Asset protection is like an asset insurance scheme that is meant to keep your assets and investments from being included in legal settlements. This is so as to ensure that no one sues for all your hard-earned assets, and they can be off the record by not being linked directly to you. One of the best strategies for asset protection is the development of a 6-flag strategy which includes the principles of geo-arbitrage. These usually include a second passport, business in a jurisdiction that charges little or no tax, banking in a jurisdiction that offers you privacy, investing in a centre that favours money management, residing in a jurisdiction that is tax friendly and generally playing the field in countries where you like staying.
All these seem like a lot to take in for the novice, but with time, you will realize that the steps are really simple and straightforward. There are several reasons why individuals should have a second passport, especially if they are US citizens.
There are usually tax and visa restrictions in some countries, and there are countries which are not fond of dealing financially with the citizens of other countries for various reasons. Therefore, having two passports will help you to always have a backup business plan when it comes to dealing with citizens of such countries.
A jurisdiction that offers little or no tax will ensure that you are running a legitimate company in a different country without paying extra taxes. This is one of the most effective offshore asset protection strategies as it is perfectly legal, and if you link this offshore company to an offshore bank that still values privacy, then you have struck gold as you will manage your business as well as your assets privately.
The beauty of geo arbitrage is that all your eggs are not placed in a single nest and you have various methods of protecting your assets outside your country. This is one of the finest breaks accessible to investors who would like to legally maintain control over their assets without the risk of future litigation.
In the 6-flag strategy, you should also look for a country in which you love to spend time in but where you should not spend too much time so that you do not end up with the responsibilities of legal citizens or residents. For example, there are countries which allow individuals to physically stay in them without paying any tax for one hundred and eighty three days in a year, after which, tax will be required from them. If you have several such countries where you like spending time in, you could use them sparingly in order to ensure that you never fall into their tax trap.
The 6-flag strategy for offshore asset protection is perfectly legal and safe, though it has gained a bad reputation because most of the people who benefit from it are individuals who practice illegal activities or who vould like to escape from the hands of the taxman. Geo-arbitrage is however about making the best out the laws of a place and using them to implement an offshore asset protection strategy.
Article Source: Catherine Faith Omondi