Anyone has the right to protect their property, no matter what form it comes in.
Part of the reason why people store money in the bank is to protect it from possible looting. Offshore accounts are just the same, and they’re typically for those with significant assets.
Offshore assets primarily spare your accounts from taxation laws that can cut a huge chunk off your money. There are ways you can protect your hard-earned savings, whether it be your personal or business account. Protecting your money isn’t only about tax it’s also vital to protect it in order to stop thieves or those who aren’t allowed to access it. But first…
What Is An Offshore Account?
Before we delve into account security, let us discuss what an offshore account is and its benefits.
An offshore account is a separate bank account outside of your country. Many may not be aware that anyone can open a foreign account, depending on the requirements they must meet. Offshore accounts themselves are often in discussion with the stigma the owner may be hiding illegal assets. However, that isn’t the case.
So why get an offshore account?
- Privacy for your resources and security from the reach of your government.
- Banking in a different country means you get access to that country’s currency.
- You can do business and set up investments in that country using your bank account.
- Withholding reports from the IRS when you have under $10,000.
Ways To Keep Your Offshore Account Safe
While the benefits of having an offshore account are excellent, you can’t go unguarded. It’s still your responsibility to ensure offshore asset protection is in place to avoid specific complications such as the following:
- Offshore accounts can remain hidden unless the owner divulges its existence to the family. Upon the owner’s death, the account remains secret because foreign banks don’t have to report it to the US.
- Beneficiaries will have to undergo a long process to claim the account balance and ask for legal assistance in that country.
Protection Through Proper Planning
If you must create an offshore account, there are steps you must take to protect what you have.
- Identify offshore accounts in a trust or will.
Unless you give power to your executor, they won’t be able to access the funds in your offshore account. Switzerland, a country known for its strict information security, has the power to deny anyone else from claiming what was in your account. US executors can’t be held liable for asset losses since the account is on foreign grounds.
- Declare assets and keep estate taxes up to date.
All US citizens must declare assets to be taxable, especially offshore accounts. Some use the foreign account to avoid paying taxes, which is rightfully illegal. While Americans are spared from a specified amount (over $5.5 million) of tax charges, it’s still safer to divulge your foreign accounts to stay at the right side of the law.
- Take advantage of beneficiary nomination.
Always name a specific beneficiary to your assets in case of sudden death to avoid probate. Your family will be able to claim the money once they show proof of death and other requirements. Make sure to name the exact amount of your assets in your will so beneficiaries will be able to receive what was specified.
- Utilize a Durable Power of Attorney.
In case, for some reason, you’re not able to fully manage your business affairs, you must appoint a power of attorney to oversee them on your behalf. However, there may be exclusions in the jurisdiction, and the person you designate in your country may not necessarily be in full power on foreign soil. It would be best to seek legal assistance locally to draw power of attorney from that country as well.
- Create, list, and update asset portfolios.
Just like investment portfolios, create a list of your money delegated, including offshore accounts, into a list of international assets to help you focus your attention on details you can’t ignore. On your death, incapacity, or passing on your business to your beneficiaries, you’ll be notified about these records.
- Plan according to the Law of Domicile.
The release of assets may depend on whether you have never set foot in that country or lived there. Probate may not be necessary if you have a bank account overseas. However, if you’ve lived in that country where you’ve opened your account, the transfer of assets after your death may only be possible with a court hearing. It’s still better to undergo the process so your beneficiaries will be able to claim what you have left them. Keep all records of your stay in that country when you plan to go and settle elsewhere.
- Determine the availability of The Right of Survivorship.
The right of survivorship dictates that your assets are automatically transferred to your joint account co-owner when you die. Not every country honors this right, however. In some locations, the transfer of assets is still subject to court hearings as well. Whether you’re starting an offshore account, it’s better to discuss it with the bank and consider your options. The bank may have a different way of handling the transfer of ownership upon death or incapacity.
Offshore accounts keep your assets made, mainly because western banks are not as safe as they used to be. Government mismanagement poses a threat to your assets as well. However, it’s also for growing your business. It’s a practical choice to have one, especially if you’re branching out your business and want to expand to other countries. Because you need security for your hard-earned income, you must also have a plan to protect your best interest from strict foreign laws and regulations. Legit account owners will never have to hide their offshore accounts unless they are using it for illegal activities. You must be responsible for the safety of your assets so you won’t have problems later on. Are you planning to open an offshore bank account?