What's the best strategy for asset protection and wealth preservation offshore?

I generally recommend that Americans try and stay on-shore whenever reasonably possible because if you have a business with an international presence, offshore properties producing income, or wish to move more than $10,000 in cash per year offshore, such activities will invariably need to be reported on your annual income tax return and can raise suspicion with the IRS.

The benefit however to moving your business, investments, or larger quantities of money offshore is that it can place...

I generally recommend that Americans try and stay on-shore whenever reasonably possible because if you have a business with an international presence, offshore properties producing income, or wish to move more than $10,000 in cash per year offshore, such activities will invariably need to be reported on your annual income tax return and can raise suspicion with the IRS.

The benefit however to moving your business, investments, or larger quantities of money offshore is that it can place assets outside the reach of judgment creditors. And if such assets have not been moved offshore in an illegal manner (by not violating the badges of fraud for example), assets in a foreign jurisdiction are extremely difficult for the U.S. government to gain authorization to seize.

With the Foreign Account Tax Compliance Act (FATCA) having been enacted on January 1st of this year, you may want to have a competent international tax advisor assist you with some of these strategies from a tax perspective. Outbound wire transfers which exceed an aggregate of $50,000 during the calendar year are now subject to a 30% withholdings tax. You may be surprised when you send a $100,000 offshore to purchase a piece of real property and only $70,000 arrives.

If you are considering moving a (relatively) larger portion of your estate offshore, then you may want to consider making use of an irrevocable offshore trust or foundation. The $5 Million lifetime gift-tax allowance previously available during calendar years 2011 and 2012 has been extended through 2013. By taking advantage of IRS form 709, you may be able to gift upwards of 80-90% of your estate into a safe, zero-tax jurisdiction for the benefit of your children and future generations.

Overall, the best strategies for asset protection and wealth preservation offshore should be simple to understand and execute. If you cannot readily wrap your head around your structure, you may want to consider revising your current strategy.