.  Who has any faith in government these days?  Gold has been used as money for thousands of years.  But right now the US government doesn’t consider gold to be money.  It is only a ‘trinket’, like your collection of stuffed deer heads or your GI Joe action figure collection.

That is good for us as there are no controls placed on gold.  At least not yet.  But now you can still get a safe deposit box in a bank outside of the US to hold your gold coins or bullion.  You can also purchase gold certificates from the Perth Mint.

Considering the financial chaos we now seem to live in, you should all be hedging your investments with gold.  This should be a key part of your asset protection strategy.  I am not saying sell everything and buy gold coins, but you should allocate some amount of your assets to gold.  There are many options like buying stock in gold miners or the ETF, GLD. 

But if all hell breaks loose, it will be tough to buy bread and gasoline with Yamana Gold stock certificates.  Now is the time to think about protecting your assets for you and your family’s future.  Keep in mind in 1933 Roosevelt confiscated all citizen owned gold in the US and a few months later devalued the dollar by 60%.  Using gold as a hedge and holding outside of the reach of the Fed is a smart strategy.

There are only two ways to move assets offshore for US citizens without having to report them to the IRS; real estate and precious metals.  Now keep in mind that all US citizens and residents are required to report any worldwide income regardless of where you live.  So if you were thinking about buying that  condo in the south of France and renting it out, you will still need to report the income.  But for asset protection, there is no better way than owning real estate beyond the clutches of the US government.

But if you were already considering buying a vacation property, considering property values all over the world are down and US citizens are likely to see more agressive currency controls, now is the perfect opportunity to buy that vacation house outside of the US. 

I recently made the acquaintence of a man in Costa Rica that is building a very interesting health and wellness resort.  He has already built and sold several houses and has many lots already sold.  He has also built a bed and breakfast and a spa.  He will soon be adding a medical facility, a hotel, and several restaurants.  For qualfied parties, he will even pay for your airfare to come visit.  He is looking for investors who want to build a house, run a hotel, or doctors who can perform plastic surgery.

It’s a great opportunity for those interested in retirement, a second home, a business oppoortunity or just a vacation.  I personally have not toured this property  yet, but I intend to make a trip there later this year to put boots on the ground.  I have thoroughly reviewed his investment offerings and his business plan and it has me intrigued.  I cannot post his contact info here, but if you are interested, send me an email and I will connect you with Hugo. 

It’s certainly worth checking out.  I know I am.

Last week the US House of Representatives passed a bill that contained the “Foreign Account Tax Compliance Act”.  This act was passed without a hearing or without any chance for opposition to be heard.  You can view the entire bill here.  Below are the highlights of the bill:

Impose a 30% withholding tax on payments to foreign financial institutions and other entities unless they acknowledge the existence of offshore accounts to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts.

Require individuals and entities to report offshore accounts with values of USD50,000 or more on their tax returns.

Extend the statute of limitations to six years when offshore accounts are unreported or misreported (the current statute of limitations on tax audits is three years).

Require advisors who help set up offshore accounts to disclose their activities or pay a penalty.

Require electronic filing of information reports about withholding on transfers to foreign accounts to enable the IRS to better match reports to tax returns.

Strengthen rules and penalties with regard to foreign trusts, including rules to determine whether distributions from foreign trusts are going to U.S. beneficiaries and reporting requirements on U.S. transfers to foreign trusts.

Clarify the definition of outgoing U.S. dividend payments that are received by foreign persons so they cannot be disguised as other types of distributions in an effort to avoid U.S. taxes.

What does this mean to you, you may ask.  The bill does not change anything about the legality of US citizens doing business offshore.  You can still bank, invest, and operate your business outside of the US.  But it can limit your strategic planning for asset protection.

But what it does do is make it much more difficult for financial institutions to do business with US citizens.  If this bill becomes law, it will mostly likely eliminate, or at least severly limit, the ability for US persons to do businessess offshore.  The offshore banks just will not deal the the hassles of IRS reporting requirements.  There are plenty of other people around the world for them to target as customers whose country doesn’t think you are a criminal for having a bank account outside of the US.

But ultimately, what this means is the US government is growing its power base and taking away your freedoms.  Every citizen should have the freedom to move, work, invest, and travel as he sees fit and this can put a limitation on some people’s lives. 

Already there has been a lot of offshore banks who now refuse US customers.  Fortunately we have a solution for clients wishing to bank and do business offshore.  For those interested in offshore asset protection strategies, contact us today for your free 30 minute consultation.