Law Offices - Kenneth D. Sisco, Attorney - Personal Information
Available for Public Speaker Engagements
Last Updated: July 1, 2007 E-Mail -- protect@action-assetprotection-services.com
OFFSHORE PLANNING SEMINAR -- Intensive examination of offshore planning and Asset Protection Techniques. DETAILS
CLICK HERE for The Ultimate Asset Protection Tool The ultimate strategy for utilizing foreign trusts, foreign corporations, private annuities, limited partnerships and more.Reduced Fees for Foreign Planning -- If you are interested in Foreign Trusts, Foreign Corporations, or foreign planning and strategies in general, and you are in a position to take action before August 6, 2007 you will be pleased to note that I am prepared to offer substantial fee reductions for foreign planning prior to that date. Please see Announcement |
|
Frequently Asked Questions Regarding The Ultimate Estate Planning And Asset Protection ToolDear Readers: Over the past four years that I have had my web site, I have received inquiries from literally hundreds of persons, with at least a passing interest in foreign estate planning and asset protection. Usually, there are only one, two, or maybe as many a half a dozen questions. Moreover, most of the questions are the same. While making a list of frequently asked questions has always been in my plans, I was never able to get around to doing it. Recently, however, I received a very comprehensive list of questions from an interested reader. None of these questions were new, but in answering them, I finally have my list of frequently asked questions. I hope they will be helpful to you. It is my intention to add to this list as different questions come in. The following questions, as well as, their answers assume that one has read at least The Ultimate Asset Protection And Estate Planning Tool. Here is the first communication I received from one interested reader. Consider this a case study if you please: <<Sir, I have read and been impressed by your article entitled, "The Ultimate Estate Planning and Asset Protection Tool". I consider it's thinking to be both creative and effective. I'd like very much to learn how I could begin to retain your services so as to form a foreign trust which in turn funds a foreign corporation. I'm an American citizen who resides in the country of XXXXX. I have trusted family members who are not US citizens or residents, so perhaps I can reduce the expenses and uncertainties involved with having someone unknown act as trustee. I have many questions for you and I am hopeful that we may conduct our business via email as it is rather costly to communicate otherwise from XXXXX. The asset that I am interested in expiating is a stock portfolio valued at around $600,000. Please write back so that we can begin our dialog. Thank You,>> Dear Mr. Xxxxx: Thank you for your interest. I would be delighted to help you in your estate planning endeavors, and I look forward to answering your questions. The first point to look at is the question of Trustee. I strongly urge my clients to use Liechtenstein as the situs of the trust. In my view in every respect, it is the best place for the trust. Unfortunately, Liechtenstein law requires that at least a co-trustee be a resident there. That means you could have a family member to do most of the work, but you would still have the base expense of one trustee. Or, you could choose a different jurisdiction that allows a foreign trustee as the sole trustee. There is no problem at all with the corporation. I typically use Bahamian IBCs and there is no problem with foreign Directors and officers. The other point is communication. While you are simply asking general questions, there should be no problem with E-mail. When we start talking specifics, you would need to obtain some encryption software. I will look forward to your questions. Ken Sisco <<Thank you for your quick response to my letter. I have a few questions and comments for you regarding my estate planning endeavors: Regarding the choice of situs of the trust, what makes Liechtenstein superior to jurisdictions that allow a foreign trustee as the sole trustee?>> There are dozens of jurisdictions that would be acceptable as situs for a trust. I prefer Liechtenstein for the following reasons. 1. Privacy. There is a saying that the Swiss do their banking in Liechtenstein – because it is private. While that is just a joke, it is very true. An employee, whether it be of a bank, law office or other institution, that discloses financial information to anyone, including governmental agencies, without proper authorization, (which is very difficult to obtain) is subject to criminal prosecution. According to the IRS Tax Haven Manual, the IRS approached Liechtenstein with a proposal to enter into a treaty for financial matters; Liechtenstein refused saying that it didn't need one. 2. Stability. Liechtenstein has been a European financial center for well over one hundred years. Its government is one of the most stable in the world, and its population enjoys one of the highest per capita incomes in the world. Its currency is the Swiss Franc, one of the most stable currencies in the world. 3. Convenience. Liechtenstein is located in the center of Europe, only an hour and fifteen minutes from Zurich by car, and an hour and a half by train. The national language is German, but it is difficult to find anyone in Liechtenstein that does not speak English, French, Italian and even Spanish. There are many banks and financial institutions, providing selection, and a very wide variety of services. 4. Trust. Probably overshadowing all the above reasons, is the fact that I have established contacts in Liechtenstein and Switzerland, that I would trust with my last dollar. That is difficult to find anywhere in the world. <<I understand that Liechtenstein law requires a resident trustee for a trust domiciled in Liechtenstein; but may there be a co-trustee that is not a resident of Liechtenstein?>> Yes. <<What type of control would the required resident co-trustee have over the assets of the trust?>> The Trustee, or the Co-Trustees acting in concert have complete and total control over the assets of the Trust. If you have co-trustees, the trust instrument could provide that the trustees act unanimously. If that is the case, then the required resident co-trustee, acting alone, would have no control whatsoever, absent criminal acts. Moreover, he is bonded, and so far as most of my clients are concerned, he would have to be absolutely insane to give up his profession and his future to steal from the trust. On the other hand, insanity is rampant in the world, so I understand your concerns. <<How can I protect the trust assets against misdoing by this resident co-trustee?>> See previous response. In addition, let me point out, that typically, the only asset of the trust is the foreign corporation. The corporation is where all the activity takes place. Whether you have a co-trustee or not, I typically provide two directors for the corporation. While of course, they know each other, they are not related, and have dealings together only as a result of their association with me. Both of them have a great deal to lose if they decide to go criminal, so I feel very confident that it is not likely that they will both go insane at the same time. <<What would be the base expense of such a trustee?>> The total annual maintenance fee for both the trust and corporation is approximately $4,500. If you provide your own Corporate Director(s) that would reduce the annual fee, as well as, the initial set up fee by $1,000. <<Can another American or I be elected co-trustee? Must the co-trustee also be a Liechtenstein citizen?>> In order to be valid, the trustee(s) of a foreign trust cannot be a U.S. Person(s). Moreover, you cannot be a trustee, or even a beneficiary. The co-trustee need not be a Liechtenstein citizen. <<I'm confused. I thought that I was going to be both the grantor as well as the beneficiary. Who is to be the beneficiary if not I? My intention is to be able assist my wife and children by allowing them to operate the structure after my death.>> A trust is just another kind of contract. You as Grantor appoint a Trustee to administer the Trust Corpus (assets of the trust) for the benefit of your named beneficiaries. Your wife, children, friends, etc. can all be beneficiaries, but you cannot. <<What additional unique benefit do I receive by involving directors? How do their responsibilities differ from those of the co-trustees? What is the cost of having them? Who may be appointed to the post of Director?>> The Trustee is responsible for the Trust. You need directors of the corporation to run the corporation. I usually have the trustee also act as a director. He allows himself to be named as a director and will perform a minimal amount of routine duties at no charge. The second director does most of the work, and his fee is $1,000 per year for routine services. For extra work, he charges an additional fee. The Bahamas permits anyone to be a director, even you. But for you to serve as a director would substantially weaken the structure, and may be very difficult to defend. Keep in mind that the reason you are not taxed on the income of the trust assets and a creditor cannot seize trust assets is that you have irrevocably transferred the assets to a trust. If you slip back in through the back door and blatantly take total control of the assets, you will have weakened the structure. <<Why do I need directors (in the plural sense)? I would chose to appoint a foreign family member of mine to act in that capacity. Do you foresee any problems with that?>> The Bahamas, as well as, most other jurisdictions require only one director. There would be nothing wrong with a foreign friend or family member acting as the Director. You would not want it to be a spouse, parent, child, or sibling, however. In many of my structures the trustee acts as one of the corporate directors to provide more comfort and security to those who have no foreign friend or family member to act as a director. <<What official public role may I play in the Bahamian IBC without risking a weakened structure?>> As stated above, you could act as an agent for the IBC, so long as you acted, within the bounds that a stranger would act. There is a concept that I don't believe we have discussed yet, but may add to your comfort level. The trust has a Protector. The Protector has no power to bind the trustee, but the trustee has the right to listen to the advice and counsel of the Protector. The Protector may advise the trustee as to the wishes of the Grantor. Typically I act as the Protector; but it could be any attorney, who enjoys attorney client privilege, or one of the foreign persons that you trust. <<May I (Xxxx Xxxxx) legally loose money to a Bahamian IBC in a legitimate (I can think of many) business deal? Or does my round about involvement with the Bahamian IBC label any such transactions as illegitimate in nature and thus potentially illegal?>> It is not necessarily a question of legal or illegal. If audited and it is determined that you had too close a relationship with the structure, it could be set aside, and treated as your personal property. Arm's length transactions are not a problem. For example, if you loaned money to or borrowed money from the foreign corporation, with the proper documentation, there would be no problem. But if you entered into a sham arrangement where you could not win and the corporation could not lose, you could be risking the whole structure. <<As I do not require the income nor desire the tax associated with it, what method of funding the trust would require it to pay me the least amount in return each year?>> I don't know your circumstances well enough to give you a complete answer here. My favorite way of funding the structure is by means of a private annuity. As you implied, this would require an annuity payment coming back to you. The amount of the payment would depend on your age, and IRS actuarial tables. Another way to fund the structure would, of course, be by gift. This could involve a gift tax or the reduction of your lifetime exemption, but it would not result in any income coming back to you. Finally, you could make loans to the structure, but of course those loans would have to be repaid, and a creditor could attach your interest in those loans. <<What is the time frame associated with setting up both a trust and a Bahamian IBC?>> It can be as little as a few days if necessary. It typically takes two or three weeks. <<As I have a few specific assets that are temporarily grossly undervalued, it would behoove me to expiate them as soon as possible so that the Bahamian IBC would enjoy the appreciation rather then myself. What are the additional fees associated with expedient formation?>> I make it a practice to personally deliver the trust to the Trustee. I have a trip planned for February 11, a little more than three weeks from now. If that is soon enough for you, not only will there be no additional fees, but I will reduce the fee by $500.00 since I am going anyway. If that is not soon enough, then you could personally deliver the trust yourself. In that case there would be no extra fees either. <<Thank you, but I would never accept a fee reduction. I expect to pay the same that any other client does.>> Thank you for your concern, but you would pay the same. It is simply that I only need one airline ticket, and I only need to stay in one hotel, regardless of how many clients I have. I see no reason to double charge my costs. Incidently, the first client to send me, also receives the discount, so there is no penalty for being the first to step forward. <<Another question regards my involvement in the structure's formation. As I am residing with my fiancée in XXXXX for the next five months, I'd like to know what physical appearances will I have to make either in Liechtenstein, the Bahamas, or the USA (and thus travel arrangements) in order to set this up?>> Unless you elect to personally deliver the trust to the trustee, you play no part in the mechanics of the structure's formation whatsoever. Obviously, you are welcome to come here to meet me, or meet me in Europe, but I have many clients that I have never met. Your presence is not required in any of those places. <<Do Bahamian IBCs enjoy some advantages other then the acceptance of foreign Directors and officers?>> There are many favorable jurisdictions in the world, but Bahamian IBCs are cheaper than most, and communications are good. <<What is the Bahamian capital gains tax as of this year?>> So long as the IBC does not carry on an active business in the Bahamas, there are no taxes whatsoever. <<I ask because my ultimate intention is to form a entity which may trade financial assets and be legally subject to ONLY the jurisdiction in which it is finally located.>> As I understand your intention, that would not be "doing business" in the Bahamas and there would be no taxes incurred. <<Regarding communication, I suggested E-mail so as to overcome both the cost and time zone barriers. I'm not highly familiar with the use of encryption software, but I will obtain whatever package you advise me to.>> I don't know what software you have available to you. Unfortunately, it is against the law to export encryption software from the U.S. to the outside world. But we can deal with that. This will most likely raise many other questions. If so, let me know. Copyright ©1999 |
TABLE OF CONTENTS
Call or E-Mail for Free Consultation 714 832-2390 |