Every sensible and forward thinking investor should be able to confidently map out an "offshore nestegg" strategy to ensure you not only protect your assets, but allow your wealth to grow unfettered with complete privacy. Central to this is understanding the "offshore world" and how it works and what the advantages are.

Offshore Companies & Trusts and how to use them

There's been a lot of talk recently in the "alternative" press about the benefits of "Offshore" companies and trusts for the small business owner and investor. Some of this information is correct, and some of it is incorrect. One of the major myths that I hear is that is expensive and not viable for the average person and in my opinion is simply not true. The cost of establishment can be as little as a two thousand dollars. Another myth is, setting up a company or trust in a so-called "tax haven" is illegal, again this is not true. There are over 50 so-called 'tax havens" in the world today and the number is actually growing as the competition for "globalised" financial services hots up. These jurisdictions have their own laws which you must abide by, but they tend to be far more liberal and protective of you, than possibly the government you currently live under. The problems of legality only arise when your offshore structure contravenes laws in the country you are a tax paying citizen or resident, or "tax slave" if you like. However, if the structure is set up correctly, these potential problems can be avoided. Many people I speak to, and get letters from, are mainly interested in an offshore company or trust for investing purposes. For these people, an offshore company is one of the most intelligent financial decisions they will ever make. The benefits of taxation deference or minimisation, participation in investment opportunities not otherwise available, privacy and confidentiality are some the main reasons, but let's have a look at those plus other reasons people use offshore companies and trusts;

Taxation - If you structure the offshore company correctly (and this is vitally important) you can gain substantial tax benefits, and I mean very substantial! In some cases, taxes can be reduced to zero, legally. There is also the problem of inheritance taxes in some countries and the looming possibility of inheritance taxes being introduced elsewhere. A properly structured offshore company can eliminate this threat to your heirs' finances.

Investment Opportunities- You can gain access to investments that as a citizen of one of the "tax slave" countries, you're not otherwise able to invest in. An offshore company in the right jurisdiction will allow access to just about any investment that you choose. The problem exists in government regulation regarding foreign prospectuses being sent to some "tax slave" countries like the US, UK, Australia and Canada, however they can be sent to "offshore" companies.

Business - An offshore company can be utilised for a wide variety of uses that will allow business many substantial benefits. Businesses such as importing, exporting, consulting, e-commerce, manufacturing, professional services and shipping can all benefit from an offshore company strategy.

Asset Protection- Asset protection from creditors, hostile governments, litigants, nasty ex-spouses, professional negligence claims, product liability claims and other malevolent people and organisations who would just love to take all your assets off you.

Privacy & Confidentiality- For some privacy seekers this is good enough reason on its own to establish an offshore company or trust. If you establish your offshore entity correctly nobody can find out what you are doing with your money regardless of who is trying to find out, due to the secrecy laws in place in many of the countries that host "offshore" entities. And when I say nobody, I mean nobody, this includes nosy relatives, spouses, ex-spouses, hostile government organisations, business partners... nobody!

You may be thinking to yourself, "I still don't think I need an offshore company or trust". This is a common way of thinking until something happens and you realise your whole world could fall apart financially speaking. Losing a large percentage of your assets is never pleasant and it's at this point you realise that an offshore company could have saved you from financial oblivion. If you need any more proof, look at the courts these days, divorce rates and not to mention your government's efforts to tax you to within an inch of your life!

However, before you charge out and buy any old offshore company or trust, you should realise they are not all the same. There are good ones, bad ones, wrong ones and right ones. It takes time to set up a structure offshore and to get to know how to use it. You should spend a little time researching the subject and when you do commit yourself to doing something, do it once and do it right! If you try to set it up in a rush when you need it - it's already too late, because if you did, you could be guilty of "fraudulent conversion" or tax evasion. Planning ahead is the answer, we never know when something will go horribly wrong in our lives. We never know when circumstances will turn against us, and sometimes it's unexpected and you'll have little or no recourse. Who knows, somebody reading this right now could be about to have a very bad tomorrow... could it be you?

In America for example, police can now freeze your assets and even confiscate them - before any proof of guilt or admission of guilt is made! Similar ability is also maintained in other "tax slave" countries like Britain, Canada or Australia. Could the day come, when certain governments regard the assets of their citizens as "their own"? Has that day already come and gone? As we all know, the future is impossible to predict, but there are certain things we can predict with a degree of certainty, and that is, our privacy and freedom will be continually compromised by our elected governments. More and more laws will be enacted to restrict us, to control us and to intimidate us. Wealth is the only antidote to these practices. Wealth allows you the freedom to come and go as you please. Wealth gives you the option of opting out. Governments know this, which is why they try to control your wealth, in an effort to control you! The offshore company or trust "short circuits" the system and ensures your wealth is under your control and therefore your options remain in tact.

However, apart from all the sinister reasons, you may just wish to spend the money on yourself overseas - and nobody back home has to know about it. You can also invest offshore to facilitate the running of your own "Offshore Business" and the tax breaks that come along with it. There are also great opportunities to invest offshore with returns that make local investment returns seem fairly miserly. One thing to keep in mind when considering an offshore entity as an investment "vehicle", is when an investment compounds its return without the burden of tax, it takes half the time to reach your financial goals. So, even if the returns weren't higher than local investments, your goal will be reached in half the time. This could mean you'll be retired on a yacht ten years earlier! Think about that.

Strategy Overview

In my book, The Invisible World, I talk about two very different "worlds". One is a very visible "world", it is onshore, it includes your house, your car, your boat, your business, your insurance policies, everything that's visible to your neighbours and friends, solicitors, tax authorities, police, creditors, banks, councils and any other government departments. It includes your tax-deductible expenses, credit cards, your club and association memberships. It's where you pay tax and where you have reportable bank accounts in your own name or in the name of your company that files annual returns and pays tax. It is, if you're smart, also very low profile.

On the other hand your "Invisible World" and the subject of my book, is "offshore". It's where you don't generally reside, work or pay taxes, and it's where you have private money and investments that no one else knows about. Ideally, you should hold your invisible wealth in countries or jurisdictions that have strict bank secrecy laws. If you establish and operate your "offshore nestegg" properly it will be virtually impossible to trace - even by the best private detective and the most determined bureaucrat. I should explain exactly what I mean by nestegg. Your "nestegg" will consist firstly of your offshore company or trust, which will hold in its name your assets, investments etc. It will also have a bank account or accounts. This is necessary to facilitate the transfer of funds to and from your offshore nestegg.

In this "Invisible World" you'll submit no reports to governments. You will be a "non-entity". The fact you're a non-entity in your Invisible World is what makes it so precious. Where there's no smoke, there's no fire. Where there are no clues, there's no trail to follow. When establishing and accessing your "invisible world", never, ever, leave a paper trail to your hidden assets. If you make just one transfer, draw one cheque from your visible world onshore and send it to your invisible world, the whole lot will be destroyed.

You can set up multiple invisible nesteggs offshore but remember to treat them as separate entities and try not to create paper trails between them. If you do create a link between two nesteggs, it's not the end of the world, it just means that two nesteggs have now become one. You can have more than one bank account within any one company or trust and you can transfer funds freely from one bank to another without disturbing the structure's integrity. The only restriction (as I mentioned above) is you shouldn't transfer funds to a different structure (either onshore or offshore).

Your short to medium term strategy should be to gradually take as much money as you can spare out of your visible world and put into your invisible world, but be very careful how you do it!

Establishing an Offshore Company or Trust

Offshore companies and trusts don't take a lot of time and effort to establish. Also, depending on which country you decide to use, it won't cost a fortune either, or shouldn't anyway.

However, first of all, you should decide whether you need one or if one will be beneficial to you or not. They aren't for everyone. If you are in investor with approximately fifty thousand dollars or more to invest, then there will be significant benefits. Under this amount, shelve the idea and build up your assets until it's appropriate. You see these companies and trusts cost a few thousand dollars and the fixed costs will eliminate most of the benefits if you only invest a small amount, so keep this in mind. You then must choose which country or jurisdiction suits you based on your nationality, residency, business, family and tax situation. On this subject alone, you will read many conflicting reports and opinions. I would suggest speaking to some of the consultants in my book the Invisible World. The reason it's often necessary to talk to someone is fairly simple, everybody is different and they have different needs and a jurisdiction that's right for one person may not be right for another. Of course, the ideal country should have at least most of the following features: