Offshore Private Placement Life Insurance (PPLI)
One of the most important things this market offers is alternative investment options. Investors do not want to buy mandated retail mutual funds set up by the insurance carrier. Investors want their own select boutique money managers to select customized products. They want their insurance fund to offer the same advantages as their other investment funds in terms of choices.
The customers of this product in the past have been wealthy U.S. taxpayers with sizable assets. They wanted to place large amounts of money into tax advantageous investment vehicles. They want to keep assets in domiciles that are not subject to creditors. They want separate account production. Most of them want it in denominations that are not U.S. dollars. Certainly, they want denominations of secure currencies, so they're looking for private placement policies.
The reason they're going for private placement is so they can have unique investment opportunities into tax inefficient investments such as hedge funds. They avoid SEC registration.
The offshore companies are offshore because they're free of state regulation, so they can create more creative products and not be subject to the various difficulties of U.S. state laws. They don't pay state premium taxes. There's no federal income tax, no federal deferred acquisition cost (DAC) tax, and there is protection from U.S. creditors.
What drives this product? The biggest issue is: Will this qualify as life insurance under the Internal Revenue Code? Is it life insurance? Is it compliant with Section 7702?
Purchasers are looking for the lowest assets charges, the lowest cost of insurance, the lowest face amounts and the least net amount at risk. They're looking for separate account protection from the insurer's creditors.
Record keeping and administration is done offshore so as not to be drawn into the U.S. tax net. That's going to be very important for international reinsurers, as they are not paying U.S. taxes. They're not under state regulation. They're marketing offshore.
They're record-keeping offshore. They're taking applications offshore. This is all occurring out of the jurisdictions of the states or the federal government. So the records have to be kept offshore.
Premiums can be paid in kind when necessary. So, you can make a premium payment by contributing stock instead of paying cash, if necessary.
Offshore Asset Protection Trusts (OAPTs)
An OAPT shelters wealth from threats. We will design an offshore technique for you which will include an OAPT and perhaps other offshore or domestic entities. We will keep your assets out of the reach of judgments, creditors, business conflicts and divorcing spouses.
An OAPT Is basically a discretionary irrevocable trust set up in a country other than the United States and containing some well thought out provisions to allow it to take advantage of the asset protection statutes of the selected jurisdiction.
I have spent my career providing high-end solutions to resolve client's offshore asset protection needs. After 35 years of practice, I am able to offer you three of the best solutions I have developed at a price previously unheard of. Each of the three addresses a particular client fact pattern. Each encapsulating particular drafting choices.
I am able to offer these prices because my practice interests are:
- • Resolving the needs of high end clients that require custom solutions and documentation
- • Resolving the needs of clients who are well-served using one of the three types of Offshore Trusts discussed below. I specialize in these strategies and have built a team able to process them in an efficient manner.
The Three Types of Offshore Trusts are:
1. The Protector
The Protector OAPT offers sophisticated choices to:
- • Diversify holdings outside the U.S.,
- • Protect Assets using the law of various countries,
- • Avoid Claims because of the difficulties of suing offshore
- • Increase Wealth because of the opportunity to invest asset protected worldwide and the ability to do so in all currencies
- • Financial and Personal Privacy
- • Fund Retirement
2. The Low Profiler
The Low Profiler offer all the advantages of the Protector PLUS planning opportunities permitted under U.S. Treasury Regulations Section 301.7701-7. Because of it's specialized drafting, it is not required to file IRS reporting Forms 3520 and 3520A.
3. The Collapsing Bridge
The Collapsing Bridge Technique combines the Protector (or the Low Profiler) with domestic and international entities in a technique which allows you to maintain total control of your assets.
Technique: The Protector Trust or the Low Profiler Trust, owns 100% of a domestic (or Offshore) LLC. You are the LLCs "Manager". You are in control of everything and everything stays domestic (e.g. your bank and securities accounts remain with your current bank and brokerage) until a creditor threatens. Only at that time does the Trustee exercise it's vote to remove you as the Manager (you can become the "Investment Advisor" to the Trust) and move Trust assets offshore. At that time, you will have worked with your trustee several years and established a cordial professional relationship.
International Business Corporations (IBCs)
IBCs are corporations incorporated outside the U.S. The Advantages of an IBC owned by an OAPT are:
• Anonymity, Privacy and Confidentiality
• Nominee Shareholders Allowed, But Not Recommended
• Disclosure of beneficial ownership not required or limited to offshore authorities
• Asset and Lawsuit Protection
• OAPTs should not carry on business or they may be taxed as a corporation for U.S. tax purposes. If it is intended that business be done, then the OAPT can do so through an IBC, which it controls. Costs of incorporating in different jurisdictions vary greatly.
TAX OVERVIEW. If you own an IBC, even if the earnings are not brought back to the US, you must declare the income. IBCs are most often not operating companies. They are U.S. Tax Neutral.
International Banking
International banks offers safety, security, confidentiality and asset protection benefits. They are effective havens for assets and funds in need of secure and confidential safekeeping. International banks provide financial privacy and when combined with other International entities such as IAPTs, PPLI and foreign LLCs they provide protection from lawsuits, creditors and divorce. Bank accounts are not just for the wealthy.
Most international banking jurisdictions have strict confidentiality regulations to ensure that your identity and your transactions are private. However, this confidentiality is not absolute. Banks must comply with investigations into serious criminal activity such as terrorism, money laundering and illicit drug trafficking. Where there is no criminal activity, your information is safeguarded.
International bank accounts operate the same as domestic accounts. International financial institutions generally do not report account information to the government. It is up to you to do so. We only knowingly work with clients who agree to appropriately so report. Please see Tax Overview.
The IBC's jurisdiction need not be the same jurisdiction as it’s bank account. For example you can have an IBC in Belize and a bank in London. It makes sense to have an IBC in one jurisdiction and the bank in another, gaining the advantages of both countries legal systems. We’d be happy to discuss the different international banking options with you.
