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Why An Offshore Trust Is Better Than A Hole In Your Back Yard

03 Mar

Why An Offshore Trust Is Better Than A Hole In Your Back Yard

A California couple recently found 1,400 US$20 gold coins from the mid-1800s buried on their property. The store is estimated to be worth as much as US$10 million due to the rarity and quality of some of the coins. The value of the gold alone is about US$2 million at today’s prices.

What was the guy who buried those coins back in the 1800s thinking? He was thinking he was protecting his assets in a world where banks were robbed and anyone with a six-shooter could decide to grab whatever he could get his hands on.

Or maybe the guy who buried the coins stole them but got nabbed by the marshal before he was able to retrieve his loot.

Either way, neither the guy nor whatever heirs he may have had were able to enjoy the value of what he had.

More recently, a guy in Nevada died with more than US$7 million worth of gold stored in boxes in the garage of his simple house. He had some stocks, as well, but he lived as a recluse. Again, the guy died with his gold “safe”…but useless.

Asset Protection Strategies

Digging a hole and keeping the bulk of your wealth in boxes in your garage are, indeed, simple, low-tech asset protection strategies. But both approaches come with risk–namely that you aren’t able to enjoy the fruits of your labor. Hiding your money somewhere no one will ever find it, even after you’re gone, seems to miss the forest for the trees. The point of working hard and making some money during your life is for someone to enjoy it–you, your kids, your favorite charity, your cat…someone. What a waste for a lifetime of accumulated wealth to go to no productive use.

An offshore trust is a more effective way to protect your assets…at least from lawsuits and false creditor claims. You’ll still have to keep your physical assets hidden from the burglars, but, with an offshore trust, you can protect what you’ve got in a way that allows you to use it and pass it along to your heirs.

The structure of an offshore trust doesn’t have to be complicated, though the documentation you put together to create the trust can be, depending on how much direction and flexibility you want. It’s possible to set up a trust offshore yourself at a cost of but a few thousand dollars; however, I recommend engaging an experienced attorney to help you think through the trust in the context of your situation overall and your immediate- and long-term needs and objectives. This is where the cost can jump. Some attorneys charge as much as US$100,000 for a trust document. Most of us don’t need that level of documentation. My point is that you have many good options between the attorney who’ll charge you US$100,000 and an off-the-shelf trust from some structures group you find on the internet.

Of course, midnight gardeners with millions of dollars’ worth of gold buried in their back yards won’t have much use for an offshore trust; it can’t help you protect physical gold sitting in the United States. To take full advantage of the asset protection benefits an offshore trust can provide, the assets have to be outside your home jurisdiction. Assets owned by the trust but physically present and therefore still subject to the local law where you are residing can be exposed simply by virtue of geography.

You have to weigh the options. You could put all your net worth into gold and bury it in the back yard or store it in your garage beneath the Christmas decorations. Or you could use an offshore trust to protect your assets thereby diversifying your net worth.

Lief Simon

Mailbag

“Lief, trying to keep moving costs minimized we were wondering if household good storage in Panama is less than US$100 a week? Also, since we have learned bringing guns into Panama is a big no, we were wondering if bringing ammunition in is permitted. We are currently in the process of selling off our guns, but ammunition is a pain we would rather avoid if we can just pack it up and hold until we can purchase a gun with a Panamanian gun permit.”

M.V.

Local storage costs vary by size of unit, but certainly you should be able to find something for less than US$100 a week.

Unfortunately, I don’t think you can import ammo. You could confirm this with your immigration attorney.