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As Mainland Turmoil Rages, Protect Your Cash Offshore

Monday, 20 September 2010 09:49 AM Current | Bio | Archive

The latest round of “reform,” the Dodd-Frank Act, self-anoints the government to control virtually every aspect of the economy.

All that is left is for them to get control of the cash you hold.

For right now, the U.S. dollar is the world’s reserve currency. It may change as some speculate and others predict, but it isn’t likely to happen tomorrow. As of right now, the U.S. dollar reigns.

What is likely is that as economic conditions deteriorate, Congress — with the encouragement of President Barack Obama — will enact currency-exchange controls in one form or another.

You don’t think so? You say that can never happen here?

Well, it has in the past. Holding gold was made illegal. And under President Richard Nixon, Congress enacted the interest equalization tax provisions which acted very effectively as a form of exchange control.

Congress hasn’t demonstrated the political will to take the steps necessary to cut the size of federal spending and the expansion of the bureaucracy. It isn’t reasonable to expect in the future that President Obama will abandon his legislative agenda.

Where does this all lead? To controlling the one thing that government wants from us that they don’t have their hands yet: Our cash.

You can be a multimillionaire, or billionaire, on paper, but if you don’t have cash, the physical currency, to buy things, then effectively you’re destitute. Having money, or some form of accepted medium of exchange that has purchasing power, is an imperative in having financial security and real-life survivability.

It doesn’t take all that much for the government to decide that besides reporting any movement of more than $10,000, that you will need to get permission from, say, Homeland Security to actually transfer more than that. Or enacting an excise tax on the purchase of foreign investments such as stocks, currencies, or even real estate.

Regulation and taxation are the stock and trade of every Congress and administration. Future ones, Democrats and Republican alike, can be expected to be no different.

Every country which is running its economy into the ground sooner or later tries to enact some form of exchange control. They want your money before it escapes. They do it out of desperation. I don’t expect our government to be any different.

What can you do about that right now? How about moving some amount of your cash or other liquid assets offshore. Enough so that you can assure yourself and your family at least a reasonable lifestyle.

The recent Obamacare legislation included provisions for foreign account compliance and reporting. The practical effect is that it is now very transparent to establish an offshore account.

You can’t put money offshore to hide it or evade tax, but you can set up foreign investment accounts to protect your money. Protected from confiscation by creditors or government.

It is true that choosing the right jurisdiction to establish a foreign account takes some considerable due diligence. Unquestionably, however, there are any number of foreign institutions who performed quite admirably while formerly prestigious U.S. blue-chip institutions needed to get bailed out by TARP and the Federal Reserve.

How do you go about offshoring your money? Establishing a trust comes quickly to mind. We like trusts for everyday estate planning anyway. Why not have a real asset protection trust?

Some people establish a limited liability company using a foreign custodian and either a U.S. or foreign investment adviser. Others use foreign life insurance or annuity policies as their offshoring vehicle.

The underlying investments, unlike in the United States, can be held in segregated asset accounts. Effectively, this gives those investment accounts protection even from the creditors of the insurance company itself.

If you believe, as I do, that cash is king, and then you will want to take the steps necessary to protect your money.

One step you can still take, before Congress or some regulator changes their mind, is to hold your cash or other assets offshore.

Who knows, maybe some day you may want to follow your money.

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The latest round of reform, the Dodd-Frank Act, self-anoints the government to control virtually every aspect of the economy. All that is left is for them to get control of the cash you hold. For right now, the U.S. dollar is the world s reserve currency.It may change...
Monday, 20 September 2010 09:49 AM
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