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OFFSHORE AND ASSET PROTECTION GUIDE 1

COPYRIGHT AND DISCLAIMER


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TABLE OF CONTENTS

HOW TO CUT YOUR TAXES UP TO 50% AND PROTECT YOUR


HOLDINGS FROM LAWSUITS..............................................................5
GATEWAY TO FINANCIAL FREEDOM.................................................22
ASSET PROTECTION PLANNING UTILIZING THE FOREIGN ASSET
PROTECTION TRUST........................................................................ 26
IRS NOTES ON TAX HAVENS.............................................................33
GENERAL OFFSHORE AND ASSET PROTECTION NOTES.................37
WHAT THE IRS AND OTHER TAX AUTHORITIES DON'T WANT YOU TO
KNOW... THE TRUTH!.........................................................................43
TAXES - HOW TO MINIMIZE FORCED ASSET REDUCTION................48
TYPES OF TAX HAVENS.....................................................................52
THE STRATEGIC USE OF THE PRIVATE TRUST.................................54
MAKING A TRUST WORK FOR YOU...................................................57
WHY YOU NEED FINANCIAL PRIVACY ..............................................64
WHO SHOULD CONSIDER GOING OFFSHORE? ...............................66
OFFSHORE BANKING........................................................................68
OFFSHORE TAX HAVEN BANKING AND TRUSTS...............................70
OFFSHORE TRUST INFORMATION ...................................................79
USING OFFSHORE BANK ACCOUNTS ..............................................82
PRACTICAL APPLICATIONS OF GOING OFFSHORE .........................83
OFFSHORE CORPORATIONS AND IBCS ...........................................84
TAX HAVENS ..................................................................................... 86
TAXES AND TAX HAVENS ..................................................................88
THE PT PHILOSOPHY ....................................................................... 89
INFORMATION ON OFFSHORE HAVENS............................................92
OFFSHORE BANKING......................................................................101
THE WORLD'S ONLY UNTRACEABLE BANK ACCOUNT ..................104
WILLS OR TRUSTS? THE CASE FOR LIVING TRUSTS ....................112
TRUTH AND FICTION ABOUT OPENING A SWISS BANK ACCOUNT 128
CAMOUFLAGE PASSPORTS - THE UNCONVENTIONAL PRIVACY TOOL
........................................................................................................ 131

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ASSET PROTECTION .....................................................................134


GETTING A SECOND CITIZENSHIP .................................................141
INTERNATIONAL DRIVING PERMIT..................................................144
CITIZENSHIP - INSIDER'S GUIDE TO INSTANT CITIZENSHIP'S AND
SECOND PASSPORTS..................................................................... 145
MERCHANT BANKING & BACK TO BACK LOANS.............................152

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HOW TO CUT YOUR TAXES UP TO 50% AND


PROTECT YOUR HOLDINGS FROM LAWSUITS

ARE YOU PAYING TOO MUCH IN INCOME TAXES?


DID YOU KNOW THERE ARE LEGAL WAYS TO CUT YOUR SMALL
BUSINESS TAXES IN HALF?
DID YOU KNOW YOU COULD PROTECT YOUR FAMILY NEST EGG
FROM LAWSUITS AND BECOME JUDGMENT PROOF

The Disturbing Trends


Every man, woman, and child in America will be sued an average of 5 times
in their lifetime! Earn more than $50,000 a year and that number triples. YOU
MIGHT BE NEXT!
Courts are now letting "your creditors" seize assets held in the names of
wives and children!
40 years ago a middle income family paid about 2% of it's earnings in
taxes, today it pays roughly 44% (a 2,200% increase - and rising)
According to the Government Accounting Office, in 1992 about 1.4 million
taxpayers were mistakenly notified of I.R.S. penalties they didn't have to pay.
The average taxpayer works 190 days a year just to pay the government
taxes, and the rest of the year for his family.
Retirement does not eliminate malpractice or liability exposure! You may be
sued for events that happened many years ago. Pensions are also no longer
safe.
As a director or officer of a corporation, you can lose all of your personal
assets if the corporation is sued!
You can protect yourself if you are sued for $12 million but only have $1
million in liability coverage or if your liability insurance provider becomes
insolvent!

Do You Need An Strategy To Protect Your Income Or Holdings?


Take This Test Now And Find Out Before It's Too Late! If you can answer
YES to 2 or 3 of the following questions, this report is important to you, and if you
can say YES to 4 or 5 questions the techniques you will learn in this report could
be vital to your financial future.

Ask Yourself The Following Questions:


Do you have more than $100,000 equity in your home?
Do you have liquid assets worth more than $100,000?
Are you a director or officer in a corporation?

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Are you a general partner in any partnerships?


Do you have an annual income in excess of $50,000?
Are you single or divorced and contemplating marriage or remarriage?
Do you own a boat or plane?
Do you have teenage children?
Do you own or lease equipment or residential or commercial property?
Are you a contractor, manufacturer, physician, surgeon, architect, CPA,
professional, or self employed individual?
Have you been uninsured or underinsured for any period of time?
Are you expecting an inheritance?

A Proper Strategy Can Cut Your Taxes Up To 50% And Keep You
From Losing Your Family Nest Egg
In this report you will learn how a proper strategy can help you:
1. REDUCE YOUR SMALL BUSINESS INCOME TAXES UP TO 50%!
2. REDUCE SELF EMPLOYMENT TAXES!
3. ENJOY TAX FREE COMPOUND GROWTH OF INVESTMENTS!
4. SELL PROPERTY AND DEFER YOUR CAPITAL GAINS TAX!
5. PROTECT YOUR HOME, cash, investment real estate, stocks and
bonds, life insurance, gold and silver, commodities and virtually
anything of value!
6. REDUCE OR ELIMINATE EXPENSIVE LIABILITY INSURANCE
PREMIUMS!
7. AVOID ESTATE TAXES, death taxes, and inheritance taxes, also avoid
costly probate!
8. PROTECT A BUSINESS OR OTHER EXPENSIVE ASSETS FROM
DIVORCE!
9. BECOME A MILLIONAIRE THROUGH TAX SAVINGS ALONE.
10. PASS ON EVERY PENNY OF FAMILY NEST EGG TO YOUR HEIRS!
11. Run your business in COMPLETE PRIVACY, without registering the
directors or shareholders with any state agency if your business is
organized as a Business Trust.

Trust Introduction
Many of these strategies utilize trusts, not alone, but in combination with
corporations, limited liability companies, etc. You most likely know what a
corporation is, but what is a trust?
To state it in the simplest terms, "A trust is a right of property, real or
personal. held by one party for the benefit of another."

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A trust, then is a Contract in which an individual sometimes called the the


Grantor transfers property to one or more Trustees, to be held or managed for
one or more Beneficiaries.
There are over 50 types of trusts in use today for a variety of purposes. We
cannot examine them all, but they include Living Trusts, Q-tip trusts, Charitable
Remainder Trusts, Land Trusts, Children's Trusts, Foreign Trusts, and many
more.

What Is A Business Trust?


The type of trust that we want to pursue is the Business Trust. What is a
Business Trust? Chances are your accountant or attorney may not know what a
Business Trust is. This is not surprising, as there are currently no courses
covering common law business trusts in any major law school. The last known
course covering common law business trusts was offered by the University of
Oklahoma in 1954. Only a handful of the most sophisticated tax professionals
understand and utilize Business Trusts.
The Business Trust had it's beginnings in England in the 18th century, and
is basically the ordinary trust adopted to the new purpose of carrying on a
business. Two famous early business Trusts in England were Lloyds of London
(1811) and The London Stock Exchange (1802).
Business Trusts began operating in Massachusetts in 1827 to circumvent a
prohibition in that state against the organization of corporations to deal in real
estate. This is the origin of the term "Massachusetts Trust". The "Massachusetts
Trust" is a form of business organization, common in that State, consisting
essentially of an agreement whereby property is conveyed to trustees, to be held
and managed for the benefit of the holders of transferable certificates issued by
the trustees. These certificates, which resemble shares of stock in a corporation,
entitled the holders to share in the income of the property. Massachusetts trusts,
originated solely because of the hostility of some state governments towards
corporations, and because those organizing trusts desired some of the same
advantages of incorporating without incurring the regulatory burdens and
restrictions placed on corporations.
The trust has been employed in nearly every field of human activity.
Recently it has been and is utilized in the field of commerce and trade in
combination the corporation or limited liability company.

Necessary Characteristics Of A Business Trust


The definition given above for a Business Trust describes a flexible and
efficient business organization. In fact, the Business Trust was historically such
an attractive vehicle for conducting business that John Sears, in his authoritative
work Trust Estates As Business maintained that the Business Trust represented
"the ideal toward which much corporate legislation has strived, and will continue
to strive, in vain."

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But the Business Trust described in this book is not the same as the
traditional "Massachusetts-type" business trust. Due to changes in the tax laws
since the 1930's, and due to the rise of a great deal of statute law regulating
many aspects of both the corporation and the traditional Massachusetts
business trust, the use of the Business Trust described in this book has required
several modifications in order to achieve all of the desired benefits. A properly
constructed Business Trust of the type described in this book, established for the
purpose of operating an on-going business, must possess several
characteristics.
A Business Trust must
be a non-grantor trust
formed under the common-
law and Constitutional right
of contract. Most trusts
formed by attorneys today
are statutory in nature and
mainly fall in the category
of Grantor Trust, primarily
because most attorneys
and accountants do not
receive training in Business
Trusts and therefore do not
understand them. As I
mentioned before, the last
known school course
covering common law
business trusts was offered
by the University of
Oklahoma in 1954, and no
other known courses have
been offered in the United
States since that time. Good consulting professionals have been able to learn
their business trust skills through personal contact and training with highly
experienced attorney mentors, some of whom have been utilizing the Business
Trust as a tax saving and asset protection tool for their clients.
Today's Pure Business Trust must avoid those "corporate attributes" which
would cause it to be treated and taxed like a corporation under statutory
provisions regulating corporations. The four (4) main "corporation attributes" are:
(1) centralized management; (2) continuity of life; (3) limited personal liability of
trustees; and (4) easy transferability of beneficial interest in the trust. If the trust
possesses any three (3) of these attributes, it will be taxed as a corporation . As
long as a Business Trust established to operate a business does not have the
"attributes "of a corporation (or an old-style Massachusetts-type trust) as
discussed in treasury regulation 301.7701-2 it will not be treated or taxed like a
corporation.

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A Business Trust of the type described herein is referred to by many names


such as a "Pure Trust", "True Trust", "Contractual Company", and
"Unincorporated Business Organization".

Court Cases Establishing Validity Of Pure Trusts


1. Berry vs. McCourt, 204 NE end 235 (1965). A pure trust is a contractual
relationship in Trust form.
2. Baker vs. Stem, 58 A.L.R. 462. It is established by legal precedent that
pure trusts are lawful, valid business organizations.
3. Weeks vs. Sibley, (D.C.) 269 F. 155. A pure trust is still legal, even if
formed for the express purpose of avoiding taxation.
4. Eliot vs. Freeman, 220 U.S. 178 (1 911). The creation of a pure trust is
not subject to statutory law, and a pure trust is not subject to legislative
restrictions as are corporations.
5. Schuman-Heink vs. Folsom, 15g NE 250 (1927). If it is free of control by
certificate holders then it is a pure Trust.
6. Goldwater vs. Oltruan, 292 P.624 (1930). A Business Trust is lawful
wherever contracts are lawful.
7. Morrissey vs. Cornmissioner, 296 U.S. 344 (1935). A Trust is taxable as
an association if a corporate structure is maintained.

Who Uses Trusts?


Businesses Currently Operating As Trusts Include:
During the past 10-15 years detrimental and restrictive tax laws and state
regulations have resulted in the resurgence in the use of Business Trusts
(mainly in combination with other forms of business, such as the corporation, or
limited liability company):
SONY, U-HAUL, Boston Celtics, Merrill Lynch, Chicago Merchandise Mart,
Fidelity Magellan Mutual Fund (The largest in America), State Street Investment
Trust, Edward II. Hines Lumber Company, Masabi Trust (traded daily on
N.Y.S.E.), Bennet Paint, Scudder Funds. Kemper Funds

Individuals Who Use Trusts Include:


Ross Perot (Perot Investment Trust), Joseph and Edward Kennedy, Jimmy
Carter (Former President), William Waldorf Astor, Bob Kerry (Senator), Henry
Ford II, Hubert H. Humphrey (Former Senator), The Dupont Family, The Bunker
Hunt Family, The Paul Mellon Family, The Rockefeller Family, Rupert Murdock
(Media Mogul). Ronald Reagan (Former President), OVER TWO MILLION U.S.
TAXPAYERS...
Trusts Were Commonly Used By Our Founding Fathers, Including:
Benjamin Franklin, John Quincy Adams, Alexander Hamilton

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Trusts Are Recognized As A Legitimate Tax Reduction Tool By The Following


Brokerage Firms:
Shearson American Express*, Merril Lynch*, E.F. Hutton*. Payne Webber*,
Price Waterhouse**, Deloitte & Touche**, and many of the smaller brokerage
firms.
(*) Source: Wall Street Journal
(**) Source: D & B Reports

It's time to make the "MILLION DOLLAR "DECISION. The decision to


ACHIEVE TRUE WEALTH THROUGH TAX SAVINGS!
How much tax money will your family end up paying over your lifetime?
Do you think your family will pay $200,000? How about $400,000? Getting
warmer. Could it be $600,000? Keep on going. Taxes are the biggest expense in
your life. Bigger than your home mortgage and your children1s college
education combined. You and your family will probably end up spending over
$1,000,000 In federal, state, and local taxes In your lifetime.
Yes - the average
household making $50,000
a year will throw away one
million dollars in taxes over
the years. But after a
lifetime of hard work and
paying huge taxes, 80% of
all retirees wind up being
totally dependent on an
almost bankrupt social
security system.
But if you managed to
save only $5,000 in taxes
per year using our
strategies and invested it
(at 15% per year) in a tax
deferred environment you
would soon have a
mountain of cash reserves,
reserves you could count
on in times of need or retirement. Take a look at the following chart:

By taking advantage of legal loopholes you will have a $121,746 nest egg in
10 years. In 20 years you will have $594,050. In 25 years you will have
$1,228,559 or over one million dollars from Invested tax savings alone. If you
save even more, and get even higher investment returns like many of our other
clients you could quickly achieve total financial independence and end up with a
small fortune. Your yearly tax savings grow so large so fast because of the
power of compound growth. Also, investments will grow and compound almost

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twice as fast in a tax deferred environment. Tax planning with trusts,


corporations, and limited liability companies is the simplest and surest way to
build your family's wealth. START TODAY!

Summary
You now know that:
A Business Trust is a LEGAL business entity
A Business Trust can be utilized along with corporations,
partnerships, etc. to: PROTECT ASSETS AND REDUCE TAXES
AND INCREASE PRIVACY
You have also read in this book that TAXES on business profits CAN BE
CUT BY AS MUCH AS HALF (50%) or more, by using a Business Trust along
with other structures to: "GET TAX FREE FRINGE BENEFITS" AND/OR
"SPLIT INCOME" AND/OR "UPSTREAM PROFITS"

Get Tax Free Fringe Benefits


You may be one of the 70% of small business persons organized as a sole
proprietorship or general partnership paying high taxes. Right now, many of the
things you are paying for with AFTER TAX income, could be paid for with TAX
FREE income if your business is reorganized as a corporation.
If your business is reorganized as a corporation, with you as one of its
employees, the business can pay for many of your normal every day expenses
and deduct them as a business expense. Every dollar deducted in this way
totally and legally avoids self employment taxes, federal taxes, and state taxes
(TAX FREE income).
The following is a list of various TAX FREE FRINGE BENEFITS that can be
provided to you as an employee of a business trust or corporation, and deducted
as a business expense under the right circumstances:
Deduct depreciation on your home (')y making it the corporate home
office)
Deduct depreciation on furniture and appliances (by making them
corporate assets)
Deduct your mortgage interest from pre-tax (TAX FREE) income
Deduct home repairs and maintenance
Deduct home utility costs
Deduct home property insurance
Deduct health and accident insurance (employee, spouse, and
dependents)
Deduct life insurance (up to $50,000 in benefits)
Deduct medical and dental expenses (employee, spouse, and
dependents)
Deduct your meals (employee meals only - in certain cases)

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Deduct your clothing (business related only)


Deduct your children's day care costs
Deduct travel and vacations (business related)
Deduct education costs (employee only - business related)
Deduct business and professional club dues (does not include
health clubs)
Deduct cost of company gym (exercise equipment)
Deduct legal expenses (employee only)
Deduct company car, airplane, or boat (business related)
In addition, the following benefits are TAX FREE to you as an employee of a
business trust or corporation:
Occasional personal use of company copying machine, occasional
parties and picnics for employees and their guests, holiday gifts with
a low value (non cash), occasional tickets for entertainment events,
as well as coffee and doughnuts and soft drinks furnished to
employees.
TAX FREE FRINGE BENEFITS can be combined with INCOME SPLITTING
and PROFIT UPSTREAMING to reduce taxes as much as 50% or more, saving
you thousands.

"Income Splitting" - For Tax Reduction And Asset Protection


About 70% of all small businesses are organized as SOLE
PROPRIETORSHIPS AND GENERAL PARTNERSHIPS: These two forms of
business basically represent individuals in business for themselves with little or
no protection, and high taxes.
A sole proprietor or a partnership could run their current business as a
limited liability company (popularly known as an L.L.C.) combined with a
business trust for better liability protection, more privacy, and tax reduction, or
transfer all of the business assets to a business trust (or a trust-limited liability
company combination). Such assets could be protected from the lawsuits that
sneak up and destroy many unprepared small businesses. "They can't take what
you don't own!". Protected assets could include business inventory, business
equipment (such as computers, copiers, desks, etc.), a vehicle, and even
business contracts (excellent for anyone receiving 1099's as independent
contractors, Multi Level Marketers, etc.).
Once the L.L.C.- trust combination is set up, several family members or
several different companies can be made shareholders (of the business trust) or
member/partners (of the limited liability company). Instead of all of the profits
being realized by one person or company in a very high tax bracket, the income
is split between several family members or companies in low or even zero tax
brackets. Income splitting can be done with children of all ages.
The professional with taxable income of around $90,000 may normally have
a federal state, and self employment tax burden of $34,000 without proper tax

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planning. This same professional can instead split this same income between
himself, his wife, his children and even a family corporation using the L.L.C.-trust
combination so that the combined tax burden is reduced to only $19,500.
Business income taxes can sometimes be cut by as much as half with this
strategy.
Self Employment or Social Security Taxes, the largest burden on many
small business persons,
are also reduced
significantly because the
income received by you
and your family members
via the trust is not
considered self
employment income by the
Internal Revenue Service,
therefore no self
employment taxes are
payable on this income. A
instant tax savings of
15.3%.
Tax savings can be
even higher than 50%
when utilizing a tax saving
strategy known as "Profit
Upstreaming". Profit
Upstreaming means to shift
profits from a high tax state
or country to a company in
a low or no tax state or
country. Profit Upstreaming
is most useful when income is high and more significant tax savings is desired,
or the business person does not have very many family members to split income
between. Profit Upstreaming can also provide better asset protection and
privacy advantages.
Many professionals such as physicians, dentists, chiropractors, attorneys,
CPA's, insurance brokers/agents, etc. run their businesses as Professional
Service Corporations. These are usually small to medium sized businesses and
are closely held (i.e., no publicly offered shares). We could include in this group
many other small to medium size professional corporations such as Sub-
Chapter S corporations, that are closely held. In terms of professional liability
protection, estate planning, and tax management, this form of business
organization offers very limited benefits. How could such corporations benefit by
adding one or more business trusts or other structures?
The corporation could divest itself of all real estate and business equipment
by putting any buildings owned into a separate L.L.C.-trust combination business
structure, and then lease the property or business equipment back from the

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L.L.C.. Remember: "They can't take what you don't own!". A physician, dentist,
chiropractor or other medical professional, for example might place all
professional equipment (x-rays, ultra-sounds, microscopes, lab equipment,
examination tables, etc.) into one L.L.C.-trust combination for leasing business
equipment. He might then place all other office equipment (desks, typewriters,
computers, fax machines, filing cabinets, etc.) into a separate L.L.C.-trust
combination for office equipment.
As the beneficiaries of the trust or member/partners of the limited liability
company the corporation, you, or your family members could receive the profits
generated from the leasing operation. Again, Taxes are reduced by splitting
income between family members or companies in low tax or no tax brackets, or
profits can be upstreamed to a company in a low or no tax jurisdiction. If the
property or equipment is owned by a corporation in tax free Nevada, all of the
profits generated by the leasing operation can avoid state income taxes.
Finally the corporation itself could continue to function, receiving payments,
hiring employees, paying bills, etc., but would own few assets (the usual targets
of liability proceedings), leasing its necessary property and equipment from the
various independent L.L.C.-trust business combinations.
Please note that both the business trust and the limited liability company
can be utilized to provide some level of protection to assets, but far better
protection of assets and tax savings result from using the trust and limited
liability company in combination. The numerous asset protection and tax savings
advantages of utilizing business structures that combine trusts with L.L.C.'s, or
even trusts combined with corporations for that matter, can be clarified in your
free initial consultation, which is yours within 30 days of receiving this book.
An individual or company might require only a single L.L.C./trust
combination. But a dry cleaning business with several locations and a small fleet
of vehicles might need to place each location into a separate L.L.C./trust. A hotel,
for example, might consider placing the bar, restaurant, pool area, and even its
parking lot each into separate L.L.C. (a strategy in liability management that has
been very successful) as a means of either protecting an asset or separating
and isolating a potential liability.
Another popular asset protection strategy among clients is to place real
estate into a limited liability company that has a FOREIGN ASSET
PROTECTION TRUST as a member/partner. This strategy is tax neutral
provides no tax savings), but it allows you to maintain legal control and use of
the property, while the majority of legal ownership of the property rests in a
foreign country that does not recognize U.S. judgments, making it very
frustrating and expensive for anyone who desires to take property from you.
Important protection to assets is always added by using a foreign trust or foreign
corporation in your strategy since the right foreign country will not recognize U.S.
judgments.
SHOULD YOU USE A FOREIGN ASSET PROTECTION STRATEGY?: Be
aware that many of your fellow U.S. citizens are rapidly moving a portion of their
assets to the safety of foreign trusts and/or corporations because of the alarming

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increase in property seizures and forfeitures taking place in the United States.
Federal forfeitures alone have taken over $2.5 billion from U.S. citizens since
1985. State and local governments have seized billions more, and it's not just
from drug dealers. Thousands of honest, private citizens have been victims.
According to the nationwide newspaper USA Today, these billions can be taken
without charging or convicting anyone of a crime, which is exactly what happens
in 80% of the cases. Maybe you should play it safe, and have an offshore nest
egg as well!

"Profit Upstreaming System" - Tax Reduction Strategy Description


Most are familiar with the common strategy used by many U.S. companies
to reduce state income taxes. This strategy, called "upstreaming", is when
company (A) in a state with high state income taxes (e.g. California), reduces it's
taxable income by allowing most or all of it's profits to flow upstream to company
(B) in a state with no state income taxes (e.g. Nevada). Real profit (what you get
to use and enjoy) is increased with little effort since state income tax is avoided.
The Nevada Business Upstreaming System is a common strategy used to
reduce taxes but there are more aggressive strategies that are even more
beneficial and profitable. Both state and federal taxes can be legally and safely
reduced significantly or deferred indefinitely by using other exciting upstreaming
strategies:
1. The Nevada Upstreaming System (Most Common - Avoids State
Taxes)
2. The Foreign Business Upstreaming System (Very Common)
3. The L.L.C. - Business Trust - Private Family Foundation
Upstreaming System

1.The Nevada Upstreaming System: Already discussed above.

2. The Foreign Business Upstreaming System:


In this very common strategy the profits of a U.S. company (A) in any U.S.
state, flow directly upstream via 1.R.C. 162 to a foreign company (B) in a low tax

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or tax free country. State and federal taxes are reduced today and can be
invested on a tax deferred basis worldwide in this manner (when properly done).

3. The L.L.C. - Business Trust - Private Family Foundation Upstreaming System:


In this strategy, the profits of any U.S. company (A) in any U.S. state, flow
upstream via I.R.C. 162 to another U.S. company (B) organized as a Business
Trust, and from there flow upstream via I.R.C. 642(c) to another U.S. company
(C) organized as a Private Family Foundation qualified under I.R.C. 501(c)(3).
State and federal taxes are reduced or deferred in this manner.

When properly done, a "Profit Upstreaming System" can shift thousands of


dollars in profits to a low or no tax jurisdiction, and defer U.S. taxes until used for
personal purposes. The flexible tax laws that apply to Business Trusts are crucial
to up streaming strategy #3.
There are also variations to these basic strategies that are used, depending
on your situation. Every client is unique and requires something slightly or very
different than the guy next door.
These Profit Upstreaming Systerns allow YOU to have the same
advantages enjoyed daily by large multinational corporations.

"Choose Your Tax Reduction Strategy" - Income Splitting Or Profit


Upstreaming
YOU CAN REDUCE YOUR SMALL BUSINESS TAXES UP TO 50% or even
more with INCOME SPLITTING OR PROFIT UPSTREAMING! In fact YOU ARE
PROBABLY OVER PAYING YOUR TAXES. With taxes rapidly on the rise it is
time you took action to protect your family wealth from high taxes and lawsuits?

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Look at the following three typical family businesses (a married couple with
two children one under 14 and one over 14) that each worked hard and made a
net profit of $50,000.

FAMILY 1: Net Profit = $50,000 Self employment income paid to husband


and wife.

Taxes Paid: $7,064 in self employment taxes


$4,489 in federal taxes
$1,197 in state taxes
$12,750 = Total taxes paid in 1996 (they overpaid
their taxes)

FAMILY 2: Net Profit = $50,000 (the smarter family - used income splitting)

Profit Paid To: $25,000 paid to husband and wife as self employment
income.
$25,000 split between children in family trust.
Taxes Paid: $3,532 in self employment taxes
$4,076 in federal taxes
$1,085 in state taxes
-$677 earned income credit
$8,016 = Total taxes paid in 1996 (they saved $4,
734 or 37% on taxes)

FAMILY 3: Profit = $50,000 (the smartest family - used profit upstreaming)

Profits Paid To: $25,000 paid to husband and wife as self employment
income.
$10,000 split between children in family trust.
$15,000 upstreamed to a private family foundation or a
foreign company to accumulate safe from lawsuits on a tax-
deferred basis.
Taxes Paid: $3,532 in self employment taxes
$2,407 in federal taxes
$641 in state taxes
-$697 earned income credit
$5,883 = Total taxes paid in 1996 (they saved $6,
867 or 54% on taxes)

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Which family were you in 1997? Which family do you want to be in


1998?

Common Questions about Tax Reduction Strategies


Why do I need an outside consultant, I have my own accountant?
If you feel you are paying too much in taxes, and your accountant tells you
there is nothing you can do about it, it is time for a SECOND OPINION. The tax
laws are very complex and it is perfectly understandable that your tax
professional may not have studied the specific areas of tax law that make these
strategies so powerful. He may not recommend these strategies because he
does not understand them as of yet. We respect your relationship with your
accountant and would be glad to have him involved, or we can refer you to an
accountant or tax attorney who can assist you. Outside consultants implement
powerful strategies that save thousands of dollars.

Income Splitting is very common, but are the Profit Upstreaming strategies
legal?
Yes! All strategies recommended to clients are 100% legal and safe ways to
reduce taxes and have been used by clients to successfully save hundreds of
thousands of dollars in taxes for years. We can provide you the name and
telephone number of an attorney or accountant who does understand this
complex area of law and who will discuss specific laws, I.R.S. codes, and
relevant court rulings that make these strategies legal and safe.

Can I really reduce my taxes in half or more?


Yes! You may even be able to reduce your business income taxes legally by
even more than half depending on your current tax bracket and the strategy that
you choose to utilize. Multinational corporations and well known rich and
powerful families use many of these strategies daily to reduce their taxes. In fact,
these strategies allow many of them to grow more rich and powerful every year,
and you can do the same.

Will the I.R.S. audit me if l use these strategies?


There is always a small chance you will be audited or come under I.R.S.
scrutiny regardless of whether you choose to pay higher taxes, or choose to set
up your affairs properly and take every deduction you are legally entitled to. The
I.R.S. audit rate for trusts is currently the lowest of any form of business (.12% in
1992).
When these tax reduction strategies are used, you don't care if the I.R.S.
audits you because you have done everything by the book, in perfect
accordance with the tax laws, and have kept complete business expense

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records like any good business person. You can even have an expert outside
accountant do routine audits of your books and company minutes to insure that
you have done everything properly.
When you run your affairs properly, the I.R.S. can't touch you.
You can save thousands, or hundreds of thousands of dollars in taxes
every year. Is that worth the small possibility that you might be audited someday
and have to spend a couple of days showing proof of your legal business
deductions with an experienced recommended attorney or accountant at your
side? You decide.

Can the I.R.S. or a judgment creditor take my assets?


When proper asset protection measures are taken, not even the I.R.S. can
take a properly protected asset. Proper consultants always include asset
protection as part of an aggressive tax reduction strategy so you can have
peace of mind and deal with all from a position of strength.
The fact is that the I.R.S. assessed 26 million penalties last year, and the
Government Accounting Office found almost half of them to be incorrect Many
people pay these penalties and thereby over pay their taxes even when these
assessments are wrong, because they feel intimidated. With your assets
protected, YOUR WEALTH IS I.R.S. PROOF, and you will not be intimidated. In
truth, your assets should be protected even if you are not taking any tax
reduction measures.

What happens if the tax laws change?


These strategies are 100% legal ways to reduce taxes now. Some of these
loopholes have been in existence since the tax laws began in 1913. No one can
guarantee that the tax laws will not change in the future to close some of these
loopholes. The time to take advantage of these strategies is now, while the
opportunity exists to get huge tax savings.

What if my current accountant or attorney tells me he doesn't recommend


it?
Attorneys, accountants, and financial consultants do disagree quite
frequently on which strategies are best for their clients. Just as you would get a
second opinion from a doctor, you should get a SECOND OPINION from a
professional experienced in upstreaming strategies.
If your current tax advisor is familiar with and comfortable with these
strategies, he is among a rare group of elite tax professionals with the expertise
needed for these specific areas of tax law. But most advisors have only a vague
idea of how our strategies work. After all, the tax laws are complex and
constantly changing, and it is impossible to know every tax law and tax saving

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strategy. Even if your current advisor has been practicing for many years he may
not have specialized training or knowledge in international upstreaming
strategies. He is only human, and may not want to admit his lack of knowledge in
order to protect his credibility and reputation. Instead of admitting his lack of
experience with L.L.C.'s, trusts, and/or profit up streaming, he may just tell you
that it is unsafe or not recommended, without pointing out a specific law that
proves his point. Proper strategies have been reviewed by top tax attorneys and
respected tax accountants, who are available for consultation and legal opinions
that support these strategies. If your advisor cares more about YOU than his
future fees and if he is true to his code of ethics, he will admit that he is not
familiar with these strategies, or admit that one or more of these strategies could
have saved you thousands of dollars year after year on your taxes. Our clients
often ask their advisors "Why didn't you tell me this years ago?"

Conclusion
There is a difference between tax evasion (which we do not recommend)
and TAX AVOIDANCE (which we as professionals recommend highly) TAX
AVOIDANCE is legal and done daily by every business that takes advantage of
it's legal deductions.
Tax evasion: Understating or Hiding Income is illegal
BUT
Tax Avoidance: Setting up your affairs to minimize your taxes, and taking
every legal business tax deduction IS 100% LEGAL.
Every person has the well documented legal right to structure a transaction
so that it satisfies the requirements of the Internal Revenue Code in order to
minimize his tax Liablilty:
1) Judge Learned Hand stated in the landmark case of Gregory V.
Helvering: "Anyone may arrange his affairs that his taxes shall be as
low as possible; he is not bound to choose that pattern which will
best pay the treasury; there is not even a patriotic duty to increase
one's taxes."
2) Taxpayers are not required to continue that form of organization
which results in the maximum tax. [Raymond Pearson Motor
Company v. Commissioner, 246 F 2d 509 (1957)]
3) "U.S. taxpayers may also use tax havens for tax planning reasons.
Some transactions conducted through tax havens have a beneficial
tax result for U.S. taxpayers that is completely within the letter of the
U.S. tax laws." [Federal Tax Guide Reports in official I.R.S. Agents
Manual
Exercising this right within the "letter of the law" is "Tax avoidance" and is
100% legal. PAY YOUR TAXES, BUT DO NOT PAY MORE THAN YOU ARE
LEGALLY REQUIRED TO PAY!

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GATEWAY TO FINANCIAL FREEDOM

By Keith Anderson
The road to Financial Freedom is not difficult nor can it be easy, but I must
say that it is fun. There are simple yet important steps necessary to retain one's
freedom:

1. Financial Freedom:
To be free means that you own your labor, that you receive your full pay and
you decide how it is spent. It means that you do not report all of your personal
financial information to governmental employee hireling servants who reserve
the right to give your personal financial information to foreign governments if they
choose to do so. The rule of law to follow, is that you owe nothing to the
government as long as you receive nothing therefrom.
Just having a Social Security number is a benefit making you eligible for
benefits from your employee hireling servants and subjects you to their will. A
disgusting thought isn't it? So, if you wish to be free you must be totally and
absolutely free from all privileges offered by the government. That means you
absolutely must close down everything associated with the Social Security
Number, cancel it, and send it back to the source you received it from and never
use the number again for anything. Trusts are great transitional tools to assist
you with this transition.

2. Ownership of property:
Whoever owns the gold makes the rules. In order to be free from licensing
and other regulatory privileges you must learn how to own property and that
means learning how to control property. It is not ownership when someone else
is telling you how you can and cannot use the property and you are required to
pay them a fee to use it. Registration of property paces that property in the
government employee hirelings' trusteeship. You have a right to revoke that
trusteeship if you are free and not a slave. In Washington there is a statute
providing for the termination of trusteeships and power of appointment (ROW
11.95). This statute will be found in the "revised" codes of each state, patterned
from the federal Uniform Commercial code of Washington (ROW's). Your state
will be something different. You will find that statute in your state's version of the
Uniform Commercial Code by doing a word search of: "Powers of Appointment,"
or "Releases."
Use this power to terminate all powers asserted by another to control
property in your use. To be totally free you must own your body and your
property, not just think you own it. The following information is provided to assist
those who wish to move toward the direction of freedom.

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The Free Enterprise Trust


A FREE ENTERPRISE TRUST, hereinafter called F.E.T., is an offshore
organization formed by contractual indenture to function in its own right as an
independent legal entity, managed by its trustee(s) and/or officers. The purpose
of this paper is to show the advantages of the F.E.T. and of its lawful existence.
The basis for our terminology, "Free Enterprise Trust" in this instance is not
that such organizations are the creatures of the common law, as distinguished
from equity, but that they are created under the common law of contracts and do
not depend on any statute, for their existence. Schumann-Heink V Fosorn 328
III 321, 159 N.E.250. The Supreme Court in Hecht V Malley 265 U.S. 144
described common law trusts as follows: "These Trusts; whether pure trusts or
partnerships, are unincorporated. They are not organized under any statute,
they derive no power, and benefit or privilege from any statute."
The power of the F.E.T. is derived from common law and the law of
contracts. We'll call these "contractual common law entities," and they are often
referred to as 'pure' trusts. An explanation of their function under the common
law of England, can be found in Smith V. Anderson, 15 Chancery Division 247
(1880). This Smith decision establishes the validity and viability of these
contractual companies in England common law jurisdiction beginning in 1880
and up to, and including, the present date. The Smith decision has never been
reversed nor has its import been nullified through passing of negating statutes.
Definitions of Law
Laws are rules of conduct which are prescribed or formally recognized as
blinding, and are enforced by the governing power interesting enough, we each
have a choice of the governing power we allow. We either follow God's law or
man's law.
Common Law and Statutory Law Defined:
(a) Common law comprises the body of principles and rules of action
relating to government and security of persons and property which derive their
authority solely from usages and customs, or from judgments and decrees of
courts recognizing, affirming and enforcing such usage and customs. It largely
follows the principles often referred to as God's law. It may be noted in passing,
that under common law we look into the law to see what we may do, for we may
do everything we are not forbidden to do.
(b) Statutory law refers to law enacted and established by a legislative body
in the form of written laws, or acts, whose exact words have been drafted and
approved by federal, state or local legislatures. We could refer to statutory law
as Legislative Law Admiralty/Maritime Law, Law of the Law Merchant, and even
Martial Law under the Executive Branch of government of the corporate United
States. Statutory law utilizes the Uniform Commercial Code, revised Codes of
the states, and local ordinances derived from the Revised Codes of the states.
This law is intricately written and rewritten in the attempt to control the masses
and property, crease countless taxes, and generally cause concern as to what
violation we'll be punished for next. The unalienable Rights of the individual are

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often ignored. To sum it up, statutory law regulates those things government
creates or benefits -- all else is under common law.
Contract Law
"Liberty," as protected by due process in the Fifth Amendment to the
Constitution for the United States of America, has been held to denote not
merely freedom from bodily restraint, but also the right of the individual to
CONTRACT. Article One, Section 10 of the constitution also supports this right.
This protects our God-given Rights to engage in any of the common occupations
of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship according to the dictates of one's own conscience, and
generally to enjoy those privileges long recognized at common law as being
essential to the orderly pursuit of happiness of free and natural individuals
moreover, one can rely upon the body of the Constitution for the United States of
America, Article One Section 10, which gives one an unalienable right to enter
into a contract when it states, "No State shall pass any Bill of Attainder, ex post
facto Law, or Law impairing the Obligation of Contracts." Conversely, the Right of
contract also allows us the Right not to contract.
All of the various States of the United States, save and except for the state
of Louisiana, have founded their legal system from the common law of England,
and have adopted its rule of "stare decisis," under which unwritten law is made
through case law decisions. Because the F.E.T. evolved from contract law and
common law, there then must be an unalienable right to use them freely. This
trust does not engage in interstate commerce per the commerce clause, Article
1, Section 8, Clause 3, United States Code.
Advantages of the Free Enterprise Trust
The F.E.T. does not act as agent or bailee, for hire, for owners of property
but owns and controls its assets through its trustees, who keeps controlling
minutes of their actions. These written minutes become part of the trust
indenture. The trust is not, in any sense of the word, under an agency or
bailment agreement, such as those used by banks.
An entity can transfer or sell property, real, personal or mixed, to a F.E.T.
Such property after transfer, is thereby protected from personal liabilities,
probate, and death taxes, if the F.E.T. is properly established, and properly
administered. A F.E.T. owns its assets in "fee simple," Bouchard v First Peoples
trust 148 NE 895, meaning that the whole title, both legal and equitable to all the
Trust Estate shall be vested in the Trustees.
Creation and Application of the Free Enterprise Trust
This type of trust may be established as a foreign, Common Law Trust or
Foreign, Offshore Common Law Trust. The participants of the Free Enterprise
trust typically include a Trustor, Beneficiaries, Trustee(s), and oftentimes
additional officers, treasure/Accountant and Secretary, etc. The Trustor initially
grants or exchanges the Trustor's property (real, personal, or both) for F.E.T.
Certificates. After the initial exchange, the Trustee is under no obligation to the
Trustor. It is agreed by the parties that the Trust transaction is neither a gift or a
sale. The Trustees and their successors as the Board of trustees, are

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empowered to act as Fiduciary on behalf of the Beneficiaries, and to hold


ownership as the absolute owner of the trust property, for the trust. The
Supreme Court has ruled that trustees act as such, and so do as though they
are totally different entities, and no liable personally (296U.S.48).
The Trustees shall appoint officers to serve as Treasurer/Accountant and
Secretary or designation of their choosing, whose duties shall include
accounting, checking account duties, and protecting the Beneficial Interest
Holders of the trust. These officers may be assigned exclusive rights to open
and operate banking, brokerage, or other accounts on behalf of the trust. These
officers, however, are forbidden under contract to divulge any information
regarding the trust, to anyone.
The F.E.T. is an organization based upon a contract which is called DEED of
Settlement. The trust may own property, real and/or personal, and operate as a
Free Enterprise in any state or Country under the course of the Common Law.
The Assets of a F.E.T. are not subject to federal income tax, federal estate taxes
or state inheritance taxes because the F.E.T. is forbidden to enter into any
contractual relationship with the U.S. District of Columbia (U.S.D.C.) jurisdiction .
In other words, the trust will not be under any contractual obligation with the
corporate United States. The death of a trustee or certificate holder does not
affect the trust or its assets in any manner whatsoever. The trust cannot die as
the result of the death of any individual. This feature is excellent when used in
estate planning.

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ASSET PROTECTION PLANNING UTILIZING THE


FOREIGN ASSET PROTECTION TRUST

1. Introduction
The use of domestic asset protection techniques, such as the family limited
partnership and the
domestic corporation, may he sufficient for some clients, however, the
additional use or the laws of foreign jurisdictions is by far the most advanced
form of asset protection.
In particular, the foreign asset protection trust (FAPT), used alone or in
conjunction with the family limited partnership or the offshore or domestic
corporation, can be an extremely effective asset protection structure. The foreign
asset protection trust is similar to a common law trust in which there is a trustor,
trustee and beneficiaries. With the foreign asset protection trust, the trust is
settled in a jurisdiction which has favorable asset protection legislation, such as
the Cook Islands and the Republic of Mauritius. The foreign asset protection
trust provides an effective fortress around one's assets since the title holder of
the assets is an independent (independent of the trustor/client) foreign trustee
and a lawsuit must be commenced against this trustee in order o begin obtaining
the assets of the client.

2. Characteristics of a Foreign Asset Protection Trust


Following are some of the more important characteristics of the foreign
asset protection trust. The property of the trust should be moved outside the
jurisdiction of the residence or the settlor. This feature limits the creditors ability
to get access to the property through proceedings and the courts within the
jurisdiction of the residence of the settlor. However, this movement of assets is
not always necessary if a family limited partnership structure is used or an
underlying corporation. Thus, the family limited partnership or underlying
corporation would enable the client to retain the assets, e.g., securities portfolio,
in the U.S.
The foreign asset protection trust will contain anti-duress provisions which
give the foreign trustee the power to refuse orders from a U.S. Court.
There could be trust shifting provisions which provide that in the event
litigation is started, the trustee will have the power to move the trust to another
foreign jurisdiction. It is critically important with this section that the trustee have
the ability to transfer assets off shore to another trustee.
Often times it is desirable in planning a foreign asset protection trust to
distinguish the trusts situs for administration purposes (also where the trust will
likely be treated as residing for U.S. income tax purposes) and another situs for
interpretation of questions of law or the Proper Law of the trust. For example,
Portugal's a civil law country which governs the tax haven of Madeira. Under

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Portuguese civil law a trust may be settled with administrative and trustee duties
maintained in Madeira, while the trusts Proper Law is under the common law of
the Cook Islands.
Only assets that are not necessary to everyday living should be transferred
to a Foreign asset protection trust. For example, cars, checking accounts and
personal items are not proper for a Foreign asset protection trust. However, a
Securities Portfolio Account worth $1.5 million can be transferred to the Foreign
asset protection trust.
It is very important to maintain a certain distance between the trustee and
the settlor, otherwise the settlor may be seen as having to much control over the
trustee. Thus, it may be necessary to insert a protector between the trustees and
the settlor. The protector is a person, other than the settlor, or a committee of
protectors, who is an independent person looking after the interests of the
beneficiaries of the Foreign asset protection trust. The protector does not have
the fiduciary duties, powers and liabilities of the trustee.
The foreign asset protection trust should be irrevocable, otherwise the court
could force the settlor to revoke the trust, thus undoing the trust for the purposes
of asset protection. The Foreign asset protection trust can be irrevocable for a
period of time, for example, 10 years. If the settlor survives the period of
irrevocability, the trust would terminate and all accumulated income and principal
will be returned to the settlor. The trustees may elect to extend the trust.
The foreign asset protection trust is a discretionary trust. A discretionary
trust is one that is settled by the settlor which gives complete discretion to the
trustees as to whom amongst a class of beneficiaries is to receive the income
and/or principal of the trust. A discretionary trust cannot have any restrictions on
the trustee in the exercise of their discretion. The settlor of a discretionary trust
does not have a definable interest. Thus the beneficiaries of a discretionary trust
do not have the right to compel the trustee to make a distribution, since the
beneficiaries, which may include the settlor, have no vested rights.
With a discretionary trust, the settlor does not have a vested interest or
definable interest. if the settlor has no definable interest in the trust, the creditors
has no vested interest either.
The Foreign asset protection trust must provide that the trustee should
distribute income and principal of the trust at the full discretion or the trustee.
The issue of discretion of the trustee has always been a concern to the
client, since the result is that the client looses control over the trust corpus. This
issue can be resolved by the use of a "Letter of Wishes" in which the settlor
writes down certain instructions that the trustee may follow in their discretion.
If the client is a beneficiary as to income and principal, then that client may
be subject to creditors claims. Preferably, the client should only be an income
beneficiary and not a principal beneficiary. if a creditor attacks the clients income
interest in the trust, the trust deed provides for a power of the trust to cease
paying income to the client beneficiary.
The role of the Committee of Protectors is to provide the settlor with a
mechanism to supervise the trustees and to remove the trustees. The client can

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be on the board of the Committee of Protectors which would act as an advisory


committee to the trustees. If a creditor begins to attack the client as a protector,
he can resign as protector. The Committee is not allowed to function as trustees
but may exercise vast control over the trustee.
The U.S. courts have not yet ruled on the issue of the Committee of
Protectors as a "super-trustee". The
Committee of Trust Protectors is an advisory board to the foreign trustee.
The trustee will elect the chairman of the committee, who is typically the settlor
or his or her spouse. The settlor is appointed for life.
The Committee can provide advice as to trust administration to the trust, but
it is never binding On the trustee. The Committee should never be seen as to
acting trustee. The Committee can discharge and replace the trustee but never
assume the fiduciary duties of the trustee.
In order for the U.S. client to retain control of the asset without a court ruling
that he is acting as a defacto trustee, an alternative approach to the protector
technique is to appoint a U.S. co-trustee along with the foreign trustee. In times
of non-duress, the foreign trustee allows the U.S. co-trustee to act as the
fiduciary of the trust assets. However, in times of duress, that is, when a
creditor is or has filed a claim, the U.S. co-trustee would file a deed of
retirement and allow the foreign trustee to act alone. A typical and practical
choice for the U.S. co-trustee would be the clients attorney since there already
exists attorney client privilege.

3. Particular Foreign Asset Protection Structures


There are various structures utilizing a Foreign Asset Protection Trust
depending upon the particular circumstances of the client and the asset(s)
being protected. Following is an illustration of three different structures utilizing
the foreign asset protection trust (FAPT):
A. Foreign Asset Protection Trust (See Diagram 1)
A client may wish to utilize a FAPT alone. The client settles the FAPT in a
jurisdiction that has favorable asset protection legislation, for example, the
Republic of Mauritius. The client then appoints a foreign independent trustee to
hold and manage the underlying assets of the trust.
Since the FAPT is irrevocable and the settlor cannot exercise control of the
underlying assets, be may wish to appoint either a U.S. co-trustee, Protector or
Advisory Committee of Protectors.
B. FAPT with Underlying Corporation (See Diagram 2)
In order for a client to obtain further control of the assets transferred to the
FAYr, the foreign trustee, who holds title to the trust assets, can establish an
underlying corporation. The foreign trustee will capitalize the underlying
corporation with the assets transferred to the FAPT by the client in exchange for
100% of the stock in the underlying corporation.
This underlying corporation can either be a domestic corporation,
established in the state in which the client resides, or it can be an offshore

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(foreign) corporation. If the client holds title to U.S. real estate, the underlying
corporation would be domestic rather than offshore.
The foreign trustee, as the 100% shareholder of the underlying corporation,
holds a shareholder meeting in which it appoints the board of director(s). The
shareholder appoints the client as the sole shareholder who is responsible to
operate the corporation on a day-to-day basis. Another option is for the client to
enter into a consultancy agreement with the underlying corporation instead of as
a director or perhaps have a power of attorney over the underlying corporation.
Directors fees, management fees or consultancy fees can be arranged between
the client and the underlying corporation.
This structure results in the client regaining control of the assets that are
being protected.
C. The Foreign Asset Protection Trust as Limited Partner in a Family Limited
Partnership (See Diagram 3)
One particular structure that has proven useful is the Foreign Asset
Protection Trust and Limited Partnership. If a client is reluctant to transfer assets
offshore to a foreign jurisdiction which is held by a foreign trustee, that client
could establish a Family Limited Partnership, in which the client is a one percent
general partner with complete management control over the assets. The 99
percent limited partnership interest would then be transferred to a foreign trust.
Under partnership law, a limited partner does not have any right to management
control partnership assets. Therefore, the foreign trustee has a substituted
limited partner is free from any management control over the underlying asset.
This particular structure is excellent for real estate, which, of course, is a non-
movable asset, even though liquid assets such as cash and securities can be
utilized in this particular structure. In fact, what the client has created is a
structure in which he controls and manages the assets to be protected by where
title is held by foreign trustee in a foreign jurisdiction and the assets remain in the
United States. This provides the ultimate control to a client legally the assets are
held by the partnership and not the foreign trustee. All that the foreign trustee
owns is a limited partnership interest in the Family Limited Partnership.
This particular structure is an excellent technique to avoid possible claims
by judgment creditor to foreclose upon the debtor partner's interest in the
partnership. The only client's interest in the partnership, the one percent general
partnership interest.

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IRS NOTES ON TAX HAVENS

FROM THE INTERNAL REVENUE MANUAL [551 (3-11-85)]

Background
(1) Since the inception of taxes, taxpayers have searched for ways to
minimize their tax burden. Creative tax planning in the tax haven area is one of
those ways and, as such, frequently straddles the fine line between tax
avoidance and illegal tax evasion. Following close behind, Congress and the tax
administration have been trying to close tax loopholes and to discourage tax
gimmicks, which violate the spirit of the law and sometimes the tax law itself.
(2) In order to more fully understand the role of tax havens, tax
administrators requested a report on tax havens be prepared, and in January
1981, a comprehensive report titled "Tax Havens and Their Use by United States
Taxpayers--An Overview" was submitted by Richard Gordon. Publication 11 50
(4-81). This report studies various methods of tax abuse in tax havens countries.
A reading of this report will give the examiner greater understanding of tax
havens and the methods used by taxpayers to avoid taxation.
(3) There exists no statutory definition of a tax haven, but certain
characteristics make their identification obvious. A tax haven will have one or
more of the following characteristics:
(a) imposes little or no tax on certain transactions when compared to
developed countries,
(b) provides confidentiality of financial and commercial information,
(c) has modern communications facilities, and
(d) has a treaty network which offers reduced tax rates on income taxable
by its treaty partners.
(4) The use of tax havens knows no boundaries. All types of taxpayers
participate including individuals, trusts, partnerships, small corporations, and, of
course, multinationals. The use of these havens has grown dramatically since
1970. This growth is the result of taxpayers in high tax countries trying to
minimize the taxes paid and to increase their cash flow.
(5) The tax haven countries are seeking to have their economies flourish
with new jobs in areas such as banking, communications, and related services.
In addition, certain other countries, such as Ireland and Singapore, have offered
tax holidays to corporations which set up manufacturing operations using local
labor and exporting the manufactured goods. Most frequently, the marketing
aspect of the operations take place nearer to where the manufactured goods are
consumed or in the United States.
(6) The international examiner should be alert to the many potential issues
which may exist:

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(a) is the manufacturer wholly autonomous whereby all income from


manufacturing, intangibles, and marketing is appropriately lodged in the tax
havens, or should the manufacturer be considered a contract manufacturer and
be allowed to earn a profit commensurate with the functions performed and the
risks assumed;
(b) has there been an outbound transfer of intangibles, i.e., trademarks,
customer lists, going concern, etc., where a Section 367 ruling should have been
requested; and
(c) has a license agreement been entered into, and if so, is the royalty rate
an arm's length rate. For further discussion on the aspects of IRC 482, see Text
520 of this chapter--Development of IRC 482 Cases.
(7) Some tax haven entities are easier to detect than others. If the tax
haven entity is a Controlled Foreign Corporation, the shareholder must file Form
5471, Information Return with Respect to a Foreign Corporation, (Form 957,
958, 2952, and 3646 have been consolidated into Form 5471 for tax years
ending after 11/30/83), the attached balance sheet, profit and loss statement,
and intercompany transactions schedules which will serve as a red flag for
identifying tax haven entities. (See Exhibit 500-8 for a list of Principal Tax Haven
Countries.) In addition, Document 6743, Sources of Information from Abroad,
provides information on 28 tax haven countries and can be a valuable audit tool
when trying to determine which foreign records are readily available for I.R.S.
inspection.
(8) If the tax haven entity is a foreign trust, the provisions of IRC 679 might
apply. Under this section, any U.S. person who transfers property to a foreign
trust which has a U.S. beneficiary is treated as the owner and is taxed on any
income generated by the property transferred. When a foreign trust is created,
Form 3520 (Creation of or Transfer to Certain Foreign Trusts) is required to be
filed. Also, Form 3250A (Annual Return of a Foreign Trust with U.S.
Beneficiaries) is required to be filed annually.
552 (3-71-85)

Primarv Audit Tools


(1) The primary audit tools are the ingenuity of the examiner and the anti-
abuse sections of the Code. An examiner's awareness that a potential issue
exists is the most important audit function to be used. Although there are many
non-tax reasons for taxpayers to locate in foreign countries, including tax
havens, the examiner must always raise the question of what are the tax
benefits derived. Resolving this question will alert the examiner to where any
potential tax abuse may exist. The anti-abuse provisions include:
(a) IRC 482, which provides for the allocation of income and deductions
among related members of a controlled group.
(b) IRC 951 through 964, which tax currently the earnings and profits of a
controlled foreign corporation.

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(c) IRC 1 62, which allows a deduction for ordinary and necessary
expenses incurred in carrying on a trade or business.
(d) IRC 269, which provides for the disallowance of a deduction, credit, or
other allowance, if the principal purpose for the acquisition or control of a
corporation or of property of another corporation is the evasion or avoidance of
income taxes.
(e) IRC 269A, which provides for the allocation of income, deductions, etc.,
between a personal service corporation and its employee-owners to clearly
reflect the income of the corporation and its employee-owners.
(f) IRC 367, which is used to prevent the use of recognition provisions of the
Code to transfer appreciated inventories from the U.S. prior to their sale.
(g) IRC 1491, which is used to prevent taxpayers from transferring
appreciated property to foreign entities in order to avoid income taxes in those
cases where IRC 367 does not apply.
(h) IRC 1 248, which taxes the gain recognized on the sale of stock in a
CFC by a U.S. shareholder as ordinary income to the extent of the earnings and
profits of the CFC accumulated after December31, 1962.
(i) IRC 1 249, which treats as ordinary income of a U.S. person, the gain on
the sale or exchange or an intangible asset to a foreign corporation which is
controlled by such person.
(j) IRC 551 through 558 (Foreign Personal Holding Companies), which
includes in gross income of the U.S. shareholder the undistributed foreign
personal holding company income.
(k) IRC 679, which taxes a U.S. person on the income generated by the
transfer of property to a foreign trust which has a U.S. beneficiary.
(I) IRC 897, which provides for taxing the gain recognized by non-resident
foreign individuals and foreign corporations on the dispositions of their United
States Real Property Interest (USRPI).
553 (3-11-85)

Audit Guidelines
(1) As soon as the examiner becomes aware that a U.S. taxpayer has
transactions with a foreign entity located in a tax haven area, he/she must look
through the transaction and examine the business and tax motives. The tax
motive might not be obvious, and the examiner's ingenuity must be used.
(2) If the examiner determines that U.S. real property was purchased from a
foreign entity, the following questions may arise:
(a) is the foreign entity related either directly or through some scheme
whereby the basis of the property may have been artificially increased?
Reviewing the terms of sale, i.e. interest rates charged, payments on principal,
and how funds are transferred, may indicate that further audit techniques need
to be applied, if the above items seem to be out of norm.

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(b) if U.S. real property was sold by the foreign entity, the examiner should
be aware of the provisions under the Foreign Investment in Real Property Tax
Act of 1980 (FIRPTA) This act added IRC 897 and 6039C to the Code. Prior to
FIRPTA, foreign investors were able to dispose of real property located in the
United States with little or no tax liability. FIRPTA was enacted to override the tax
provisions that enable foreign investors to effectively avoid U.S. tax in real estate
and related transactions. Refer to Text 231.(11) of this handbook for discussion
and guidelines on this area.
(3) The tax haven entity may have large salary, rent, and other type
expenses on the profit and loss statement. If so, it must be determined:
(a) if the expetises were allocated from a related U.S. entity, or
(b) if the expenses were charged to the tax haven by some unrelated bank,
insurance company, law firm, or other service company. The above situation may
indicate that the tax haven is not a viable entity.
(4) If a foreign bank is used, try to determine that it is a viable bank and not
just a bank in name only which shares desk space with other banks.
Transactions with these banks should be scrutinized.
(5) Certain tax haven schemes involve the use of multiple trusts. A taxpayer
with a going business has a trust (first trust) created by a resident in a tax haven.
The creator of the trust appoints the taxpayer as the trustee of the trust. The first
trust then forms two or more trusts in another tax haven with secrecy laws and is
designated as the trustee of these two trusts. The second trust acts as a
management consultant to the U.S. taxpayer. The consulting fee virtually
eliminates the profit of the U.S. business. Because this fee is considered U.S.
source income, trust number two files a Form 1040 NR. However, its income is
reduced or eliminated by the payment of a "contingent royalty fee" to the third
trust. Foreign trust number three winds up with the profits originated by the going
business. The profits are then returned to the taxpayer by the trust number three
either in the form of gifts or loans. The foreign trust problem is essentially an
auditing problem.

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GENERAL OFFSHORE AND ASSET PROTECTION


NOTES

The legal process, because of its unbridled growth, has become a cancer
which threatens the vitality of our forms of capitalism and democracy.
Lawrence Silberman, U.S. Attorney General

... The harsh truth is that ... We may well be on our way to a society
overrun by hordes of lawyers, hungry as locusts, and brigades of judges in
Numbers never before contemplated.
- Chief Justice Of The United States Warren Burger

The legal trade is nothing but a high class racket.


- Professor Fred Rodell

I do not wish to speak ill of any man behind his back, but the fact is that He
is an attorney.
- Samuel Johnson

People say law, but they mean wealth.


- Ralph Waldo Emerson

All sorts of substitute for wisdom are used by the world. When the court
doesn't know, they use precedent. The court that made the precedent guessed
At it. Yesterday's guess, grown gray and wearing a big wig becomes today's
justice.
- Dr. Frank Crane

A lawyer is a learned gentleman who rescues your estate from your


enemies and keeps it for himself.
- Lord Brougham

It is the trade of lawyers to question everything, yield nothing, and to talk by


the hour.
- Thomas Jefferson

He saw a lawyer killing a viper on a dunghill hard by his own stable; and
the devil smiled, for it put him in mind of Cain and his brother Able.

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- Coleridge

Lawyers are the only persons in whom ignorance of the law is not
punished.
- Jeremy Bentham

The first thing we do, let's kill all the lawyers.


- Shakespeare, King Henry VI

The virtuous need but few laws; for it is not the law which determines their
actions, but their actions which determine the law.

- Theophrastus

Where you find the laws most numerous, there you will find also the
greatest injustice.
Arcesilaus

The more corrupt the state, the more numerous the laws.
- Tacitus

"The law, sir, is a ass."


- Charles Dickens

"...Ours is a sick profession marked by incompetence, lack of training,


misconduct and bad manners. Ineptness, bungling, malpractice, and bad ethics
can be observed in court houses all over this country every day. (...these
incompetents have) a seeming unawareness of the fundamental ethics of the
profession.
- Chief Justice Of The United States, Warren Burger

"Most lawyers are as crooked as a dog's hind leg."


- Grampa Province

Why a trust?
Why create a living trust? Isn't that something that's only done by rich
People? Can the average citizen create his/her own living trust without the Help
of a lawyer? Why not just pay a lawyer to write a simple will?
There are a number of reasons and answers to these simple questions.

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First, you should know that you have every legal right to create your own
Living trust by yourself, without the help of a lawyer.
In the second place, when you hire a lawyer to write a will, they don't do It
anyway. Their legal secretary does the job and you end up paying an exorbitant
legal fee.
Further, these secretaries really won't do anything more than fill in some
Blank spaces on a pre-designed word processing form and print it double-
Spaced with numbered lines. This type of printed output looks profession,
impressive, and expensive -- that's really what you are paying for. They follow
the same process for divorces, annulments, legal separations, Bankruptcies,
creditor plans, simple contracts, real estate deals, and so on, ad nauseam.
Most of the work done by legal secretaries or paralegals is nothing more
that filling in the blanks. What the majority of the legal profession doesn't
Want you to know is that anyone, yes!, Anyone!, Can do what they do. It is
my honest opinion that the legal profession is in a sad state of Affairs. Any
document drawn up by one lawyer will be challenged by another Lawyer if he is
paid to do so. No matter how correct or exact it is, some Other lawyer will find
fault with it if there is a fee to be made. It is The business of lawyers to make
things so complicated that they cannot be understood. Lawyers are not paid to
fix things or fight for justice, they Are paid to argue, confuse, obfuscate, and
prolong.
They get paid for keeping things from happening. This is only one of the
many reasons why simple trials that should only take hours to decide normally
take weeks, months, and sometimes years.
That, in a nutshell, is the reason for this package of shareware software.
You don't need a high priced (and perhaps incompetent) lawyer to do something
That you can do yourself. anyone with a computer and a word processor or
Text editor can use these pre-designed trust forms to create their own living
revocable trust.

Reasons For Creating A Living Trust


That brings us to the answers to the questions of why a person should form
a trust instead of writing a will. The reasons are numerous and important.
Before starting, you should have a firm understanding of what a will is and
What a trust is. The differences between them are vast.

Wills
A will is a legal instrument executed by any competent person according to
The prescribed statutes of the state. Using this instrument the person States
their desired disposition of their property which will take effect on And after their
death.
The existence of a will automatically means that there will be lawyers,
Judges, and the court system involved when a person dies. Because wills must

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be "probated", there will be legal fees, the court may interpret the will as It sees
fit, and the wishes of the deceased are not necessarily followed.
When a will goes to probate court, not only does it get bogged down in the
mire of the ineffective, inefficient, cumbersome, and expensive probate system, it
also becomes a matter of public record. Additionally, it could conceivably be
challenged by a lawsuit.

Trusts
A trust is a legal relationship in which one person transfers property of a
Second person for the benefit of a third person. The person creating the Trust is
the grantor. The person having legal title to the trust property Is the trustee. The
person for whose benefit the trust is created is the Beneficiary. The nifty, magical
part of this arrangement is that one person Can be a grantor, trustee, and
beneficiary all at the same time.
Using a trust, an individual can transfer property from their personal name
To themselves as a trustee of a trust. As the trustee, they can hold the Property
for themselves or for someone else. Under the instructions of a Revocable living
trust, the trustee (or co-trustees) can see to it that when The grantor dies all trust
property is transferred to the beneficiary or Beneficiaries. When the grantor
dies, the trust property automatically is held by any co-trustee or successor
trustee for the benefit of the beneficiary. All of this is accomplished without any
probate process or any other type of court proceedings. You don't need to be
wealthy to take advantage of this either. If you only own your home or
automobiles, you can use a trust to make sure that when you die everything
automatically transfers to anyone you wish.
A revocable living trust is the answer to almost all of the horrible problems
that can be encountered by probate court. It can be entered easily at little Cost
and it can be revoked by the stroke of a pen.

Advantages Of A Trust
The most obvious advantages of a revocable living trust are:
Avoidance of probate and probate administration fees and
expenses.
Avoidance of excessive probate legal fees.
Avoidance of unnecessary delays.
Avoiding publicity concerning probate matters.
Avoiding ancillary (secondary) administration.
Avoiding statutory restrictions on bequests of property.
Avoiding inheritance taxes.
Avoiding will contests.
Property management.
Management uninterrupted by the incapacity of the grantor.

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Uninterrupted income and access to principal for family


beneficiaries.
Avoiding the emotional trauma, aggravation, and frustration of
dealing with a complicated probate process and overpaid lawyers.

Things You Should Know


A Trust Takes Precedence Over A Will!
It is imperative that you carefully read and understand the following
Sentence. A trust takes precedence over a will. Even if you have a will Leaving
specific property to a person and later create a trust transferring The same
property to a different person, the trust takes precedence and the Property will
go to the person named in the trust.
Community Property
If community property is to be placed into a trust, it is important that both
Spouses join in the creation of the trust as both grantors and co-trustees.

Exhibit A - (an easy way to alter the trust)


Property may be transferred using a trust by means of an "exhibit a". This
Is a separate page attached to the trust, but referred to in the trust agreement. If
you decide to change anything in the trust property at a later Time, you only
need to change "exhibit a". You don't need to alter the trust agreement.
All property transferred to the trust must be listed in exhibit a. You Should
be aware of some special information concerning the property Transferred to the
trust and the methods involved:
real estate can be transferred to a trust.
bank accounts and saving & loan accounts can be transferred to a
trust.
stocks, bonds, and mutual funds can be transferred to a trust.
insurance policies can be transferred to a trust.
automobiles, motorcycles, trailers, motor homes, and similar types
of vehicles can be transferred to a trust.

Real Property
Real property included in a trust should be recorded with the names of the
Trustees of the trust. Normally, this means filing a "quit claim" deed on The
property changing the name of the owners of the property. This usually Is done
at the county recorder's office. The new deed should be similar to:
john doe and jane doe, as trustees under revocable
living trust agreement dated january 1, 1990

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You should contact your county recorder's office for specific information.
Quit claim deeds may be obtained at stationary stores or at local real estate
Offices.

Bank Accounts
Bank accounts and saving & loan accounts should be changed using the
same type of trust language. It is suggested that you contact your bank, saving
& loan, or other financial institution to find out how they prefer it to be done.
Some institutions require a copy of the trust agreement on file. Different
businesses have different methods.

Vehicles
Automobiles, motorcycles, and any other similar types of vehicles should be
Registered using the same trust language. It is a good idea to check with Local,
county, and state offices regarding their specific requirements Regarding transfer
of vehicles to a trust.

Choice of a Trustee
You cannot be too careful when choosing a trustee, co-trustee, or
successor Trustee. It is suggested that an adult family member be selected. Do
not consider a lawyer, trust officer, bank, or trust company for a trustee. This
defeats the entire purpose and objective of the revocable living trust. It Is
imperative that a trustee be chosen who will expressly avoid the needless
expenses, delays, and inconvenience of court appointments.

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WHAT THE IRS AND OTHER TAX AUTHORITIES


DON'T WANT YOU TO KNOW... THE TRUTH!

BY DAVID JOHNSON
The following article is one of the most informative we have seen on the
subject, particularly when one looks at the enormous amount of mis-information
that has been published by main stream media recently. David Johnson is an
American aiming this piece at US taxpayers. This certainly does not detract from
the value of the article for other nationals. The majority of points discussed apply
equally to most countries and you can be sure that the few that don't, will in the
near future. Big Brother has the nasty habit of spreading bad news as rapidly as
possible...

When you have something to hide, the simple rule of thumb is-do it
offshore. After all, if you are reading this your goal is to keep your financial
business to yourself. The purpose of this article is to give an introductory inside
look at banking and investing overseas, using fiscal tax shelters (havens) to
reduce or eliminate taxes, and foremost, to provide confidentiality in personal
and business matters. Period.
For various reasons, offshore banking has been tagged as "unsafe", "risky",
"illegal" or "for the wealthy", let's separate the facts from the bull! First off, one
must understand that it is normal for those that know little or nothing about
something (besides what they hear from other even less knowledgeable people)
to be afraid and suspicious about it. Misinformed financial planners, attorneys
and accountants may know economics and the law in the United States or their
country of residence, but few know a bout handling business outside their
domicile. Let's tackle these misconceptions one at a time.

Legality
There isn't and will never be a law restricting the sending of funds outside
the USA. How do I know? Simple. As a country dependent on International trade
(billions of dollars a year and counting) the American economy would be
destroyed. How? Since all US global trade is transacted in US dollars, there
would be no exports or imports, due to the fact that the United States would not
be able to buy and sell goods. Make sense?
If you wanted to, you could move or transfer some or all of your money out
of your bank or credit union to anywhere in the world, Legally.
US banks and the IRS disseminate negative propaganda dealing with
offshore banking, making it seem unsafe or some type of criminal act. Why?
Banks just want to keep your money in their institutions to use for their own
profitable purposes. Did you know that most US banks themselves accept

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deposits from people overseas and often invest in foreign stocks and hold
accounts with foreign banks? It's true! As far as the IRS is concerned, they
obviously want your money in US banks where they can tax every dollar you
earn in interest, and keep track of how many liquid assets you have and where
they are.
The confusion with tax legalities is sometimes due to lack of knowledge. In
the US tax evasion is a crime, tax avoidance is not. As you know, there are
zillions of laws on the books in every country. Without a doubt what is legal in
one place may be against the law elsewhere. For example tax evasion is not a
crime in jurisdictions where there is no income tax. Thus, in most cases (except
those with significant political and/or business weight) countries that are not
allies usually don't assist other nation s in enforcing laws that are not laws in
their countries. Further, a country has no legal right to conduct an investigation in
a foreign country without consent of the respective government.
In reality, a country has every right to deny any other nation permission to
make examinations in their territory. Therefore, it is difficult if not impossible for
authorities in the US or elsewhere to obtain financial transaction records of tax
evaders in many foreign-based institutions (outside of those located in areas that
have some type of co-operation treaties). Strict banking secrecy laws also
contribute to this difficulty. Most tax havens impose lengthy prison terms and/or
hefty fines for violations of a client's secrecy.
INTER-FIPOL (The International Fiscal Police) is the tax crime equivalent of
INTERPOL (The International police Organisation), which is a network of law
enforcement authorities in numerous countries which exchange information on
criminals. Many evaders are opening accounts in fictitious names and using mail
forwarding and pick up drops for privacy.

Practicality
Movie-makers and recent international scandals, such as BCCI and Iran-
Contra, have contributed to negative views about offshore banking.
Contrary to popular belief, rich criminals and corrupt government officials
make up a small segment of the total number of customers at any given offshore
institution. Now more than ever the average American blue collar worker and
businessman is using offshore banking as a way to reduce taxes (through legal
avoidance). Many accounts may be opened for the same amount required in the
US (about $100) or less. In some cases, there is no minimum opening deposit at
all. Further, the interest rates are usually substantially higher than in the US
(since federal law sets limits on the amount of interest a bank can pay you). But
by far, the reason most people turn to offshore banks is their confidentiality.
One might ask, "if these banks are so good, why don't they advertise in the
US."? The answer is simple...they are prohibited! Federal law restricts off shore
banks from advertising their services in US magazines and newspapers, unless
they agree to the same restrictions that govern F.D.I.C. institutions. (such as
interest limitation). Why? That's simple too...to keep the competition down.
Opening an account with these banks is as simple as writing a formal letter to

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the institution and requesting information on about their various services and the
appropriate application forms, and returning them to the bank. It really is that
easy! Most banks never really have to see you in person.

Safety
All offshore banks are regulated in one form or another, like their US
counterparts, but minus the limiting federal laws. Less restrictive regulations
abroad allow foreign banks more freedom in locating the best investments
worldwide. Allowing them to pass on and share their profits with their customers.
As for insurance, forget the F.D.I.C. or other private insurance companies! They
usually only allow a liquidity factor (insurance) of about 10% of public deposits.
Many offshore banks are self-insured, meaning they have at least one dollar in
cash to cover every dollar on deposit, that translates to 100% plus insurance.
Also, the majority of the worlds largest and strongest banks (as far as assets go)
are overseas, not in the United States. Call your local library's business and
finance or commercial department and ask the librarian to look up these details.

Internal Revenue Service (IRS)


Treasury form 90. 22-1 (report of Foreign bank and financial accounts must
by law, be completed and returned to the IRS by June 30th. each year if you
possess a foreign account. Everybody surely files! For a copy of the form, call
the IRS at (800) 829-1040, or check your phone directory for the number of your
nearest forms distribution centre.

U.S. Customs
The US Department of Treasury's Currency and Foreign Transactions
reporting Act details which monetary instruments (cheques, money orders etc.)
must, by law be reported to the federal government. A copy of an illustrated
circular which explains the act in full is available for the cost Of $5 from
Worldwide Consultants, 242 West Pratt Blvd., Suite 971, Chicago, IL 60645
U.S.A.

What you don't have to report


Here are two categories of instruments that you are not required to report. If
you make out a personal cheque or money order to an offshore bank, you don't
have to report it. And if you have a cheque or money order payable to you, you
may restrictively endorse it (i.e.. pay to the order of xyz bank), and you do not
have to report it either.

Tax evasion
If you deposit your pay cheque in a US bank, chances are you've already
paid income taxes on it (unless it is a personal cheque). So you have no further
obligations, since taxes were deducted before the cheque even hit your hand.
With a savings or brokerage account, at the end of the year when you get your

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annual statement, you simply add the total amount of interest or profit earned on
your income, and pay taxes on the grand total. The same is only true offshore if
the country the bank is located in imposes a withholding tax. Since I'm on the
subject of taxes, did you know that the United States and the Philippines are the
only two nations in the world that tax income earned outside of their countries?
Anyway ... back to tax evasion. Below are a few examples of ways some
individuals have cheated the taxman.
A lawyer received payment by personal cheque from a client and deposited
it in his offshore account. Since the deposit didn't appear on his business
records, the chances are it would never be found out (even if he was audited).
One couple sold a valuable antique and had the buyer send the payment
directly to their offshore bank account. Later the couple used the money to tour
Europe and the Caribbean.
Another example is the Savings and Loan bank customer who enticed his
"unscrupulous" banker to electronically transfer a large sum of cash offshore
without reporting the transaction to the IRS. The customer then borrowed the
money back from the offshore bank. Since loan proceeds are not taxable, no
taxes were paid.
These types of schemes are no longer used by the rich with extra money to
hide, but by average Americans who don't like to pay taxes on every cent they
earn.

How hidden assets are found


Having conducted investigations in the US and abroad, I am familiar with
the various techniques which may be used to locate leads to funds being kept
offshore. Here are a few:
Checking passports (and travel agents) for evidence of visits to "high
profile" destinations such as: Switzerland, Cayman Islands, The Bahamas, Isle
of Man, Netherlands Antilles, and other known banking and tax havens. Travel to
these type of areas will surely throw up a red flag, giving investigators a place to
start looking for your assets.
Examining telephone (home, business and hotel), fax and mobile (cellular)
phone records to identify undisclosed business connections and contacts.
Reviewing credit card statements to determine who you do business with,
where you travel (domestic & foreign), and what products and services you use.
These records leave a paper trail a mile long.
Garbage is often sifted through for information such as statements,
invoices, correspondence, and other relevant material useful in tracking your
affairs. Use a high quality paper shredder, discard your garbage at another
location, or burn and crush it. It sounds drastic, but what you throw away says a
lot about you, and many leads can be found there.
Compiling a list of parties that you have a relationship with (business or
otherwise) by recording the return addresses on your incoming mail. This
technique can disclose friends, associates and partners. If you must receive

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important mail at your residence or business address, be sure to ask your


correspondents to stop using a return address.
Looking into banking transactions. All withdrawals of $3000 or more must
be reported by your bank to the federal government, whether made by cash,
cheque or electronic transfer. Keep your transactions under $3000.
Checking private courier's logs (UPS, DHL, Federal Express, Airborne
Express etc.) for delivery of special or important letters and packages.
Examining telex records of your company or business to locate areas of
foreign activity.
About the Author: David Johnson is a consultant specializing in privacy,
security and investigative matters.

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TAXES - HOW TO MINIMIZE FORCED ASSET


REDUCTION

LET'S TALK TAXATION


"Taxation is theft".
- Libertarian slogan
-
A frank look at the morality of taxation, some questions answered, plenty of
food for thought and maybe a change of direction for you.
A slave has nothing, no legal rights, no property and no freedom. He exists
purely at the whim of his master, all favours, perks and comforts are given if and
when his master decrees. As they are given so can they be summarily taken
away. He has no protection, no rights and certainly no recourse.
Makes the fine hair at the back of your neck stand up doesn't it? It should.
You're in the slave category and your national revenue service is your master.
That's right they can take whatever they want from you, your property, your
wealth and if necessary your freedom without so much as a by your leave-and
guess what, you have no legal recourse. If they don't have legit grounds they'll
trump something up and chances are it will stick. You're in for the high jump one
way or another.
Webster's Dictionary defines theft as the "taking away of another's property
without his consent and with the intention of depriving him of it." So what's so
different about taxation? It doesn't really matter whether the tax man is working
for the dictator of a one-party state or under the auspices of a "democratic"
government and its supposed approving electorate, he can and will remove a
percentage of your wealth without your consent. Object too strongly or don't
comply with his wishes and you could lose all your property, have your bank
accounts attached, your passport confiscated and even face imprisonment.
In the third world a single despot usually winds up with all the taxation
spoils. In more modern, so called democratic countries the booty is spread a
little, subsidised industry, subsidised schools, subsidised health services,
subsidised parastatals and the like are all in for a piece of the action. These
recipients of government largesse combine to create what can only be called
subsidised indolence. Let's not forget the bureaucrats, they score heavily
whenever it's hand out time. Any additional funds they get will speed the
promulgation of more rules, more regulations and more taxes. Bureaucrats don't
create wealth, they blow it.
Show me a high-taxation country and I'll show you a country where the
level of benefits to citizens can never remotely equal the huge permanent losses
to the economy caused by discouraged production, depleted capital and
confiscated wealth. Which ever way you cut it the way the booty is split doesn't

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change the essential nature of a theft, it is an immoral, anti-social and


destructive act.
You cannot ever separate taxation from the general control of human
action. By placing taxes on some items and not on others human energy and
wealth are diverted from those ends that men freely choose to only those of
which the state approves. The inevitable result is the frustration of men's freely
chosen ends and the disruption of economies.
Where taxation is total (e.g. Communist China) there can be no freedom.
Without the right to property there are no rights at all: Freedom of speech is
meaningless without the right to own printing presses and rent auditoriums.
Freedom of association is impossible without the right to own land and houses.
Freedom of enterprise cannot exist when everything is owned by the state.
Political freedom and economic freedom cannot be separated: The society in
which everything is owned by the state is the society in which everyone is
controlled by the state.
Legalised theft (taxation) is rife in the world today all that varies is the
amount that gets taken. This ranges from minuscule (Andorra, Bahamas) to
moderate (Brazil, Switzerland) to great (Scandinavia, South Africa) to total
(Communist China). It is no coincidence that political freedom is generally
greatest in precisely those lands where taxation is lowest.

Tax Havens
Those countries with the lowest taxes in the world are known as Tax
Havens. Every such country is small and relatively under-developed. That is why
they are tax havens: The creation of a climate favourable to business is the only
real chance most of these countries have of becoming prosperous. (One other
way that growth can come to under developed countries is for them to discover
that they have vast deposits of natural resources. They then give industrialised
nations "eternal mining rights", in exchange for their investment in development
and infrastructure. When things are going swimmingly, they then nationalise
everything). Unfortunately, it is true to say that given the chance most
governments will eventually "kill the goose that lays the golden egg." After a free
market has given them a modicum of prosperity they will impose taxes, controls
and regulations. This is why new tax havens appear periodically and old ones
disappear.
There are also marked differences between the theory and practice of tax
law in countries around the world. In the more advanced western countries,
particularly those with an Anglo-Saxon heritage, the tax laws are generally
severely but fairly enforced to the letter of the law. Bribing the tax collector in
developed countries is dangerous. On the other hand, the Latin countries
generally lack the efficiency to track down the evaders, and most citizens
generally don't consider tax evasion to be a crime, but rather as a game that
should be played to win. Taxes are negotiated in a friendly atmosphere; the tax
collector is more often than not treated to a couple of drinks and an envelope
stuffed with small, unmarked bills.

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A country which presents a very favourable tax situation, however, may


prove no bargain when everything is considered. Is it better to pay a 40% tax on
earnings of $100,000 or a 10% tax on earnings of $50,000? A successful
manufacturer's representative, or physician, or stockbroker may find that even if
he builds his business up to maximum sustainable levels in a foreign locale, his
new before-tax income still doesn't compare with his old after-tax-net. Also living
expenses abroad may prove greater than those in his home country especially if
the exchange rate is unfavourable. In countries like the Bahamas and the
Caymans, a high portion of their food and other staples are imported and subject
to customs duty; the same is true of fuel, clothing, building materials and most
other necessities, all of which cost more than in producing countries. When you
combine increased travel and communication expenses, you may easily find
your standard of living has declined substantially in spite of lower taxes.

Other Taxes
Income taxes are the obvious taxes, but they are far from the whole story.
Many countries have import duties of over 100% for many products-effectively
doubling their cost to residents, and reducing their standard of living by a
proportionate amount. These tariffs are justified by many plausible economic
arguments, and their justification also takes advantage of feelings of nationalism.
You are extolled to "Buy American" or "Buy British or whatever" because it's
patriotic, even though it may be to your personal advantage to buy imports. Can
you see why you should limit yourself to buying particular products anymore
than you should limit yourself to buying from companies in your particular area of
residence? I'm sure you can't. The only beneficiaries of this type of stupid
arbitrary discrimination is the local government and local firms. Why is it bad to
discriminate against poor black Americans who make $3,000 a year, but good to
discriminate against far poorer Latin Americans who make $200 a year? Why
should 250 million Americans be forced to pay twice the market price for Italian
shoes so that a few thousand workers at American shoe plants can be kept in
business? Import taxes and other trade barriers only benefit protected industries
at the cost of higher prices for millions and the maintenance of the illusion that
such protected firms are providing an efficient product. Even then the illusory
"benefits" will last only until other governments respond with equally stupid and
arbitrary counter-laws. The net effect is that relatively inefficient firms continue in
their wasteful production of goods that other countries can produce more
cheaply.
A form of tax that has gained great favour with governments the world over
is the Value Added Tax -- or V.A.T. It is favoured because, as a sales tax added
on at each step of the manufacturing process, it is both invisible (i.e. cost rises
are ascribed to producers, not to tax authorities) and very hard to evade, unlike
the income tax. In Europe where it originated, V.A.T. continues to escalate way
beyond what was originally envisioned.

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Avoiding Taxes
The best thing to do about taxes is simply not to pay them. The authorities
don't look with favour upon those who evade taxes, but expatriates are in an
ideal position to avoid them legally. As a general rule you can stay for up to 6
months in most countries before becoming liable for any taxation. Although many
countries tax residents on world-wide income, they do so only if you live there for
over six months a year (calendar or tax, depending on the country). This means
you can have a summer home where it is cool, a winter home where it is warm,
travel a good bit in between, and pay off your mortgage with your tax savings.
It's quite possible to pay no tax at all legally. This is often what some of the
world's richest people do. The US government definitely presents a problem for
Americans, however, since it's unique in taxing all your income wherever you go
regardless of how long you stay out of the US.
Most countries will consider you liable if you are simply physically present
for more than 183 days per year, but others consider you liable if you are
domiciled within them, or own property therein, or have a place of residence.
Note that although most tax residents are on world-wide income, non residents
are only liable for local income; some countries tax only local income, regardless
of residence. The biggest problem for Americans is not avoiding foreign taxes,
but rather avoiding US tax while retaining the freedom to return to the US.
Nonetheless, the old adage "out of sight, out of mind" applies here. If you
don't have any US income it's probably possible to write "deceased" on your tax
form and be stricken from the records. But God help you if The American Secret
Police (the IRS) find out.
If you can solve the problems presented by the US government, you're
nearly home free. Even if the worst happens, very few governments handle non-
payment of taxes in the brutal way the American authorities do. In most
countries, tax evasion is only a civil, not a criminal, offence.
On the whole, however, one should be scrupulous in one's observance of
national tax laws. The wisest course for an expatriate is to keep a low profile.
There's no reason to take a chance on jeopardizing your status when you can
avoid taxes completely by hiring a competent tax advisor, not staying longer than
allowed each year in a given country, and taking advantage of tax loopholes.

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TYPES OF TAX HAVENS


Simply stated, a tax haven is any country whose laws, regulations,
traditions, and, in some cases, treaty arrangements make it possible
for one to reduce his overall tax burden. This general definition,
however, covers many types of tax havens, and it is important that
you understand their differences.

No-Tax Havens - Countries that have no income, capital


gains, or wealth (capital) taxes, and in which you can
incorporate and/or form a trust. The governments of these
countries do earn some revenue from corporations; "no-tax"
means that what you pay is independent of income derived
through a company. These states may impose small fees on
documents of incorporation, a small charge on the value of
corporate shares, annual registration fees, etc. Primary
examples are Bermuda, Bahamas, and the Cayman Islands.

No-Tax-on-Foreign-Income Havens - Countries that


impose income taxes, both on individuals and corporations,
but only on locally derived income. They exempt from tax
any income earned from foreign sources that involve no local
business activities apart from simple "housekeeping" matters.
For example, in such a haven there is often no tax on income
derived from export of local manufactured goods.

The no-tax-on-foreign-income havens break down into two groups.


There are those that allow a corporation to do business both
internally and externally, taxing only the income coming from
internal sources, and those that require a company to decide at the
time of incorporation whether it will be one allowed to do local
business, with the consequent tax liabilities, or one permitted to do
only foreign business and thus be exempt from taxation. Primary
examples in these two sub-categories are Panama, Liberia, Jersey,
Guernsey, Isle of Man and Gibraltar.

Low-Tax Havens - Countries that impose some taxes on all


corporate income, wherever earned. However, most have
double-taxation agreements many the high-tax countries that
may reduce the withholding tax imposed on income derived
from the high-tax countries by local corporations. Cyprus is a
primary example. The British Virgin Islands is another, but no
longer has a tax treaty with the U.S.

Special Tax Havens - Countries that impose all or most of


the usual taxes, but either allow special concessions to
special types of companies (such as a total exemption from
tax on shipping companies, or movie production companies)
or allow very special types of corporate organization, such as
the very flexible corporate arrangements offered by
Liechtenstein. The Netherlands and Austria are particularly

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good examples of this. To understand the precise role of tax


havens, it is important for you to distinguish two basic sorts
of income: (1) return on labor and (2) return on capital.

The first kind of return is what you get from your work: salary,
wages, fees for professional services, and the like. The second kind
of return relates, basically, to the return from your investments:
dividends on shares of stock; interest on bank deposits, loans and
bonds; rental income; royalties on patents. It is the second kind of
income, income from an investment portfolio, which tax havens are
useful for. Forming a corporation or trust in a tax haven can make
the second form of income totally tax free, or taxed so low that you
will hardly notice. Certain types of businesses can be effectively
based in a tax haven. If you publish a newsletter, for example, you
might be able to set up the entire operation in a totally tax free
country such as the Bahamas or the Cayman Islands. If your income
comes from copyright royalties, perhaps on the computer program
you invented, the Netherlands is famed as a base for sheltering
royalty income.

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THE STRATEGIC USE OF THE PRIVATE TRUST

THE MULTIPLE TRUST SYSTEM

BY DANNY HASHIMOTO
The multiple trust system contains a minimum of three trusts. The Domestic
Trust (DT) generates income in the United States (domestically) and normally
would have a tax liability if it did not distribute its net income. However, DT does
distribute its net income to its beneficiary, the first Foreign Trust (F-1), thereby
leaving no net income to be taxed. Under l.R.C. section 651, this is a legal
deduction against income. Therefore, when DT files its tax return, it has no
income tax liability.
The physical assets (homes, vehicles, etc.) remain in the Domestic Trust.
Only liquid cash (distributable income) moves from one trust bank account to.
another.
The Foreign Trust, F-1 distributes its income, in this case the income it
received from DT, to its beneficiary, the second Foreign Trust (F-2). Once this
distribution is made, F-1 incurs no income tax liability, having disbursed all of its
net income (as DT did).
F-2, the second Foreign Trust, has now received income from another
'foreign" trust income is not taxable as it is not directly connected income from a
United States source. It is analogous, for example, to Russia and China doing
business with no right or authority of the States to intervene. Essentially, the
United States has no taxable authority over the distribution.
Both foreign trusts, F-1 and F-2, are located in what is known as a "tax
haven" country, foreign, of course. A tax haven country is a country that imposes
no tax on those who come to do business by way of the formation of trusts and
various business activities. These tax haven countries have advantageous laws
for financial privacy and have no exchange treaties. Therefore no information of
any kind is given to the United States government about these foreign trust
banking or otherwise. The tax haven country that is chosen for this purpose is
politically stable. Banking is among the finest and safest in the world.
F-2 is not required to file any tax return - not with the United States and not
with the foreign country. Flexibility for the client is now achieved as all the income
in F-2 is now fully utilizable. This foreign trust may now invest in foreign
countries, make non-taxable gifts, make loans and make income distributions. If
it makes income distributions to its beneficiary, a tax liability will result. Usually,
during the lifetime of the client, income distributions from the F-2 are not
necessary as there is enough income being paid out of the trust(s) to the client
who serves as Manager.

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The Trustee (of each trust) receives a nominal annual trustee fee. The
Protector, whom you appoint, has the power to remove the Trustee for any
reason. The day-to-day business affairs of the trusts are managed by you, the
Client, and the Trustee supports your activities as they are in harmony with the
mission of the trust (to preserve, protect and enhance) the assets you placed in
the trust at the outset.
No inheritance taxes or probate fees are incurred at anytime because title
to the assets does not convey when you pass away. Title remains in the trust
and only the identity of the Manager changes along with the beneficiaries as you
have directed. The trusts are irrevocable, giving you the strongest asset
protection capability as well. There are many benefits that accrue with this trust
system -- among them being the capacity to have your trust estate grow much
faster due to the compounding effect of tax dollars saved and your own astute
management, of course!

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MAKING A TRUST WORK FOR YOU

BY THE CARIBBEAN CONNECTION


The use of a Trust for asset protection and estate planning dates back
several centuries. Trusts were common in England early in the 11th century. In
some form the trust was an instrument for holding property in Roman times.
Developed over time, Trusts have become a seriously effective means of
minimizing taxes, protecting assets and passing wealth along to heirs in privacy
and without devastating tax consequences.
The very wealthy have used the trust approach for many years. Recent
development in the offshore world where more and more jurisdictions adopt
effective laws, the trust has become an instrument available to people of lesser
means. For nominal costs, minimal formalities and on short notice, a trust can
come into being. We invite you to consider the trust a part of your personal and
corporate financial planning, either alone or in conjunction with a IBC
(International Business Company).

Some Information About A Trust


In general, a trust involves:
I. A Settlor or Grantor: The person, company or other entity placing property
into a trust.
II. A Trustee: The individual, company, another trust or other entity who
receives the property to be managed for the benefit of those individuals,
companies, trusts, or other entities named as Beneficiaries.
III. The Beneficiary or Beneficiaries: The individual, individuals, company or
companies, trust or trusts or other entities named to benefit from the trust
property.
IV. The Trust Document: The Deed or Declaration of Trust is the written
instrument which details the duties of the Trustee, Names the Beneficiaries and
Lists the Property in the Trust Corpus or body of assets.

Types of Trusts
While we will assist in the establishment of a trust wherein the settlor or
grantor retain absolute direct control of the trust assets by becoming the Trustee
or by some other means, we are reluctant to do so. If the property is not within
the absolute and discretionary control of the Trustee who is not the grantor or
settlor, and the grantor or settlor retains overt control, little is accomplished as
relates to asset protection especially, and to tax avoidance or minimization,
typically.*
Laws in high tax countries specify that if the tax payer controls the property,
then he must pay the taxes on the assets or earnings on the trust property.

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The Discretionary Trust provides for a party to serve as the Settlor, being
himself beyond the jurisdiction of the beneficiaries. The actual property can
come from any place and be any thing. With a Discretionary Trust, the Trustee
can add to the list of beneficiaries or remove beneficiaries. Certainly, in a
Discretionary Trust, the Trustee has control over the property. This type of Trust
is almost exclusively used for asset protection and tax and estate planning.
As already referred to, under current tax laws and regulations in the high
tax or "sophisticated" countries where the Common Law trust is known, if the
beneficiaries are know, there might be a decision to claim taxes due, even
though there has been no distribution. The confidentiality laws of most offshore
jurisdictions take this into account. With the confidentiality feature, there is not
chance that anyone can get information as to who beneficiaries are.
To fill in the gaps where beneficiaries are not named in the Trust Deed or
Trust Instrument, a Letter of Wishes filed with the Trustee to specify the
Beneficiaries and their interest trust property will suffice.
Also, where the Trust Deed does not specify details relative to distributions,
a letter of wishes may be filed at any time by the beneficiary. Laws in most
jurisdictions allow for this while not revoking the irrevocability feature of the trust.
A Letter of Wishes may be filed at the time of initiating the Trust or at any
time thereafter.

For Asset Protection


In litigious countries such as the United States, it has become common
practice for individuals to seek offshore trusts for protection against:
Malpractice claims in the case of Medical Doctors and other
professionals
Products liability
Creditors, either Business or Personal
Judgments
Problematic divorces
The Trust Must be Irrevocable to qualify in many cases as a true asset
protection device. If the Beneficiary or Settlor have ready access to trust
property, claimants or tax authorities can "demand" compliance with local laws
and tax regulations of the beneficiaries or settlor.
A trust cannot be all things to all people in all situations. Multiple trusts might
be called for: One for tax reduction, another for minimizing liability by holding
physical assets.

Speed Where Speed Is Important


A trust can be established in minutes, literally. While it might take longer to
have property transferred into a trust, time can be a factor as to the dating of the
Deed. Generally, a Trust Deed is not registered with any tax jurisdiction. A trust is
a private arrangement. Normally, there is no requirement for accounting reports

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to any agency. On the contrary, there is no access provided to the activities of


the trustee except as arranged by the parties or through the courts, and that is
not easy.
Please Note
It is always advisable to seek the advice of experts when making decisions
about your finances. We regret that many of the experts do not know enough
about the use of offshore jurisdictions to be of use. Just the same, prudence
must be taken. We are not tax or legal professionals no not provide investment
advice, tax advice or legal opinions. We tell you what is available and will
answer your questions as relate to the jurisdictions in which we work or the
service in which you have an interest. We provide support and administrative
services and in doing so we use properly licensed and trained professionals.
*If clients are uncomfortable with having a trust company in the picture, an
IBC can be formed for the purpose of acting as trustee.

Practical Profitable Use Of An International Business Company


Portfolio Management
Holding equity shares in an offshore company in a jurisdiction where there
are no taxes on the company, no reporting, where shareholders may be
nominees and management can be provided through Power of Attorney offers
many advantages. With communication facilities being what they are today and
the existence of the ability to trade immediately from just about any point on the
Globe, the IBC has become a major tool where efforts to minimize taxes and to
maintain confidentiality are important.
Trading Companies
Depending upon the jurisdictions involved in a trade or in trading, a
jurisdiction can be selected where taxes can be minimized or completely
eliminated. The existence of the VAT, the intrusion of the EU, withholding
provisions, reporting requirements, licensing demands, etc., will dictate the
jurisdictions. Generally, however, trade between the United States and just about
any jurisdiction can be conducted through a Belize IBC with great advantage.
The country's status provides access to European, Asian and other countries
with great facility and potential to maximize profits and avoid taxation.
Intellectual Property
The simple holding of Intellectual Property in an IBC can account for
significant profit increase, tax savings and minimization of reporting and
regulatory compliance.
Holding Title to Land, Improved Property, and Other Physical Assets
Precious Metals, Land, Improved Property, Valuable Collections, Shares of
Beneficial Interest can be held by an offshore company. This will facilitate
transfer of ownership and translation of ownership to heirs if the trust is not in
use. Look at the Features of An IBC and see how they apply to you and your
financial planning approach. It is always good to consult with professionals in
your home jurisdictions. Unfortunately, the so called professionals are limited in

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their scope of understanding of business or the need to look offshore for


solutions. For Domestic Companies we suggest a close look at the BTO or
Business Trust Organization as a planning and operating approach.
Inter-Company Finances
Borrowing and Lending
Leasing
An offshore company holding title to machinery and equipment can lease
the same to a company in your jurisdiction where profits for the operation are
maintained offshore, unreported and untaxed.
A loan and interest from an offshore company can be collected from a
company in your jurisdiction.
The earnings can remain offshore.
Ship/Boat Owning and Shipping Company Operation
Register your ship or boat abroad for minimum tax and liability. Operation
costs are minimized when using personnel from developing countries. There are
other benefits that accrue. Such benefits become obvious as you review the
laws and regulations related to vessel registration in Belize and other
jurisdictions and the Companies Act and its ramifications for offshore operations.
Consultancies and Personal Service Companies
Setting up your consultant service in an offshore jurisdiction will enhance
your visibility and increase your earning potential by minimizing taxes and
operating expenses.
Personnel Companies/Personnel Management
If you are operating offshore, or have set up offshore you can provide
services worldwide allowing income to be reported from an offshore company.
Ease of operation, minimal accounting and retention of earnings can all work
toward maximizing income. The individual is in actuality an employee of the
offshore company.
Employment for Offshore Contracts
If you or your company have an offshore contract and must hire people to
fulfill the details of the agreement, then it might pay to retain the employees or
consultants where there is minimal or no need for payroll taxes, insurance, etc.
The employee might benefit also from earning offshore.

The IBC Can Be Of Measurable Value


We have suggest before that a good and proper use of an IBC is to serve
as trustee for an offshore trust. Properly structured and careful use of Power to
act for the company, clients can remain in virtual control of the assets while
confidentiality, asset protection and tax benefits remain in place.

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Selecting A Jurisdiction For Your Company And Your Trust Is


Important
The jurisdiction you select and the company you retain to provide offshore
services to establish and manage your offshore financial activities are important.
Assuming that an offshore account is part of a well thought out part of your
estate planning, we are happy to make some suggestions. We ask that you
keep in mind that we do not provide advice on tax planning and investment
advisory services. We are specifically a service company which works with
other professionals to administer offshore investments and provide assistance in
establishing trusts and International Business Companies in various jurisdictions
around the World.
We have provided services to thousands who seek a high degree of
confidentiality in their affairs, look for an opportunity to accumulate wealth
without the immediate imposition of taxes and want to protect assets against
confiscation of judgments or other unfortunate events in their lives.

Making The Most of the Offshore World


More and more businessmen and professionals are coming to realize the
value of operating at least part of their investment activity offshore.
We are specialists in establishing and providing management services for
International Business Companies (IBC's) in tax free environments where
maximum confidentiality can be maintained.
Through offices of associates in Mexico we deal in currencies worldwide.
We have established thousands of trusts to provide asset protection,
confidentiality and the ability to accumulate wealth free from taxation.
An offshore or foreign environment where no taxes are imposed and
confidentiality is maintained is especially suited for providing consulting services
and the holding of intellectual property.

A quick look at Belize first choice offshore jurisdiction


Enter The Offshore World With Confidence
Belize has become a leading competitive center for the establishment of
International Business Companies which offer unmatched advantages in terms
of confidentiality, tax and investment planning, business management, maximum
ease of transferring title to property and economic opportunities.
Why an IBC?
An Offshore Tax Exempt Company has many advantages when used in
Managing an Offshore Portfolio
Property or Ship Ownership
Leasing
Insurance
International Trade

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Consulting Services
Holding Intellectual Property
Financial Planning
Holding Assets Confidentially
Why Belize?
Belize offers many attractive advantages among which are:
Political Stability
Modern Democratic Legislative Body
Professional Support For Establishing A Company And Providing
Management
Totally Tax Exempt Income
Easily Accessible By Land, Sea And Air
Prompt Service
Excellent Communications
Friendly English-speaking Population
Vast Untapped Resources
The IBC In Belize
Key features of the Belize IBC are:
Having Only One Shareholder/Subscriber Permitted
Share May Be Held By Corporations Or Trusts
A Single Director Allowed Which May Be A Corporation Or Trust
Non-Disclosure Of Beneficial Owners
Bearer Shares Permitted
Low Fees For Setup And Renewal
No Statutory Accounting Or Auditing Records Need Be Filed In
Belize
No Minimum Capital Requirements
Minimal Restrictions
Cannot Carry On Business With Residents Of Belize
Cannot Own Real Estate In Belize
Cannot Operate As A Bank Or An Insurance Company
Cannot Provide Registered Office Or Serve As Registered
Agent
An IBC must maintain a Registered Agent and a Registered Office in Belize.

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WHY YOU NEED FINANCIAL PRIVACY

The "War On Drugs" has become a "War On People". In fact, by definition


you cannot have a war on anything but people, and Government is bringing that
fact to life. It doesn't matter whether you are pro-drug or anti-drug, and that is not
a discussion for this site, but one thing is certain: the government has been
fighting a losing battle, at higher and higher costs, from day one. The 'war' has
cost billions and billions of dollars without putting so much as a dent into the
world drug trade. There has however been quite a dent put into the lives of
private tax-paying citizens as a result.
To help track money-launderers, the U.S. Government instituted the
Financial Crimes Enforcement Network (FinCEN), an amazing computer system
that has access to all bank, credit, insurance, medical, driving and criminal
records as well as census data and other personal information on most of the
U.S. population. This information is available for most of the developed countries
all over the globe as FinCEN not only acts as a database for the I.R.S., F.B.I.,
C.I.A., D.E.A. etc., but also Revenue Canada, R.C.M.P., Inland Revenue and
InterPol, among others. It is the most effective financial investigation unit in the
world.
By collating and analyzing public databases on a day-to-day basis and by
performing a real-time analysis of all electronic currency movements into and out
of the United States, FinCEN has caught over 40,000 'criminals' to date. The sad
truth is that less than 10% of those individuals were true criminals, the others
were private citizens who were not even aware that they had committed a crime.
A couple of true stories:
A 61 year old man was gunned down in his own home by 27 armed
undercover police agents in California who raided his house on suspicions of
drug activity on the basis that his wife always paid for her groceries in cash
(read: was laundering money). After he was dead the police discovered that he
was a multi-millionaire (legitimately) thus explaining why his wife could afford to
spend lots of cash. (Nevertheless, after a six month investigation a Judge
decided that the officers' actions were justified because they had suspicions of
illegal drug activity).
Under the U.S. Money Laundering Control Act, it is a crime to structure
financial transactions to avoid the US$10,000 reporting threshold i.e. if you
transfer $10,000 or more offshore you must report it to Customs and it is illegal
to transfer $5000 twice to avoid the reporting requirement. Well one man was
sending sums of money less than $10,000 to his son's bank account to pay for
schooling and was unaware of any reporting requirements. The result? The
government accused him of 'structuring' and he was arrested. He eventually lost
his home, car, bank account and other assets which were sold before he could
defend himself in a federal court.
It gets worse.

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As if FinCEN on its own was not enough, it will soon have access to a new
computer system called AI/MPP (Artificial Intelligence, Massive Parallel
Processing). AI/MPP will link all federal and state government databases with the
entire US banking system. This system will be able to monitor all banking
transactions in real time, cross-reference current transactions with past
transactions and use artificial intelligence to detect suspicious activity as it is
carried out. Perpetrators of financial crimes, whether intentionally committed or
not, will be caught within an hour of the illegal transaction. As shown above, the
government doesn't particularly care if you're innocent or not.
This does not even touch on the need for privacy to deter litigants of
frivilous lawsuits or to avoid creditors. With money hungry, out-of-control
government, North Americans have got their hands full enough already. The
solution to the problem of course is to go offshore and some (like us) would say
that with today's technology it is foolish to keep more money than is necessary
onshore and in plain site of any snoops.

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WHO SHOULD CONSIDER GOING OFFSHORE?

Aside from the very rich (who all should) and the very poor (who all have no
reason to), tax havens can be beneficial to people who fall into one or more of
the following categories:
1. People with excess money to invest - if you are already maxing out your
RRSP contributions annually, and have some extra money to invest you can
generate much better returns offshore than onshore.
2. People who value financial privacy - Contrary to popular belief, your
financial records are an open book and government snooping is only going to
increase as time and technology marches on. Our forefathers believed in
financial privacy, our modern governments have eroded it in the name of
confiscatory taxes.
3. People who are in danger of being sued - In America, the number of
frivolous lawsuits filed each year is enormous. If you're American, you have a
10% chance of being sued in any given year and a 33% chance of being sued in
your lifetime. Worse, the litigants are winning! Imagine a burglar breaking into
your house, injuring himself in the process and then suing you. Believe it or not,
courts award judgements to those plaintiffs. Creditors and ex-spouses can also
take away most, if not all, of what you own. The best line of defence is to protect
your assets before someone else decides they deserve a slice of your pie. If you
try to hide your assets after someone has won a judgement against you, you'll
be guilty of fraudulent conveyance (trying to fraud your creditors) and will end up
in even bigger trouble.
4. People who want to invest in funds and securities not available in their
home country. Some of the best investments are located offshore, but North
American governments prevent them from advertising on our shores. Why?
Because government knows that people would avoid domestic investments if
they had a choice to do better elsewhere. Being in the offshore arena will gain
you access to these investments.
5. People who are self-employed part-time or full-time in a home business -
If you receive income in the form of cash or cheques paid directly to you, you
can really beef up your privacy by doing your banking offshore. It may even
allow for tax avoidance possibilities - talk to your financial planner about this.
6. People who just want to put money aside for a rainy day - Just in case.
7. People who do a lot of travelling - Many offshore banks offer multi-
currency accounts (single accounts that can be operated in two or more major
currencies). These accounts alleviate the inconveniences and commission fees
of always exchanging money.
8. People who anticipate substantial sums of money - Whether it be through
inheritance, royalties, or the rewards of hard work, the time to set up an offshore
financial plan is before you acquire your wealth, not after.

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9. People who, through technology, are able to work from anywhere in the
world e.g. certain network marketers, 900# operators, freelance writers, mail
order salespeople etc. Refer to our PT Page.
10. People who are just fed up and want to expatriate.
In the end of course, the decision is personal. Certainly, offshore banking is
not for everyone. We invite you to go through our site, learn as much as you can,
and make an informed decision as to whether you can benefit from using tax
havens or not.

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OFFSHORE BANKING

Tax benefits
Liabilities to income tax may be avoided, reduced or deferred.
With a offshore bank account you may pass your wealth along to heirs and
avoid devastating tax consequences. There are no taxes on the account interest
and no filings are made to any government authorities.

Asset Protection
A offshore bank account can help you protect assets from creditors, divorce
settlement and law suits. By opening a joint account you are also able to choose
freely how to divide your assets in case of death. Many countries have laws that
dictates who receives the assets in case of death.

Secrecy
It is not possible for any third party to obtain information about your account,
not even government authorities.

High interest rates


Banks in offshore financial centers are able to pay higher interest rates
since there are no taxes on banks income or accounts.

Frequently Asked Questions


How can I access my money?
There are several ways. You can apply for a credit card which can be used
worldwide for purchases or for withdrawals in ATM:s. This will give you instant
access to your funds 24 hours a day. You may also choose to have a checkbook.
For larger amounts you can instruct the bank to transfer funds to any other bank
in the world. Instructions can be sent by mail, fax or over the phone.
Who will qualify?
With our program everyone can have their offshore bank account even
without an initial deposit and without a bank reference. We can not guarantee
that everyone is accepted for a credit card, however no credit checks are ever
made. We do guarantee though that everyone that follows our instructions will
have their own offshore bank account opened!
How do I make deposits?
You can transfer money to your offshore account from any bank in the
world. Your clients can pay directly to your offshore account. If you have any
income from overseas, the funds never need to arrive in your country of

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residence, yet you can access your funds whenever you want. You can also
send checks to the bank for deposit.

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OFFSHORE TAX HAVEN BANKING AND TRUSTS

"It is well enough that the people of the nation do not understand our
banking and monetary systems, for if they did, I believe there would be a
revolution before tomorrow morning." - Henry Ford Sr.

Introduction
Did you ever read the fine print on the 'signature card' your bank gets you
to sign when you open an account? It reads: "The undersigned hereby agrees to
abide by all the rules of the bank." Did you ever ask to see those rules?? What
you have actually done is agree to abide by all the administrative rules of the
Secretary of the Treasury (i.e. the Government).
You have in fact signed a contract with the government, voluntarily waived
your right to privacy, and agreed to be accountable to the State. Is that what you
really want? A partnership with the Government??
While it may not be practical for most people to get out of the banking
system altogether, through the use of a TRUST you can minimize this problem,
or even eliminate it entirely by establishing an affordable International Business
Corporation with a private OFFSHORE BANK ACCOUNT. The government then
knows nothing of your banking business and will have no way to find out. Now,
doesn't that sound like a better arrangement?
It is time to move out from under "Big Brother's umbrella", the umbrella that
is costing us all our freedom, our privacy, our financial independence, not to
mention how much it is costing us in terms of real hard cash.
The Government, Tax Collectors, and Bankers know that money held
outside your country of residence is money they cannot control. That is why they
are adamant in their defamation and condemnation - they know it takes money
out of their hands. They would much rather you keep your money in domestic
banks, paying you less and taxing what little you do earn.

Offshore Banking Defined


Before we go any further, let's define Offshore Banking.
The term Offshore Banking has two different and very distinct definitions,
one MECHANICAL, the other FUNCTIONAL.
We will concern ourselves here with the Functional Definition, but for those
of you who are interested in the nitty gritty, here is the Mechanical Definition.
To the "depositor public" at large, an Offshore Bank is: ANY BANK
OUTSIDE THE COUNTRY IN WHICH THE DEPOSITOR LIVES. That means:
Any bank outside the United States is an offshore bank, if you are a resident of
the United States.

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An Example: If a U. S. resident maintains an account of any kind in a bank


in Canada, that bank is an offshore bank for that account-holder/depositor. And,
the same holds true for a Canadian having an account in a U. S. Bank.
Any time you have money deposited in, or invested with, a bank in a
country outside of the country in which you live and work, you are "Banking
Offshore", even if thatbank is just across the imaginary borderline between the
U. S. and Canada.
No matter how a bank is structured, where it is licensed and chartered, or
where it does business, ALL BANKS use the same channels (exchanges,
clearing houses, etc.) to facilitate the movement of funds internationally and/or
domestically. Therefore, since all of the banks in the world are indirectly
connected through their correspondent and inter-bank relationships, there is no
real confusion arising from the transacting of banking business.

The Confusion Over Offshore Banking


The confusion regarding Offshore Banking is only a matter of "legal
jurisdictions", arising from the fact that no country may impose its laws in another
country without that country's consent and cooperation, i.e., a treaty.
Because of the wide variety of laws around the world, what is illegal in one
country may be entirely legal in another country. Any country can, through its
various policing agencies, investigate any person residing in their country for a
violation of their laws. That same country cannot investigate beyond its borders
without first obtaining the consent and cooperation of the country in which the
investigation is to be conducted. Even then, the investigation must be conducted
under the law of the country in which the investigation is to take place; not under
the laws of the country conducting the investigation.
As an example: The U. S. can not investigate anything in Canada, without
the consent and cooperation of the Canadian Government, and the Canadian
Government is totally within its international rights to refuse to consent or
cooperate in the investigation.
Further, countries will not (usually) without a special treaty or agreement,
assist another country in enforcing or investigating a crime that is not a crime in
their country.
As an example: Income Tax Evasion is a crime in the U. S., however, in
countries that do not impose an income tax (referred to as a tax haven), income
tax evasion is not a crime. Therefore, those countries are not obligated (and
usually don't) assist the U. S., or any other country, in enforcing or investigating a
tax law which does not exist in their own jurisdiction.
THEREIN lies the confusion. -- Offshore Banks located in countries that do
not have income tax laws do not (usually) assist the Internal Revenue Service in
the U.S. in enforcing, or investigating violations of U. S. tax laws. Therefore,
without the consent and cooperation of those countries, the I. R. S. cannot (in
most cases) get information regarding financial transactions conducted in those
countries by Tax Evaders in the U.S.

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Since the I. R. S. is the tax-collecting arm of the Federal Reserve, upon


which it depends to collect money for its self-serving purposes, the Government
readily and willingly supports the I. R. S. in its condemnation of Offshore
Banking. But, why do the Bankers join in the condemnation? (other than the fact
that all U.S. banks are members of the Federal Reserve).
The reason is simple. -- If you take your savings account out of a bank in
your country and place it offshore in a bank in another country, the bank in your
country doesn't have your money to use any more (or monetary control over
your accounts and record of your transactions). To keep you from doing that, the
Bankers jump on the bandwagon to condemn Offshore Banking, even though a
good many of them have deposits in other countries and benefit from Offshore
Banking themselves. As long as they can keep YOU confused, fearful and
suspicious about Offshore Banking, they have YOUR MONEY in their banks to
use for their purposes.

Why Have You Been Duped?


The answer was best stated in the first paragraph of an article entitled,
"Offshore Tax Havens Lure Main Street Money," which appeared in U. S. News
and World Report (August 1, 1983).
"Ordinary Americans by the thousands are cutting their taxes on the sly by
secreting part of their incomes in foreign banks, safe from the prying eyes of the
Internal Revenue Service."
Because more and more Americans are becoming fed-up with the U. S.
Income Tax that penalizes the wage earners and businesses while rewarding the
do-nothing elements of our society, the U. S. Government is scared-to-death. If
the majority of Americans ever found out that they could put their legally earned
money outside the U. S. legally, where the I. R. S. couldn't find it, the U. S.
Government would find it very, very difficult to keep supporting the non-
productive causes that eat your tax dollars.
The U. S. Government knows that if it publicizes the fact that it cannot
control money outside the U.S., more and more Americans will seek offshore
opportunities. So the U. S. Government sponsors "propaganda" (which the
controlled media gives maximum exposure) stating that their purpose in
investigating, and attempting to control Offshore Banking activities is to protect
you from the "criminal" elements of our society. They imply that anyone dealing
with an Offshore Bank is in cahoots with, assisting, aiding, and abetting the
gangsters, dope dealers, and other criminals.
The U. S. Government knows it cannot forbid you from having an Offshore
Bank account but they figure they can intimidate most Americans into not
banking offshore, by linking it (however indirectly) to criminal activities.
Regardless of the stated purposes employed by the U.S. Government in
this scare-tactics propaganda, their ONLY REAL PURPOSE is to protect their
self-serving ability to squeeze every dollar possible out of the U. S. Taxpayer.

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Using An Offshore Account Legally


Anyone who holds a Checking or Savings Account in a United States Bank
may, legally, move that account to any other bank, anywhere in the world
(offshore).
If you have a Savings Account in a United States Bank, the odds are that
you have already paid your income tax on that money, before putting it in your
Savings Account. Therefore, your only further tax obligation on that money is to
pay the income tax on the interest you earn.
As an example: If you are a tax-paying, law-abiding person, and have
saved $100 from your paycheck, you have already paid the taxes on your
income. The $100 is your after-tax money, therefore you don't pay taxes on it
again. At the end of the year, when the bank sends you your Savings Account
statement, you learn that you have earned a whole $5.25 interest (without
compounding). So you add $5.25 interest earnings to your income tax statement
and pay your taxes on that earned interest.
The same thing holds true if you have your Savings Account in an Offshore
Bank. At the end of the year, when you get your statement, you simply add the
amount of interest earned to your income and pay the taxes on that earned
interest.

So. . . Where's The Advantage?


BETTER RETURN ON INVESTMENTS
Using the same example as before, let's assume that you are in the highest
possible tax bracket; pay 50% of your net income in taxes. Your $5.25 in interest
earnings would cost you $2.13 in taxes, leaving you with $2.12 in real after-tax
earnings.
Now, let's suppose that you had that same Savings Account, made up of
after tax dollars, in an Offshore Account. Your actual earnings could more than
double.
Because banks in other countries are not restricted by the U. S. Federal
Reserve Board as to the amount of interest they can pay on deposits, the
interest you can earn from your Offshore Accounts will almost always be higher
than the interest you could earn on your accounts in U. S. Banks. This will be the
case even after deregulation of the U. S. Bank (if it ever comes), owing to the
fact that your Offshore Accounts will have less activity, thereby, less cost to the
Offshore Bank -- a feature of Offshore Accounts most often overlooked by the
U.S. Banks.
Don't believe that Offshore Banks can't really pay the high interest rates
they offer because, if banks could really pay those rates, U.S. Banks would try to
meet the competition and do the same.
Take a closer look at the financial statements of any U.S. Bank. You will find
that their "gross" profits against public deposits can range from 25% to 40% but
they have written laws to limit the amount of interest they can pay you on your
deposit. The U.S. Banks put their earnings into unnecessary and non-productive

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accoutrements, while Offshore Banks do without the fancy buildings and


unnecessary frills and share their profits with their customers.
If you ask any banker in the U.S. about the low, low interest he pays you on
your money, he will tell you there is nothing he can do about it - "It's the law. I
would gladly pay you more if the law would allow it." But, what he doesn't tell you
is the fact that he, and other bankers wrote the law. Why should they let you
share in their profits, when they can write a law that limits your earnings and
increases theirs.
Don't pass up the exceptional interest earnings available to you simply
because you have blindly accepted, without question, the myths regarding
Offshore Banking.
The fears and suspicions you may have held regarding Offshore Banking
are nothing more than the protectionist scare-tactics used by the Government,
the I.R.S., and the Bankers to keep your money within their grasp; limiting your
earnings, by law (allowing them to keep the lion's share for themselves), while
taxing the paltry earnings they do offer.
PERSONAL PRIVACY
Without a doubt, the greatest violator of the privacy of U. S. residents is the
U. S. Government itself. The various and many U. S. Government agencies
maintain a staggering total of over 3.5 billion files on American citizens.
Considering the country's population of 230 million people, the U. S.
Government agencies maintain an average of 15 files on every man, woman,
and child in this country. When you consider that children, and other dependents
probably don't have separate files of their own, the average number of files on
adults rises even higher -- is it any wonder Americans worry about their personal
privacy?
Files and information maintained outside the U.S. are neither part of, nor
subject to, the scrutiny of the U.S. Government Agencies. The U.S. Government
can (under normal circumstances) only gain knowledge about your Offshore
activities if YOU tell them about it or if you are involved in some form of criminal
activity in the U.S., and their investigation in this country reveals to them
evidence of your Offshore activities.
Beyond the prying eyes of the Government, your nosy neighbors, business
competitors, ex-spouses, and other snoopy people who may well attempt to
keep track of your financial activities for their own purposes. In this country, even
some of the more inept private detectives can easily gain access to your most
personal records. However, records and files on your activities outside the U.S.
are impossible for these snoops to get their hands (or eyes) on.
Banking Offshore and maintaining your financial records and files outside
the U.S. allows you the maximum Personal Privacy available.
TAX ADVANTAGES (we do not pretend to be your tax advisor)
As you are well aware, in the U.S., there are a multitude of totally legitimate,
and legal, "tax shelter" opportunities available. The same kinds of "tax shelter"
opportunities are also available in almost every country in the free world.

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Since the various I.R.S., Treasury, and Securities Regulations governing


"tax shelter" opportunities are constantly changing, we will not attempt to give
you specific advice regarding such opportunities. But, by realizing that these
"shelters" exist you can better understand that you can legally and legitimately
shelter your income from taxes.
When you find a "tax shelter" opportunity, have your accountant or other tax
professional check it out to see if it conforms with the governing regulations.
Those professionals are in a position to keep on top of the governing regulations
in effect at that time and advise you as to the legality and tax advantage to be
gained. (However, few have accurate expertise in the laws of doing business
offshore).
Setting up an Offshore Trust is an effective way of furthering potential tax
savings. Rules for taxing trusts apply to domestic trusts and those trusts whose
incomes are currently taxed under the Internal Revenue Code. If a foreign trust
company, organization or business trust is properly set up, the U.S. beneficiaries
holding certificates do not currently own any of the trust income. The Trust
income is 100% owned by the fiduciary. Under these circumstances the U.S.
beneficiaries owe no current tax on the trust accumulation, corpus or income
until they receive a distribution. Under current tax laws and regulations in the
high tax or "sophisticated" countries where the Common Law trust is known, if
the beneficiaries are known, there might be a decision to claim taxes due, even
though there has been no distribution. The confidentiality laws of most offshore
jurisdictions take this into account. With the confidentiality feature, there is no
chance that anyone can get information as to who the beneficiaries are.
Other benefits of using an Offshore Trust in your financial stategy are:
ASSET PROTECTION
An Offshore Trust enables you to change the title on your personal or
business possessions, including stocks, real estate, bank accounts, coins, gold,
vehicles, boats, etc. You may use and enjoy the Trust property during your
lifetime, even though the property is titled in the Trust name. With the assets no
longer in your name there is no public record of personal ownership.
In litigious countries such as the United States, it has become common
practice for individuals to seek offshore trusts for protection against:
Malpractice claims in the case of Medical Doctors and other
professionals
Products liability
Creditors, either Business or Personal Judgments
Problematic divorces
Having assets owned by an Offshore Trust often discourages would be
creditors from taking action against you. Any court action would have to be
conducted in the country where the Trust is held and with that country's lawyers.
ESTATE PLANNING / AVOIDING PROBATE
One major misconception held by most people is that a Will is a means of
distribution. A Will is merely a tool used with the three methods of distribution

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most often encountered in Probate. When the estate goes through Probate, fees
for attorneys and executors (10 - 50% of the fair market value of the estate) are
paid directly from the estate. As a further note, control and confidentiality are lost
when an estate goes through Probate, all proceedings are a matter of public
record. The courts can also force liquidation of assets to pay outstanding debts
and judgements. Heirs are forbidden by law to purchase any assets of the estate
sold through forced liquidations. The estate also becomes subject to federal
estate taxes. Because assets transferred to a Trust are no longer in your
personal estate, you can avoid expensive Probate costs, as well as estate and
inheritance taxes.

Scoff-Law Applications
As the government (any government) writes more and more laws regulating
the personal activities of the citizenry (especially if those laws infringe the
citizen's earning capacity), more and more of the citizens will violate those laws
without compunction, guilt or remorse. As an example: How many people do you
know who have driven faster than 55 miles-per-hour on a Federally funded
highway?
Scoff-laws are, by definition, people who scoff at, or flout, the law. They
have no compunction about violating those petty laws, rules or regulations that
they feel are unreasonable, unrealistic, or infringe their personal right to life,
liberty and the pursuit of happiness.
These people know that a government that writes that many laws can't
possibly expect to catch the vast majority of people who violate them. Besides,
even if they get caught, unless they are a major offender, the penalties aren't that
severe or the power-that-be may simply choose to overlook the offense. As an
example: Most police officers simply overlook people driving faster than 55
m.p.h., but do stop those people driving recklessly at any speed.
Because of the multitude of federal, state, county, city and township tax
laws in this country, the vast majority of people in the U.S. have become tax
scoff-laws. It is physically impossible for any one person to know (or understand)
all of the various and many tax laws, rules and regulations. And, the people all
know that it is impossible to be in 100% compliance with all of those laws and, it
is just as impossible for the government at its many levels to know who is, or
who isn't, paying which taxes under which laws, rules and regulations. So, most
people just report the earnings, and pay the taxes, they absolutely have to, and
feel no remorse if they don't report some of the income they know they should.
Again, we reference the article entitled, "Offshore Tax Havens Lure Main
Street Money," which appeared in the August 1, 1983, issue of U.S. NEWS &
WORLD REPORT, Robert Mirshberger, an assistant regional commissioner for
the I.R.S. in New York was asked about the risk involved in tax cheating. His
answer was, "It would be an unfortunate happenstance if you were caught. You
would be a very unlucky person."
The article continued with some examples of the ways modern-day tax
scoff-laws use Offshore Bank Accounts to cheat the I.R.S. tax collectors:

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A doctor received a payment from a patient and deposited the check in his
Offshore Bank Account. Since the deposit doesn't appear in his business
records, the chances are it would never be found, even if the doctor is audited.
One couple sold a piece of art work and had the buyer send the payment
direct to their Offshore Bank Account. Later, the couple used that money to enjoy
a vacation outside the U.S. Mr. Mirshberger with the I.R.S. said, "There's no way
we would ever discover that."
Another example told of a bank customer who got his "unscrupulous"
banker to transfer large amounts of cash to an Offshore Bank Account without
reporting the transaction to the I.R.S. Then, the customer borrowed the money
back from the Offshore Bank. Since loan proceeds are not taxable, no taxes
were paid.
But, these examples are only the tip of the iceberg. It is no longer just the
wealthy with art works to sell or the professionals and businessmen with extra
income to hide. There are hundreds of thousands (maybe even millions) of blue
collar and middle management white collar workers using Offshore Bank
Accounts to reduce the unbearable tax load imposed by the federal, state and
local governments.

Offshore Banking Is Not Evil


As you have now learned, Offshore Banking in and of itself, IS NOT evil,
illegal, immoral or unethical.
The scandalous defamation and condemnations of Offshore Banking is only
another ruse foisted upon the gullible public by the Government and the Banking
Establishment. Their purposes, not Offshore Banking, are evil in that the intent is
to maintain control over YOUR MONEY for their own self-serving uses.
No matter what the government and bankers tell you, their purposes are not
intended to restrain the criminal element. They know, as well as you do, that
criminals will do their evil deeds no matter what laws they have to violate; it is the
nature of their endeavors. The true purpose of the government is to keep YOUR
MONEY within their jurisdiction. The true purpose of the bankers is to keep
YOUR MONEY in their banks.
Using an Offshore Bank Account legally, paying your taxes and reporting
your transactions, you can legally enjoy passive income 2, 3, or even 4 times
greater than what you can earn in your country.
If you choose to use your Offshore Bank Account for tax scoff-law purposes,
the matter will be between you and your conscience. But, remember, your illegal
use of an Offshore Bank Account does not make Offshore Banking illegal. If you
get caught, you, not the Offshore Bank will be at fault.
For many years, moneyed-people have known about and used Offshore
Banking opportunities in order to increase their assets, legally avoid taxation,
and gain personal privacy for their financial affairs. Now, most anyone with a
good income, or modest savings, can enjoy the same exceptional advantages
and free themselves from the negative forces active in your country.

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Conclusion
The Offshore Banking Community is available to you for your use. No
matter how small your ambitions may be, there is a place for you to earn
maximum returns... all you need do, now that you know how Offshore Banking
really works, is find the Offshore situation that will work for you.

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OFFSHORE TRUST INFORMATION

The use of a Trust for asset protection and estate planning dates back
several centuries. Trusts were common in England early in the 11th century.
Developed over time, Trusts have become a seriously effective means of
minimizing taxes, protecting assets and passing wealth along to heirs in privacy
and without devastating tax consequences.
The very wealthy have used the trust approach for many years. With recent
developments in the offshore world where more and more jurisdictions adopt
effective laws, the trust has become an instrument available to people of lesser
means. For nominal costs, minimal formalities and on short notice, a trust can
come into being.
In general, a trust involves:
A Settlor or Grantor: The person, company or other entity placing
property into a trust.
A Trustee: The individual, company, another trust or other entity who
receives the property to be managed for the benefit of those
individuals, companies, trusts, or other entities named as
Beneficiaries.
The Beneficiary or Beneficiaries: The individual(s), company or
companies, trust(s) or other entities named to benefit from the trust
property.
The Trust Document, The Deed or Declaration of Trust is the written
instrument which details the duties of the Trustee, Names the Beneficiaries and
lists the property in the Trust Corpus or body of assets.

Irrevocable and Discretionary Trusts


A properly structured Trust will be irrevocable and discretionary, meaning
that the settlor cannot reclaim any of the assets once they have been placed in
the Trust. Note however, that the settlor can use and enjoy the Trust property in
his lifetime. If the property is not within the absolute and discretionary control of
the Trustee who is not the grantor or settlor, and the grantor or settlor retains
overt control, little is accomplished as relates to asset protection especially, and
to tax avoidance or minimization, typically.
Laws in high tax countries specify that if the tax payer controls the property,
then he must pay the taxes on the assets or earnings on the trust property.
The Discretionary Trust provides for a party to serve as the Settlor, being
himself beyond the jurisdiction of the beneficiaries. The actual property can
come from any place and be any thing. With a Discretionary Trust, the Trustee
can add to the list of beneficiaries or remove beneficiaries. Certainly, in a
Discretionary Trust, the Trustee has control over the property. This type of Trust
is almost exclusively used for asset protection and tax and estate planning.

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As already referred to, under current tax laws and regulations in the high
tax countries, if the beneficiaries are known, there might be a decision to claim
taxes due, even though there has been no distribution. The confidentiality laws
of most offshore jurisdictions take this into account. With the confidentiality
feature, there is no chance that anyone can get information as to who the
beneficiaries are.
To fill in the gaps where beneficiaries are not named in the Trust Deed or
Trust Instrument, a Letter of Wishes filed with the Trustee to specify the
Beneficiaries and their interest trust property will suffice.
Also, where the Trust Deed does not specify details relative to distributions,
a letter of wishes may be filed at any time by the beneficiary. Laws in most
jurisdictions allow for this while not revoking the irrevocability feature of the trust.
A Letter of Wishes may be filed at the time of initiating the Trust or at any time
thereafter.

For Asset Protection


In litigious countries such as the United States, it has become common
practice for individuals to seek offshore trusts for protection against:
Malpractice claims in the case of Medical Doctors and other
professionals
Products liability
Creditors, either Business or Personal
Judgments
Problematic divorces
The Trust must be Irrevocable to qualify in many cases as a true asset
protection device. If the Beneficiary or Settlor have ready access to trust
property, tax authorities can "demand" compliance with local laws and tax
regulations of the beneficiaries or settlor.
A trust cannot be all things to all people in all situations. Multiple trusts might
be called for: One for tax reduction, another for minimizing liability by holding
physical assets.

Advantages of an Offshore Trust


Tax savings, avoidance and deferral: You can save, avoid and defer
many taxes in many ways. You don't owe tax until you repatriate
your assets, whether they be cash or the very house you're sitting in
now. Any asset can be designated Trust Property. And if the Trust is
in another jurisdiction, chances are those assets can earn interest,
or accrue whatever pertinent value without being subject to
domestic taxes.
Safety: Keeping assets offshore provides you a financial reserve
should disaster strike at home, or in your domestic financial life.

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Protection Against Judgment: In a lawsuit-happy world it's nice to


have reserves that can't be "seized", "liened" or "attached" with the
stroke of the Court's pen or the phone call of a tax authority. Though
not impossible for them to get at, it's much much harder for them to
attach your assets, when they're held in Trust, offshore, by a Trustee
who isn't beholden to anyone but the wishes and the good of the
beneficiaries.
Confidentiality: A private contract, a legal agreement, and the
business of no one but your's, the trustee's, and whomever else you
think needs to know. The offshore Trustee is required to say nothing
to external inquisitors.
Ease of Transfer of Interest to Heirs or Others: Wills, living trusts,
and domestic trusts invariably pay taxes - especially when assets
are transferred. An offshore trust does not.
Earnings and a Faster Accumulation of Wealth: Trusts can own
companies, have bank accounts, own portfolios, hold trading
accounts. and not pay taxes.

Conclusion
The Common Law Trust has served for centuries as a favorite vehicle in
financial planning and asset protection. The Trust is finding even greater life in
today's increasingly complex society as we see our privacy constantly being
eroded. The Trust is one of the most flexible financial instruments and entities to
ever come about and they should be a part of most everyone's financial plan.

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USING OFFSHORE BANK ACCOUNTS

Opening an Offshore Bank Account is the easiest and most inexpensive


way to start your migration offshore as it does not require any special knowledge
to use - the mechanics of banking offshore are no different from those at home.
It's the intangibles - the privacy, lack of taxes and lack of regulations - that differ.
Offshore Bank Accounts are superb for providing financial privacy, paying higher
interest rates than your present bank, and safekeeping spare cash. We urge you
to apply for one of these accounts and step into the offshore waters; once you
get used to the freedom, mobility and higher returns offered offshore, you will
never turn back!
It's easy to deposit and withdraw funds to and from your offshore bank
account. You can transfer money to your offshore account from any bank in the
world. Your clients can pay directly to your offshore account. If you have any
income from overseas, the funds never need to arrive in your country of
residence, yet you can access your funds whenever you want. You can also
send cheques to the bank for deposit.
For withdrawals, you can apply for a secured credit card which can be used
worldwide for purchases or for cash in ATM's, giving you instant access to your
funds 24 hours a day. You may also choose to have a chequebook. For larger
amounts you can instruct the bank to transfer funds to any other bank in the
world. Instructions can be sent by mail, fax or over the phone.

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PRACTICAL APPLICATIONS OF GOING OFFSHORE

This page is intended to demonstrate practical, workable applications of the


various offshore entities described previously in an attempt to allow you to make
the correct decision as to what you need. Many people find all this stuff quite
daunting and confusing, this page should help clear the air.
If you are looking for some financial privacy and better interest rates, all you
need is an offshore bank account. By getting a credit card from your offshore
bank you can have instant access to cash and merchandise anywhere in the
world and since all transaction records are kept offshore, it will be kept private.
An offshore bank account does not provide any asset protection or allow for tax
planning options.
A much higher degree of privacy is available, as well as some asset
protection, by incorporating offshore and then opening a corporate bank account
and getting a corporate credit card. To alleviate confusion, it needs to be
stressed that incorporating offshore does not necessarily entail being involved in
any enterprise, but is simply a way of creating a distinct, legal entity separate
from yourself, to hold assets. In this case, you are doubly protected as not only
are the transactions kept offshore in secrecy, but the transactions won't even
have your name tied to them. There are no tax advantages to doing this as tax
authorities will consider such companies as simply extentions of yourself and tax
the company's income as your personal income. Some asset protection is
provided by going this route. However, creditors could argue in court that the
corporation is nothing more than you operating under a different name and you
could be forced to turn over the corporate assets. However, if privacy is your
major concern, this is the route to take.
If you want it all - privacy, asset protection and tax avoidance possibilities,
then an asset protection trust is a must. We especially recommend putting your
assets into an offshore corporation first, and then putting the corporation into a
trust. This gives you an essentially impenetrable financial fortress. As mentioned
above, all transactions will bear the name of the corporation, not your personal
name. Moreover, in this situation, not only do you no longer own the assets (the
trustee does), you have no way of getting them back (asset protection trusts are
irrevocable, meaning, you cannot reclaim assets once they've been put into the
trust). Since it is beyond your control to gain access to the assets, you cannot be
forced to turn them over to anybody. To top it all off, using an asset protection
trust/corporation setup, you may be able to legally avoid taxes. As mentioned
elsewhere, if that is a goal of yours, it is best to obtain professional advice before
doing so.

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OFFSHORE CORPORATIONS AND IBCS

In the past, the primary reason for incorporating was to limit the liability of
the investors to the amount of assets held by the corporation. Incorporating
offshore can also create certain opportunities for tax avoidance and tax deferral.
As well, they provide anonymity by taking advantage of tax haven secrecy laws.
Many people set up an offshore corporation simply to create a legal entity that
can operate bank accounts, make purchases and invest without having their
personal name tied to it.
Offshore corporations are used outside of the place of incorporation for a
seemingly endless variety of activities including trading, trade financing, holding
assets, manufacturing and tax minimization. They are primarily used for holding
investments and real estate. Equipment may be purchased and leased by an
offshore corporation. They are also used for the ownership and registration of
aircraft and vessels, the holding of patents, trademarks and copyrights,
management and administration, and the collection of royalties and commissions
(assets like these which are difficult or expensive to transfer can be held by a
corporation allowing the owner to transfer the shares in the corporation rather
than the asset itself). In some cases, an offshore corporation, recognized as a
citizen or national of the place of incorporation, may confer a trade advantage or
may help avoid a disadvantage. Offshore Corporations are also commonly used
as an integral part of a trust structure.
Here is a breakdown of potential uses for an offshore corporation:
Investment Holding Company - real estate, stocks, bonds, precious
metals and mutual funds can all be held by an offshore company
allowing for management under one corporate name.
Holding Intellectual Property - royalties and licensing fees for
patents, trademarks and copyrights may he held in a tax-free
environment.
Trading Companies - an organization can trade outside its own
country and, depending on the jurisdictions involved, can have
taxes minimized or completely eliminated.
Consulting Services - setting up a consultant service in an offshore
jurisdiction can increase your earning potential by minimizing taxes
and operating expenses.
Sales / Re-Invoicing Company - an offshore company may act as a
middleman selling goods throughout the world and have the profits
accumulate in a tax-free environment.
Advertising Company - an offshore company acting as an
advertising agency can retain the 15% ad agency commission in a
tax-free environment.

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Shipping - register your ship or boat abroad for minimum tax and
liability. Operation costs are minimized when using personnel from
developing countries.
Leasing Company - capital equipment may be purchased and
leased by an offshore company, taking advantage of deductible tax
write-offs on lease payments.
Set up corporate bank accounts and obtain international corporate
credit cards, no matter what your current credit rating may be.
Spend your money anywhere in the world employing your corporate
or anonymized credit cards and leave no personalized paper trails.
In summary, every businessman, professional practitioner, entrepreneur
and investor should know about and be using offshore corporations. The simple
fact and reality is that properly structured offshore entities and transactions can
give you benefits and advantages you never probably thought were possible,
and probably never knew about. It can all be done very legally and it is no longer
necessary to be a multi-millionaire to use and take advantage of these
structures.

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TAX HAVENS

Tax havens are countries who have designed their laws and banking
practices to help you escape taxes, protect your money from creditors, hide your
wealth from prying eyes and build wealth faster than you can at home. There is
nothing mysterious about tax havens; they are often countries who find
themselves with little or sporadic tourist trade, or without strong industry for
instance, so they intentionally structure their laws to attract foreign money and in
the process create a profitable industry for themselves: international banking. A
modern tax haven will possess the following qualities:
no tax or low tax is imposed
a high level of bank and commercial secrecy
banking and similar financial activities are significant to the country's
economy
modern transportation and communication facilities
lack of exchange controls on foreign deposits
The above attributes allow tax havens to be legally utilized by someone of even
modest means to:
Avoid or defer taxes
eliminate the reporting and paying of income tax on earning,
interest, dividends and investments
protect against high capital gains taxes and reporting requirements
prevent inheritance taxes, estate taxes, executor's fees and probate
fees
earn tax free income through operation of an active business
earn tax free income as a result of intellectual property (patents,
royalties etc.)
Asset Protection
protect assets froms creditors, malpracitce claims, judgements, liens
and bankruptcy
prevent erosion of assets from divorce or separation
deter the initiation of civil litigation
Financial Privacy
prevent any knowledge of your assets from becoming public
protect the privacy of your involvement with investment houses,
brokers and securities markets
protect the privacy of corporate ownership from becoming known

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prevent any person or government agency from gaining access to


your hard currency
Despite the marked increase in demand for books and seminars on the
subject, many people are sadly misinformed about tax havens. There are four
persistent myths regarding offshore banking:
Offshore banking is illegal
While there is no doubt that money-launderers and tax evaders utilize tax
havens, so do many legitimate, law abiding citizens and corporations. Exxon,
Sears, Firestone, Boeing, Chase Manhattan, Citibank, Bank of America and
hundreds of other firms and banks all actively bank offshore.
Offshore banking is too complicated
In today's world, with our high-tech telecommunications systems, banking
overseas is about as convenient and easy as banking down the street. Credit
and debit cards are readily available giving you instant access to your cash and
with both fax and computer communications, it is simple to transfer funds or
send other instructions instantly without leaving your home.
Offshore banking is too risky
The truth is, your money is much safer offshore than onshore. Almost all
offshore banks are self-insured, meaning they must have 100% liquidity. Every
$1 on deposit must be backed by $1 in liquid assets. In North America, banks
are required to have only 10% liquidity. No other country has had as many bank
failures as the United States. Moreover, offshore banks operate with greater
flexibility and pay higher interest rates to their depositers than the overregulated
North American banks. Unfortunately, most North Americans will never know
about how much more money they could be earning overseas because federal
laws prevent offshore banks from advertising in the United States and Canada.
Offshore banking is only for the wealthy
At today's cost, offshore banking is for everybody who has, or anticipates
getting, any excess money. Anyone who works out of their home in a small part-
time business for extra income for instance is a perfect candidate for offshore
banking. Even small depositers can increase their yield by 50% or more by
banking offshore. This added income can be important to the middle-class citizen
trying to get by.
In conclusion, tax havens are simply countries that believe in "life, liberty
and the pursuit of happiness" in a "free enterprise" system which respects the
privacy and rights of the individual to pursue their enterprise unrestricted by
government regulations and unexposed to the voracious appetites of the money
grabbers. You should take advantage of them!

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TAXES AND TAX HAVENS

It is commonly believed that money placed in tax havens instantly becomes


tax free. This is widely spread on the internet by certain companies offering
offshore bank accounts and credit cards. Beware! It is not true. While offshore
jurisdictions will not levy any tax on your gains, both Canada and America tax
their citizens on world wide income, regardless of where it is earned. Failure to
report and pay the appropriate tax on offshore investments is illegal.
That said, tax avoidance can be achieved through proper structuring of
legal offshore entities (trusts and corporations). If tax avoidance is your primary
goal, Offshore Solutions strongly advises against do-it-yourself tax avoidance
schemes. It is best to be prudent and obtain professional tax planning advice.
Tax laws do not however, have any effect on the use of tax havens for
higher investment yields, asset protection or financial privacy.

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THE PT PHILOSOPHY

THE COHERENT PLAN FOR A STRESS-FREE, HEALTHY AND


PROSPEROUS LIFESTYLE WITHOUT GOVERNMENT
CONTROL, TAXES OR INTERFERENCE.

SLIGHTLY ALTERED FROM AN ORIGINAL WRITING


CREDITED TO ADAM STARCHILD

If you want to escape the control over your life and property now held by
modern Big Brother Government become a PT and you break free.
In a nutshell, a PT arranges his or her "paperwork" in such a way that all
governments consider him a tourist - a person who is just "Passing Through".
The advantage is that being thought of by government officials as a person who
is merely "Parked Temporarily", a PT is not subjected to taxes, military service,
lawsuits, or persecution for partaking in innocent but forbidden pursuits or
pleasures. Unlike most citizens or subjects, the PT will not be persecuted for his
beliefs or lack of them. PT stands for many things: a PT can be a "Previous
Taxpayer," "Perpetual Tourist," "Practically Transparent," "Privacy Trained," or a
"Permanent Traveller" if he or she wants to be. The individual who is a PT can
stay in one place most of the time. Or all of the time. PT is a concept, a way of
life, a way of perceiving the universe and your place in it. One can be a full- time
PT or a part-time PT. Some may not want to break out all at once, or become a
PT at all. They just want to be aware of the possibilities, and be prepared to
modify their lifestyle in the event of a crisis. Knowledge will make you sort of a
PT - a "Possibility Thinker" who is "Prepared Thoroughly" for the future.
PT is elegant, simple, and requires no accountants, lawyers or other
complex arrangements. Since the income of most PTs is immediately doubled
(no taxes), and most frustrations of life with Big Brother are instantly eliminated,
the logical question is only: "Can you afford not to become a PT?"
The PT, once properly equipped, operates outside of the usual rules,
gaining mobility and a full slate of human rights. The value of these rights cannot
even be perceived by people who have never experienced them. Tax havens
become an important tool of the PT, because the tax haven corporations and
trusts provide an interface to the more permanently settled world, just as a flag of
convenience does for a ship.
The message of PT is not, however, to encourage greed, lust,
irresponsibility, immorality or any ot the other seven deadly sins. The effect of PT
being popularized will be to release creative souls from the many burdens of
coping with Big Brother.
You don't need to find a new country or displace someone else to make
yourself a sovereign. The PT need not dominate other people. He or she must

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only be willing to break out of a parochial way of thinking: the PT must be


superior only in that small area located between the ears. We speak of the
potential PT now in terms of wealth, talent, intelligence and creativity.
On an international scale there is a survival lesson here for the civilized
world as well. Do you want to escape the control over your life and property now
held by modern governments? The PT concept could have been called
Individual Sovereignty, because PTs look after themselves. We don't want or
need authorities dominating every aspect of our existence from cradle to grave.
The PT concept is one way to break free.

The 5 Flags of a PT
Flag 1: Business Base
These are the places where you make your money. They must be different
from your personal fiscal domicile, the place where you legally reside.
Flag 2: Passport & Citizenship
These should be from a country unconcerned about offshore citizens and
what they do outside its borders, the passport should have good visa free travel
and offer hassle free border crossings.
Flag 3: Domicile
This should be a tax haven with good communications. A place where
wealthy, productive people can be creative, live, relax, prosper and enjoy
themselves. Such a place should not be threatened by war or revolution, low
crime rate, good medical facilities and preferably should enjoy good levels of
banking secrecy.
Flag 4: Asset repository
This should be a place from which assets, securities and business affairs
can be managed anonymously by proxy.
Flag 5: Playgrounds
These are places where you would actually physically spend your time and
enjoying life.
The above outlines the basic concepts of the philosophy of PT.
Before you react negatively and believe there's no possible way you can
attain such a lifestyle, pause for some considered thought.
PT starts by taking root in the mind. It becomes a thought process, that
never leaves you.
Most of the Flags can be attained without you ever having to leave your
home turf. It's simply a matter of modifying business strategies and re-arranging
some personal paperwork.
Get into some serious research to find out whether you qualify for
citizenship of another country. You may qualify by marriage, or descendency
through your parents or grandparents. If you don't have any luck on this one
don't despair. It's possible to buy legitimate and legal citizenship and passports
from a variety of countries. With regard to domicile once again there are many

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opportunities to qualify for legal residency in various countries, without spending


much time there.
"Becoming a PT is not a static thing you can do once, and then, like
obtaining a diploma, hang it on the wall. PT is a way of thinking. Something far
more than a mere occupation or even a lifestyle. It is a state of being...the
variations and possibilities are infinite. A PT has real freedom in an unfree world".
Bill Hill

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INFORMATION ON OFFSHORE HAVENS

BY DR ARNOLD GOLDSTEIN

There are many countries that can be referred to as "tax havens". The
primary reason is that they have different tax laws from the United States, which
allows wise, experienced financial planners to legally delay income taxes
through careful study of the tax laws of various countries.

Bahamas
The Bahamas is made up of 700 islands and 2,000 cays
scattered over 100,000 square miles and is located 50 miles off the
Florida coast. New Providence Island, site of the capital city of
Nassau, has an area of 83 square miles. The second largest city,
Freeport, is on Grand Bahamas island. Its capital is Nassau, and the
commercial center is New Providence.
The climate is moderate and ranges from 70 degrees to 80
degrees F. The population is 250,000. The majority of the population
lives on the island of New Providence and Grand Bahamas. Many of the islands
are uninhabited due to the lack of fresh water. The official and spoken language
is English. The unit of currency is the Bahamian dollar.
The Bahamas has excellent communications. Thirteen airlines fly to the
Bahamas and direct flights are available from most international cities. Miami is
30 minutes away by plane and New York is approximately a three-hour journey.
Seventeen shipping lines connect the Bahamas with important world
markets. Nassau has a major deep-water port and Freeport, on Grand Bahamas
Island, has a fine natural harbor.
Freeport's owners hope the port, which is as close to Miami as it is to
Nassau, can be developed into a major regional hub for container shipments to
North and South America, the Caribbean and Europe. The Bahamas has an
excellent overseas telephone service which includes direct dialing to the United
States and Canada.
Economically, the Bahamas thrive on tourism and the tax haven industry. It
is a popular vacation spot and gambling, shopping and fishing are enjoyed by
tourists and residents alike.
Offshore haven activities dominate the financial world of the Bahamas.
Financial services include international business companies, insurance
companies, banks, personal investment companies, ship registration and trust
services.
Bahamian law is based on British common law but is augmented by
Bahamian statutes. The supreme court is the highest tribunal, the court of

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appeals occupies the middle position and the magistrates court has jurisdiction
in minor civil disputes and criminal offenses. The ultimate court of appeals is the
privy council of the United Kingdom.
The Bahamas were initially settled in 1640 by the Eleutherian Adventurers,
a group of Englishmen who sailed from Bermuda. The Bahamas has had a
representative form of government since the 17th century.
In July 1973, the Bahamas achieved its goal of becoming an independent
country within the British Commonwealth. A Governor-General appointed by the
British government is responsible for defense, external affairs and internal
security. However, the real head of the government is an elected prime minister
who consults with a cabinet of nine ministers chosen from the legislature. The
bicameral legislature has a 49-member house of assembly and a 16-member
senate.
One benefit of setting up a tax haven in the Bahamas are Bahamian
International Business Companies (IBC's). IBC advantages include:
24-hour formation subject to name approval
Limited liability
No minimum capital requirements
Total tax-exemption for 20 years
Minimal compliance work
Director and shareholder anonymity
Companies limited by shares and companies limited by guarantee are the
two basic types of corporations operating in the Bahamas. Companies limited by
shares have fixed, unmodifiable authorized capital. They cannot buy back their
own stock.
Companies limited by guarantee can reduce their share capital by buying
back their shares and canceling them. Therefor, offshore funds are incorporated
in the Bahamas as companies limited by guarantee.
The Bahamas do not have any tax treaties to avoid double taxation
because it does not have any form of direct taxation. The main source of
government revenue comes from customs duties and import taxes.
The Bahamas have no personal, corporate, profit, capital gains, estate,
death or withholding tax.

Hong Kong
The country of Hong Kong is on the southeast tip of China and consists of
a large number of islands and a part of the Chinese mainland totaling
approximately four hundred square miles. The principal areas are the island of
Hong, Kowloon and the New Territories. These areas were ceded to Britain in
perpetuity in 1842 under the treaty of Nankinu. In 1898, the new territories were
leased by Britain from China for period of 99 years and includes all the land
north of Boundary Street in Kowloon to the border with China as well as 235
small islands.

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Hong Kong's subtropical and monsoonal climate produces dry, cool winters
with an average temperature of 59 F. Summers are hot and rainy with an
average temperature of 82 F. Humidity runs high.
The population is currently six million. Hong Kong is one of the most
densely populated areas in the world. The capital and commercial center is
Victoria. The official languages are English and Chinese, with English being used
in the commercial and political context and Cantonese Chinese used widely in
industry and domestic trade. The unit of currency is the Hong Kong dollar.
Hong Kong is a prominent trade and manufacturing center with superb
transportation and communication facilities. Major airlines connect Hong King by
frequent flights to every major city in the world. The British civil service tradition,
coupled with the pressures of demand, makes Hong Kong's airmail, telex and
international telephone and cable services highly efficient, regular and reliable.
Hong Kong is the leading southeast Asian center for both finance and
commerce and ranks as the world's third largest financial center after New York
and London. There are more than 160 licenced banks with 128 foreign banks
having representative offices in Hong Kong and a further 225 licensed deposit-
taking finance companies.
The judiciary operates independently under the direction of the chief justice.
Hong Kong's legal system is based on the principles of England as they existed
in equity in 1843. There has been some modification by the United Kingdom
parliament and the Hong Kong legislature.
Hong Kong has been a British crown colony since 1842. The governor,
appointed by the Queen, presides over the Hong Kong government.
In 1984, an agreement was made on the future of Hong Kong between the
British and Chinese governments. On July 1, 1997, all of Hong Kong will become
a special administrative region of China. For fifty years thereafter, the following
will remain unaltered:
A local government will continue with full authority in executive,
legislative and judicial matters.
The legal, social and economic systems will remain in force.
All forms of property, including inheritance and ownership by non-
residents, will be respected.
The current economic position, including the financial markets and
the Hong Kong dollar, will continue.
The financial system will remain independent, and China will not
seek to raise any taxes in Hong Kong.
Hong Kong will remain independent for customs purposes.
Crown land leases may be granted for up to fifty years after 1997.
The freeport will remain.
Company formation in Hong Kong follows the usual British pattern. A
memorandum and articles of association are required, and they must include the

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standard information. All these requirements are purely formalities, because


nominees can be used for everything.
Annual maintenance of a corporation involves annual auditing signed by a
chartered accountant and submitted to all shareholders with a copy to the
government. The government charges and annual maintenance fees are low.
The initial expenses of incorporation, articles of association and stock
certificates are approximately US$4,000, and annual maintenance is about
US$500.
Incorporation takes up to a month to accomplish. It can be done with
complete privacy through nominee shareholders. There is no legal requirement
that ultimate beneficiary owners be disclosed.
Hong Kong income tax is taken from income that has its source in Hong
Kong rather than a tax based on residence. Hong Kong does not, therefore,
impose tax on non-Hong Kong source income even when remitted to Hong
Kong. Consequently, if a Hong Kong company's trading or business activities are
based outside Hong Kong, no tax will be levied.
Hong Kong companies with Hong Kong source income currently pay a 16.5
percent tax on profits. For individuals, the maximum rate of taxation on income is
15 percent.

Isle of Man
The Isle of Man is located on the Irish Sea, and is close to England,
Scotland and Ireland. The island has a temperate climate and, due to the
influence of the sea, rarely experiences extremes of either heat or cold. The
population is approximately 70,000, with Douglas being the capital and main
commercial center.
The official and spoken language is English. However, owing to the island's
Celtic origins, it also has its own Gaelic language.
The monetary units are the British pound, Scottish currency and the Isle of
Man pound note.
The Isle of Man is served by Ronaldsway Airport in the south of the island
some eight miles from Douglas. There are regular services on at least a daily
basis to most major cities in Great Britain. The island has some five hundred
miles of roads connecting all the major centers of population. Telephone, telefax
and telex services are excellent. The postal services work in very close liaison
with those in the United Kingdom. International courier services are available
with connections via Heathrow.
The Isle of Man, confronted with a decline in its two principal sources of
income, agriculture and tourism, now places greater reliance upon industrial
investment and its financial center activities which now contribute more than
thirty percent to the gross national product.
The government wants 10,000 new residents before the end of the century.
The Isle of Man is the only low-tax financial center in Europe that actively
encourages new residents.

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More than fifty licensed banks, including many international banks, are
present on the island. Their services are comprehensive, discreet and
confidential, comparing favorably with the banking sectors of Switzerland and
Liechtenstein.
Isle of Man law is based on British common law and much of the civil-law
legislation is modeled on United Kingdom acts of parliament. The island has its
own courts and the heads of the judicial system are known as "deemsters."
Advocates of the Manx Bar have the combined role of both solicitors and
barristers and are able to appear in both the lower and higher courts. The
ultimate court of appeals is the English privy council.
The Isle of Man is a dependency of the British crown. However, it has never
been part of the United Kingdom or its colonies. The government dates back to
Viking times, and its own independent parliament, Tynwalk, has existed for more
than one thousand years. While the Isle of Man is tied closely to the United
Kingdom, which insures the island's defense and presides over international
affairs, Tynwald is responsible for all aspects of domestic legislation, including
taxation.
To support the government's decision to become a leading European tax
haven for offshore funds, the Isle of Man subsequently adopted an industrial aid
and incentive package which is considered to be one of the most attractive in the
western world.
Isle of Man resident and non-resident companies can engage in any activity
worldwide, but exempt companies can only be used for insurance, shipping,
property investment, investment holding, commodity dealing or the holding of
patents, royalties, copyrights, licences and trademarks.
The Isle of Man offers several investment vehicles, each providing its own
advantages:
Exempt companies -- If granted exempt status, a company's offshore
income and dividends will be exempt from island income tax.
Non-resident companies -- A company may be incorporated on the island
but remain non-resident. As such, it will be exempt from income tax, although it
will have to pay an annual non-resident duty. A non-resident company could be
used for protecting assets owned by an individual resident in another country.
Trading companies -- Various companies in the manufacturing and service
sectors enjoy advantages because of the island's relationship with the EC,
existence of a freeport, low costs, tax structure and a generous range of grants
and incentives offered by the island's government.
Banks -- As the island's government continues to encourage foreign
investment, it is likely that the growth of the financial sector will continue, adding
many opportunities for banks.
Apart from the limited treaty with the United Kingdom, the Isle of Man is not
party to any double-taxation treaties. Isle of Man residents pay income tax only
on their worldwide income at a rate of fifteen percent for the first chargeable
amount and twenty percent thereafter.

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Along with these many advantages, the Isle of Man offers an attractive tax
structure. The major features are well worth noting:
No capital gains tax
No estate or inheritance taxes
Tax free holidays for industry
Exempt Offshore
Value added at fifteen percent

Liechtenstein
The financial condition of Liechtenstein is excellent -- no national debt,
stable political conditions and an absence of political tensions.
Liechtenstein is located between Switzerland and Austria. The capital and
commercial center is Vaduz. The population of 29,000 enjoy a climate similar to
that of the northeastern United States, and speak German and Alemanni. The
unit of currency is the Swiss Franc. Communications are excellent.
Tax legislation is extremely favorable for holding companies. It is a highly
industrialized nation with a healthy economy and a firm belief in the principles of
free enterprise. Its banks provide secrecy regarding foreign accounts, and all tax
matters are treated with a high degree of confidentiality. This is not to say,
however, that Liechtenstein provides an atmosphere of "wheeling and dealing"
for individuals and families seeking tax avoidance.
On civil law, Liechtenstein conforms in part to both the Austrian ans Swiss
systems. Liechtenstein codified a company law in 1926 that is highly regarded
as one of the most modern in Europe. Many regulations on legal procedure
guarantee the impartiality and fairness of the law.
The government of Liechtenstein is a constitutional monarchy based on
democratic and parliamentary procedures that encompass all the principles and
practices of a modern government. Liechtenstein governs on the principle of
separation of powers where legislation, administration and court actions are
concerned.
Liechtenstein recognizes a variety of enterprises and company forms. The
most suitable forms to be used as holding companies are the anstalt
(establishment,) the akteigesellschift (company limited by shares,) and the
registered trust. Liechtenstein has designed legislation that is particularly
favorable to the protection and administration of financial structures.
Liechtenstein tax legislation defines holding companies as enterprises that
exclusively administer capital or assets such as shares or bonds of other
enterprises.
If a holding or domiciled company is formed as a legal personality and is
entered into the public registry, it will have special tax privileges:
Tax exemptions on all assets and income
Reduction of the capital tax

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Exemption from all taxes on profits and earnings


Reduction of the formation stamp duty
A further reduction of the capital tax for the foundation with high
capital
Absolute secrecy regarding tax matters
Liechtenstein levies no income taxes against any company that is domiciled
there if the company does not receive Liechtenstein source income. There are
low registration and annual capital taxes on such companies. Bearer shares are
permitted but foreign banks and mutual funds are not.
The top rate for personal income taxes in Liechtenstein is 7.5 percent. The
taxes on company profits vary from five to twelve percent, in accordance with a
ratio of profit to net worth. People who are considered residents of Liechtenstein
for tax purposes must pay taxes on all income from gainful activity that is derived
from a partnership, membership or proprietorship of any enterprise that has an
office registered in Liechtenstein.
Foreigners and Liechtenstein nationals who have their permanent
residence in a foreign country are not required to pay taxes on income derived
this way. Such persons are exempt from property taxes on the share of an
enterprise that they might hold. Liechtenstein has a double taxation agreement
with Austria but with no other country.

Nevis
Nevis is located in the Leeward Islands, approximately twelve hundred
miles southeast of Miami. The climate is nearly perfect, with tropical vegetation
prominent. The capital and Commercial Center is Basseterre. The population is
8,000. The official language is English. The unit of currency is the Eastern
Caribbean dollar.
Nevis was a British colony from 1628 until 1983 when it became
independent and joined the federation of St. Kitts - Nevis. The federation is an
active member of the British commonwealth. Nevis is a democracy based on the
British parliamentary system, and has an elected local assembly.
Nevis offers excellent communication facilities which include direct dialing
to the U.S., Canada and Europe as well as worldwide telex, facsimile and
telegraph services. Direct airline service is available to most major cities in North
America and Europe.
The 1983 constitution provides for a federal parliament headed officially by
the governor-general. A cabinet in Nevis is lead by the premier as leader of the
majority party in the house of assembly. The legal system in the island is based
on English common law, served by a high court of justice and a court of appeal.
Nevis companies are exempt from Nevis taxes on all income, dividends or
distributions not earned on the island.

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There are two kinds of companies that can be set up on the island but it is
the exempt company that is set up to handle offshore investment. The exempt
company has some very attractive advantages:
There is no minimum authorized capital.
A business license is not required.
Officers, directors and members do not have to be identified.
Incorporations take three days.
There are no requirements that capital be in a certain currency.
Par value is not required for a company purchasing its own shares
and can be set at any sum.
The corporation laws of Nevis simplify stockholding. Registered
stock may be held by just one person who may hold the position of
both director and secretary. Bearer shares are also allowed to be
issued.
Double-taxation treaties are held with Denmark, New Zealand, Norway,
Sweden, Switzerland and the United Kingdom. Offshore companies are exempt
from all forms of Nevis taxation.
Recent changes in the statutes governing trust administration have added
two important provisions:
Any plaintiff bringing a civil suit action against a defendant must post a
$25,000 (US) bond before the case may proceed.
The statute of limitations governing civil suit filings is one year.

Turks & Caicos


Thanks to the New Company Act of 1982, the Turks and Caicos enjoy a
burgeoning foreign investment. Until new legislation is drafted, the Turks and
Caicos may be closed to all but branches or subsidiaries of reputable
international banks.
Investment Profile -- There are two kinds of companies that can be set up in
the islands but it is the exempt company that I set up to handle offshore
investment.
The exempt company has some very attractive advantages: there is no
minimum authorized capital...
A business license is not required.
Officers, directors and members do not have to be identified.
Incorporation takes three days.
There are no requirements that capital be in a certain currency.
Par value is not required for a company purchasing its own shares
and can be set at any sum.

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The Turks and Caicos simplifies stockholding. Registered stock may be


held by just one person who my hold the position of both director and secretary.
Bearer shares are also allowed to be issued.
Taxation...
No double-taxation treaties are held with any other country. Inheritance,
income, sales, capital gains, gift, succession, property and dividend taxes do not
apply in the Turks and Caicos.

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OFFSHORE BANKING

Welcome to one of the most prestigious and important financial estate


planning tools available today. No other vehicle can offer you a comparable
degree of privacy, asset protection and opportunity for profit and flexibility. Yet,
misinformation, myths and a lack of reliable published information has often
clouded the picture.
The advantages to conducting business offshore have become apparent to
numerous companies typically with American Business. Merrill Lynch, American
Express, Firestone, Dow Chemical and Bank of America are just a few of the
well known names with substantial offshore interests. In addition, virtually every
domestically based financial institution, maintains interests offshore either
through private banking or mutual fund securities. The reason is clear. Offshore
business is sound, profitable and can substantially reduce costs.
In most jurisdictions, the following are direct benefits that are available to a
Private International Bank owner:
No income tax
No estate tax
No capital gains tax
Strict privacy laws
Low paid-in capital requirements
Please keep in mind, that there are approximately fifty jurisdictions around
the world, which in one form or another, can be classified as tax-havens or
international financial centers. These governments reflect the different cultures
and ideals of their citizens. As a result, there are numerous variations to private
banking. One jurisdiction does not work for all ! ! ! Your specific goals and
qualifications would need to be discussed prior to concluding which strategy to
implement. To suggest otherwise, is to do you a disservice.

Private International Bank Ownership


What is Offshore Banking? All countries maintain legislation and establish
standards for the purpose of regulating banking activities or bank ownership
within their respective jurisdictions. One of the lessor known facts is that most
nations (including the United States) set standards for international banking
entities that are incorporated in their country but conduct all business "offshore".
This provides the nation with another source of capital or commerce while
enabling much more flexible ownership requirements. In the United States these
entities are called "International Banking Facilities: (IBFS)" while other nations
entitle these entities as "Class B Banks", "Trust Companies" or "Banking
Corporations".

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Broadly defined, "Private International Banks" (PIBs) or "Offshore Banks"


are simple, banking entities established outside of the United States or the
country in which the depositor resides. Thus in most cases, these enities are not
subject to State or Federal rules or regulations. The advantage of avoiding costly
regulations such as reserve and insurance requirements results in a path of
profits contributing directly to the bottom line.
All solicitations need to be carefully monitored and should be conducted
outside the borders of the host country. Advertisements are restricted to the
appropriate international periodicals. Private International Banks tend to have
higher profit margins and lower capital outlays.
An "Offshore Bank" or "Private International Bank" (PIB) enables
international financial matters to be transacted in complete privacy, free from
host country taxation, without exchange controls, without the need to ever leave
your country of residence. Only minimal presence need be established within the
borders of the host nation.

Class "A" and "B" Banks


Class "A" Banks: A "Class A Bank" is recognizable as a storefront business
operation, often accompanied by a marquee. This is usually a combination
banking entity accepting public deposits for both private and business accounts.
In the United States, we are most familiar with the "Class A Bank." This type of
banking license is held by all the "majors" and frequently has the customary
vault, tellers and ATM machines. Examples of international "Class A Banks"
would include Credit Swiss, Barclays Bank & the Royal Bank of Canada.
Class "B" Banks: The Class "B" Bank or "Private International Bank" is
restricted from doing business with the citizens of the host country and no
presence is maintained on "the street". A representative (usually an attorney) will
post a brass plate on their office building exterior and all business is conducted
via fax, telephone and mail. Class "B" banks are able to issue virtually all of the
same financial instruments as that of a Class "A" Bank.

Components of a PIB
Bank Charter & License: Legal framework the bank establishes for the
bank's authority and distinguishes the difference between a financial institution
and a corporation.
Registered Office: Representative office in host country.
Resident Agent: Local liaison
Board of Directors: Usually from one to ten people that hold meetings and
direct bank business.
Shareholders: PIB owners
Clearing Account: An account with a major bank or brokerage house where
physical deposits are held.
Offshore banking centers attract numerous companies because of the
many benefits and planning strategies to be obtained. A few are listed below:

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Potential tax benefits


Low capitalization requirements
Unrestricted lending activities
Non-disclosure of client activities
Cash management without minimum liquidity rules

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THE WORLD'S ONLY UNTRACEABLE BANK


ACCOUNT

It may have been possible in the days of swashbuckling pirates for the
individual with a few extra bucks to hide his stash in a chest in the ground
beneath a secret palm tree and be reasonably sure that his money was sagely
hidden from other pirates like tax collectors, ex-spouses, blackmailing
mistresses, suing lawyers and others whose life ambition is to make the rich
poor and themselves rich. In today's world with Switzerland down-grading its
secrecy laws and making numbered accounts history and more and more tax
havens being infiltrated by foreign governments and their tax departments
snoopers, a man's (or woman's) hard earned money is no longer his personal
business. Every government's tax-robber-barons want to know all the details so
that they can extort in many cases more than 50% of your assets into their tax
coffers. Everybody today from tax authorities to lawyers has his proverbial nose
up your financial ass." They work with the belief that they can extort gross
amounts of your hard earned money because they have the power to make the
rules. And after all, the golden rule states that those who have the gold, rule.
Authorities today look upon anyone who deals in cash, rather than "paper" -
checks, money orders and electronic transfers, etc., as a tax evader straight and
simple. Walk into most any bank today with a suitcase full of cash and
immediately you are presumed a drug dealer, pimp or tax evader. Even trying to
set up a bank account with a relatively small amount of cash can be a tricky
situation. Cash, because it leaves no paper trail is looked upon the in the
banking industry with the same scorn as a virgin at an orgy as is trying to open
an account without producing high-powered ID, supplying an address for the
record and filling in a detailed questionnaire of employer, marital status, etc.
You can get around some "local" regulations by opening an account by mail
in almost any tax haven in the world without an ID. Sound peachy-cream in that
you can use any name you want but you still usually have to furnish an address.
This requirement isn't a problem to most "worldly, PT type individuals for they will
usually set up a series of "resident" addresses or confidential mailing addresses
through maildrops spread throughout the world. Still the risk of detection by
some tax collecting vermin, judicial or government authority having records of
your account down the line is more than slight unless you are very clever. How
you ask, do they find you? INTERFIPOL!
Most people have heard of Interpol, the international police agency
supported by many governments, but few have heard of Interfipol, "the
International Fiscal Police." This organization is quietly starting to come into its
own. If you happen to have, or someday create, a tax problem in any OECD
country, you can rest assured that you and your money will be hunted prey. It
may take some time, but your money will be taken out of circulation.

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Even keeping your money is a variety of European, Asian and/or offshore


banks (forget American banks for the IRS and others can "freeze" or impound
your account faster than a vindictive spouse can spend it" doesn't preclude the
fact that you still show up on the bank's computers as a "foreign account". With
today's almost total lack of true banking secrecy, banking authorities can be
persuaded to do a little computer search and give the records to snoops from
other countries who are under the laughable impression that the account holder
would like to "donate" some of this money to help the tax coffers overflow.
As Expat World has said in the past, "the biggest crime of all governments
is government itself." Governments, at least on this planet earth, have all the
prosecutors, police forces and jails. With all these perverse institutions on their
side, the person who sticks out his nose too far or voices his opinion too loudly
to "tease" a government will find himself, in the real world, at the mercy of Big
Brother and his agents. Governments will lie, cheat and steal to feed the vast
and evil bureaucracy with the money it needs to propagate itself or provide
financing that is "needed" by "society" to do good things for the "needy".
Unless you bury your stash as the pirates of old or use the ONE
UNTRACEABLE BANK ACCOUNT WE ARE GOING TO TELL YOU ABOUT, your
stash is ultimately available to Big Brother and his henchmen.
Today, many in all societies have chosen drugs as the recreation of choice.
Governments have taken advantage of the massive amount of drug use to
create a "red herring". In using the red herring of hunting down big-time drug
sellers, they have been able to convince governmental authorities around the
world to open their bank accounts to Big Brother, when in reality, what they really
want is to find all the money that they suspect is being hidden away by the small
to large account holder from their tax bite. Armed with the bank's records they
can then hunt down your money and confiscate it under some pretence, either
real or imaginary. If you can be identified as owning an account, your money isn't
safe in countries with so called "bank secrecy" laws. (The trick is to have an
account in a good bank-secrecy-law country in which no one but you has any
idea who the owner of the account is - more on that later.) If a government
agency want bad enough to know your financial position in a bank, secrecy laws
in place or not, otherwise unattainable records are provided in record time.
History bears this out! Drug money or related activities are the smoke screens
that seem to be the key to opening secret bank accounts - no matter that the
closest you've got to the drug scene is watching a Cheech and Chong movie.
The prevailing theme everywhere among "Big Brothers" is that the end justifies
the means. Using drug charges is quicker than trying to go a legal route by court
orders and such since what the authorities are actually seeking to prevent is
your try at robbery-evasion, known to them as tax evasion.

Banking As A Contrived-Earthling
To open a bank account you need ID. In your own country usually a drivers
license or national identity card will do. Walk into a bank abroad to open an
account and it usually can be done but you must produce your passport for ID as
well as an address. The bank photocopies the passport, records and your

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address before opening the account. In some countries, and in most offshore
banking centers, it is possible to open an account by mail without any photocopy
of your passport of other ID buy you still must provide an address for bank
communications. The address is the weak link if you're seeking secure financial
privacy. Some offshore centers like the Isle of Man require a reference from
another bank or two references form professional people who will swear you are
who you say you are. With any of the above options you are luring yourself into a
false sense of security or have broken more laws than one wants to in trying to
preserve your right to financial privacy.
All PT's are aware of owning a second passport to use for banking
purposes (banking passport). This passport is almost always issued in your "pen
name" and probably has a maildrop address associated with the paperwork
needed to issue the passport. If you use a legally issued 2nd passport, not a
forged or stolen blank, and you use it low profile and remain yourself low profile,
you only have a very slight risk of future ramifications. If you are going to stash
away a considerable amount of your assets, this may be the recommended way
to go. You may obtain legally issued 2nd foreign passports form a broker or
directly from some governments who provide second travel documents because
of some "aid" you have provided to their pet government projects. Be careful
with brokers for 90% of them are crooks - use only recommended or successful
brokers who personally escrow the associated costs until the documents are
delivered. This passport can be used for banking purposes and used in
conjunction with a daisy-chain of banks through "Transit Accounts" to make your
money and you almost untraceable. (Transit Account - Special Report available
at US $20 from Expat World. Airmailed!)
The ins and outs of secret banking can lead to a vicious circle which
eventually leads to YOU unless you are meticulous and careful - - except for "the
world's only untraceable bank account". This untraceable account makes it
possible for people with as little as US $50 or more than US $50 million who
want to keep it secret from EVERYBODY - government snoopers, lawyers,
money-grabbing ex-spouses, etc. - to need not have the cunning of James Bond
in avoiding bankruptcy or capture by Big Brother's of this world.

The "Sparbuch" Account


Surprisingly, the safest way to have a secret untraceable bank account is
also the easiest IF you have the one connection necessary. Anyone can open a
"Sparbuch" account with the right connection without showing any sort of ID
whatsoever, without giving any references or any address and without having to
go through a lot of circumvent moves. One of the least known and best guarded
secrets in the International Banking community is the Austrian "Sparbuch"
account. In privacy terms it beats any back or financial account on the planet
earth. With the "Sparbuch" there is no need to create a single individual or a
string of "creative references". No need to worry about ID or obtaining addresses
in other countries. There's no toilet paper trail for any poop-smelling G-man to
follow.

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The "Sparbuch" account is as old, almost, as banking itself. All German


speakers will realize it literally means "Saving Book" or more generally
"Passbook". In appearance it is not very impressive - just a folded piece of
cardboard with the name of the bank and a computer printout of the most recent
transaction pertaining to the account.

Opening An Account
Tremendous Advantages, Few Disadvantages
ADVANTAGES: First of all, if you're Austrian you will not need Expat World's
services because any Austrian can simply walk into any bank in Austria, deposit
any amount (by today's practices about US $50) and five minutes later walk out
with a "Sparbuch".
The "Sparbuch" account does not carry a name BUT A CHOICE may be
either in the name of an individual, a corporation, including offshore corporations
or as we have stressed, it may be in no name at all; a so called "Euberbringer"
account or "bearer-passbook". As the names implies, he who brings the books
presumed to be the legal owner. An "Euberbringer-Sparbuch" is the bank
equivalent to company bearer shares. In addition to the secrecy protection built
into this no name, no nothing account, Austrian general bank secrecy laws make
Switzerland and the rest of Europe look like they are partners with the IRS,
Inland Revenue and the rest of the money stealers. With the "Sparbuch"
account, additional security is provided in keeping the wolves from you door by
having them not know what door to look for. No account statements are EVER
mailed to account owners for the bank doesn't require an address to open the
account. It may sound odd, but think of the individuals who have had their lives
upset because tax authorities, ex-spouses, police or other privacy invaders have
intercepted their mail. Instead of statements being sent to "Sparbuch" account
holders, the "Sparbuch" is updated automatically and any interest accrued
added whenever the "Sparbuch" is presented at any branch of the issuing bank.
It is unquestionable impossible to establish just who opened the "Sparbuch"
account (and who owns it) by means of checking available records - - since no
record has been created except the physical "Starbuch" itself and the account
number in the bank computer system. No forms to fill out, no ID to show, no
nothing!
To make a deposit in "Sparbuch" cash in any currency can be hand carried
to the bank and plunk down, no questions asked. It will be converted to Austrian
shillings before being credited to your account. One can mail money orders or
checks to any branch of the relevant bank with a note to credit the "Sparbuch",
account number such and such. SWIFT electronic transfers may be made to
"Sparbuch" by registered mail or courier with and enclosed note stating that you
wish to make a withdrawal and include the "Logungswort" (the code). The bank
will do so provided you pay the applicable charges to have a check made out
and mailed to you along with the "Sparbuch".
It is entirely legal to transfer a "Sparbuch" from one person to another
without giving the bank or anyone else notice about this. In certain countries it

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has been made a crime by Big Brother to sell or even give away a passbook.
See, Big Brother want to collect as much data about bank account holders
worldwide as possible. A "Sparbuch" can be sent to someone through the mail to
pay back a debt or left in a sealed envelope with a will as a loophole to beating
immoral probate taxes. You can even donate the "Sparbuch" to the Save the
Whales Foundation if you are so inclined.
Furthermore, the "Sparbuch" is completely safe. Even though it's not strictly
necessary a "Sparbuch" will usually be issued with a code which is needed
whenever withdrawals are made. The code is chosen by the customer himself
(no 007, please!) - the way it should be for the customer knows best what is
easiest for him to remember. If the "Sparbuch" is lost, one quite simply applies to
the bank, gives the name (if any) of the account, the account number and the
code - the so called "Losungswort) - and a new "Sparbuch" is issued, usually
with no charge.
When you do have an Austrian "Sparbuch" account, you have created that
very important first step towards opening bank accounts in other countries in
whatever name you wish. If for example, you want to open an account in some
tax haven where you wish to stash some of the "mother mode", quite simply
write to open an account in a name suitably different from your own and give the
Austrian bank as a reference. In due course you will have little difficulty getting
international credit cards from our tax haven bank with references from an
Austrian bank where you never showed an ID at all.
An enterprising PT friend of mine let me have a peek at his Gold American
Express card made out to "Scrooge McDuckle". Needless to say, it's not
advisable to use this card in English speaking locations. If you wish to keep a
good chunk of liquid funds available that you may stash just about anywhere, or
even bring with you on your travels, the "Sparbuch" account is the perfect
solution.
Another nice feature of the "Sparbuch" account is that you don't have to
fear the local authorities when crossing the border of countries that put a
restriction on the amount of money you may bring in or out with declaration or
confiscation. The "Sparbuch" is not considered cash or any other "monetary
instrument". Many big-moneyed clients travel throughout Europe on business
and pleasure with one or two, five-figure "Sparbuchs" in their possession, fully
protected by "Logungswort", to meet any type of deal that may come up. It's only
a quick trip to Austria for instant untraceable cash.
A Few Disadvantages: Being a truly secret bearer passbook account, a
"Sparbuch" usually doesn't offer high interest rates - generally in the 3-5% range
with slightly higher rates for opening an account with a 12 month notice of
withdrawal.
A "Sparbuch" account may only be opened in Austrian shillings which is not
in the EMS (the European Monetary Scam). This may be a blessing in disguise
rather than a slight drawback since the Austrian shilling for the past few years
has been tied to the Deutsche mark. The Austrian shilling has been almost the
most stable and reliable currency in Europe over the last two decades. In the

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real world, the Austrian shilling offers a greater degree of stability than the Swiss
franc.

The Key To Your "Sparbuch"


Since the point of the exercise is to open and ensure a completely
unquestionable, secret bank account without leaving a paper trail for snoops of
any persuasion to follow, one has to take special care about exactly how a
"Sparbuch" account is opened.
It is impossible to open a "Sparbuch" by mail; so someone has to physically
appear in Austria in order to open the account. Needless to say, this someone
should be a person with no link or connection to the person wanting to open the
account. In fact, the less known about the prospective "Sparbuch" owner the
better for even under torture the Austrian opening up the account for the client
would have nothing to tell!
So do you have to go to Austria? Yes - and no. First off, the "Sparbuch"
account is open to everyone, but there is a slight catch. You need not be a
resident of Austria to open a "Sparbuch" account UNLESS, THAT IS, you are
willing to go through the revealing and exhausting process of producing a
passport, providing an address and so forth. Obviously this would destroy the
advantage most "Sparbuch" owners are seeking.
The "Sparbuch" account is the ultimate in banking secrecy but for some
reason the Austrian authorities have kept the ultra low-profile for Austrians only.
They haven't extended this service to foreigners BUT it is possible to circumvent
the "resident" bit. It can be done the easy way with Expat World or it can be done
the hard way with a lot of cunning and a good portion of luck, having a fair
knowledge of German, and the ability to "prove" that you reside in Austria.
At EW we decided that we would try to get a "Sparbuch" the "hard way". We
thought we could finesse our way around the Austrian residency routine, us
being PT's and knowledgeable in loophole maneuvering. So we set out to do
what is impossible in any country known to us: Open a bank account in a fast,
clean, efficient manner, with no fuss and no one asking to see our passport.
In bank after bank, we were spotted as obvious foreigners and no amount
of carefully rehearsed lines in German could convince the bank tellers that there
was no reason why we should produce a passport just to open an account. To a
man, almost, they insisted that, yes, we had to do just that.
The first day and most of the second, we went to over 40 banks located on
just about every street corner in Vienna before we managed to open one measly
"Sparbuch" without having to hand over our passport. Whether we finessed the
clerk with our haggard looks after a full day of hassling with previous bank
clerks, or the clerk was half asleep, we don't really know, but we did open the
account without our travel documents but we did have to fill out a form to open
the account and leave our fingerprints all over the original. Needless to say, even
if one is moderately conversive in German, if there is any hint that he is not a
resident of Austria, i.e., a foreigner, the road to opening an account on your own

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is filled with frustration and complications. Although we did finally succeed


winning the battle, we were one tiny bit short of winning the war.

The Easiest, Safest Way - The EW Way To Open A "Sparbuch"


Even if you could endure the time, frustration and expense, master enough
German and convince a bank clerk to do what he's really not supposed to do -
THINK ABOUT IT, if the purpose of having a "Sparbuch" is to fully and
completely avoid leaving clues that may eventually lead to yourself, including
your fingerprints, why show up at the bank in person. Bank employees have, on
occasion, been known to have frightfully good memories. SO WHY NOT
CONSIDER LETTING SOMEONE ELSE DO THE JOB - it does not have to be
expensive. Time is money. Letting someone else go through the bothersome
motions makes sense in more ways than one.
Expat World has connections with a lawyer who has offered to open a
"Sparbuch" account for EW clients with no hassles whatsoever. You do not need
to show any ID, no photocopies of your passport or drivers license are needed.
These "Sparbuchs" are delivered "off the shelf" as anonymous ("Euberbringer")
accounts, complete with an easy to remember code )"Logungswort"). They
come, as standard, with an opening balance of 1,000 Austrian shillings, roughly
about US $100. A small service charge is incurred for this service. There is
absolutely nothing more to it than merely writing a short note and enclosing a
check, money order or cash. You will not even be asked to fill out any forms or
sign anything whatsoever - not even the modest and unthreatening form which
even Austrian residents are required to fill out!
You should feel free to order your "Sparbuch" account in any name different
from your own (after all, that's what this whole game is about) or no name at all.
Now for some really good news! The total price, including both the opening
balance (the money actually already in the account when you receive the
"Sparbuch") and all the postage and handling, plus the service of our
lawyer/agent is only US $550. Since this amount buys you an account with a
balance of US $100 already in it, the "real" charge is US $450. No can you come
close to opening the account on your own for less money.
After EW receives your funds, allow 2-4 weeks for the delivery of the
"Sparbuch" which will be air mailed to you anywhere in the world. Maildrop
addresses or hotel addresses are fine places to have your new secret "bearer-
passbook" received. As an extra service, worldwide DHL courier delivery is
available at an additional charge of US $50.
Consider the alternatives. Whether or not you do it yourself or leave the job
to competent professionals, as we recommend, how often are you presented
with such a clear-cut, easy-to-use and ready-to-roll solution to true privacy in
banking?
If you wish to get an Austrian "Sparbuch", please send the necessary
remittance to Expat World, Box 1341, Raffles City, Singapore 9117. Don't forget
to include the address where you want the "Sparbuch" sent. We'll do the rest.
Remember we take no prisoners and take no records!

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WILLS OR TRUSTS? THE CASE FOR LIVING


TRUSTS

HOW TO ELIMINATE THE HASSLES OF: PROBATE,


LAWYERS, DELAYS, LEGAL SYSTEM

Introduction To Living Trusts


Simply put, living trusts are an expedient way to transfer property at your
death. A living trust is a legal document that controls the transfer of property in
the trust when you die.
Generally, living trusts are established during an individual's lifetime and
can be modified or changed while that person is still alive. Circumstances do
change and the option to make alterations in the trust is important.
For this reason, a living trust is set up on a "revocable" basis. Revocable
means you can modify or change the trust's provisions. Your other option would
be to create an irrevocable trust. Once put in place, you are unable to change
the terms of the trust regardless of the circumstances.
As you will see, living trusts speed up the process by which your property
moves to your designated beneficiaries after you die. Today, and into the
foreseeable future, this is vitally important as the United States is experiencing
an unprecedented wealth transfer.
It is estimated, according to "Fortune" magazine, that some $6.8 trillion
worth of assets will soon pass from parents to children, grandchildren, friends,
charities and others. The questions remains: how will this wealth be transferred?
Will it be the traditional methods of wills and probate or the new revolution of
estate planning that has incorporated living trusts? Many legal experts believe
that living trusts are the future of wealth transfers.
The concept of living trusts has created controversy simply because the
legal profession seems evenly split on the issue. Estate planners seem to favor
living trusts but there are enough opposed to the concept to avoid a clear
majority decision.
Living trusts are also called "inter vivos" trusts, a Latin term preferred by
attorneys. The Internal Revenue Service calls them "grantor" trusts. All mean the
same thing.
The Internal Revenue Service, however, recognizes the living trust as a
valid estate planning tool and exhibits no prejudice against it. There are specific
provisions in the tax laws that deal with living or grantor trusts.
The revocable provision means that while you live, you still effectively own
all of the property that has been transferred into the trust. You can sell it, spend
it, give it away; in short, do anything you wish since the property is still yours.
The trust itself is merely a document in your lifetime that truly doesn't begin to

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function until you die. Then, the trust operates to transfer your property privately,
outside of the reach of probate, to the specific individuals or organizations to
whom you wish to leave your worldly possessions.
What is probate? Why do people try to avoid it?
Technically speaking, probate is the process by which one proves the
validity of a will in court. If there is no one contesting the will, this should not take
long. If there are complications, probate can take years. For those of you familiar
with the works of Charles Dickens, recall "Bleak House" and the neverending
probate case of Jarndyce vs. Jarndyce.
Probate has come to mean not just proving the validity of the will but the
entire administrative sequence involving the passing of an owner's title to
property after the owner's death. The deceased's property is inventoried and
creditors are identified and paid after the payment is made to the estate's
attorney, executor and tax entities.
The term "probate" also identifies the court which has jurisdiction over the
estate probate and administration. Probate court also has jurisdiction over the
guardianship of minors and mentally incompetent adults. All wills go through
probate.
The average length of the probate process is twelve to eighteen months.
Any estate transactions in that time must be approved by the probate court.
This can create havoc for beneficiaries. Since a living trust replaces a will
and doesn't need validation from the probate court, considerable time and
hassle can be saved.
This, then, is the purpose behind living trusts. The trust is simple to
establish and, when carried out, makes it easy to transfer property. The trust is a
matter of explicit instructions as to who gets what property after the owner dies.
Like a will, the trust should cover all expected and unexpected events that might
occur. The details tell the designated trustee how to use the money and property
in the trust.
A living trust is a capable substitute for a will and a document that more and
more people, disillusioned with the probate system, are turning to in their estate
planning.

Terms You Should Know


Before proceeding further, it might be helpful to define a few terms for you.
These terms will occur often during this text and in the actual living trust process,
so it's important to familiarize yourself with their definitions.
A/B TRUST: Common term for a "marital life estate trust", generally used by
couples whose estates are valued at more than $600,000.
ACCUMULATION TRUST: A trust that does not pay out all of its income until
certain circumstances occur.
ADMINISTRATION: Court supervised distribution of the probate estate of
the deceased. The person who manages this distribution is called the
EXECUTOR if there is a will or an ADMINISTRATOR if there is not.

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BENEFICIARY: The person or organization legally entitled to receive gifts


made under the provisions of a legal document such as a will or trust.
CODICIL: An amendment to a will. It is a separate legal document, properly
witnessed and executed.
CORPUS: Property owned by the trust, commonly referred to as "corpus of
the trust".
DEATH TAXES: Amounts levied on the property of the deceased called
estate taxes (federal) and inheritance (state) taxes.
DURABLE POWER OF ATTORNEY: A general power of attorney that will
continue to be valid after its maker becomes incapacitated or incompetent.
DURABLE HEALTH CARE POWER OF ATTORNEY: A special power of
attorney in which the maker gives another person authority to make health care
decisions when the maker is unable to do so, due to injury or sickness.
ESTATE: In general, all of the property you own when you die.
ESTATE PLANNING: The legal maneuvering by which one dies with the
smallest taxable and probate estate possible, with the ability of passing on your
property to your beneficiaries with the least amount of hassle and expense.
INTESTATE: To die without a will or other valid estate transfer device.
Estate will go through probate and be passed to heirs who are specified in the
applicable state's laws.
IRREVOCABLE TRUST: A trust that cannot be changed, once established,
except by court action in a proceeding referred to as REFORMATION.
JOINT TENANCY: A form of property ownership by two or more people
where the death of one owner causes the transfer of that individual's share to go
directly to the remaining owner(s). A will has no power to change the joint
tenant's right of survivorship. This is another common tool used to avoid probate,
although there may be gift tax consequences.
LIVING TRUST: Trust established while the maker is alive and which
becomes immediately effective. It remains under the control of the maker until
death. It allows property to pass to beneficiaries free of probate.
LIVING WILL: A document that provides instructions to physicians, health
care providers, family and courts as to what life-prolonging procedures are
desired if a person should become terminally ill or be in a persistent vegetative
state and unable to communicate.
PERSONAL PROPERTY: All property other than land, buildings attached to
the land, and certain oil, gas and mineral interests.
PER STIRPES: A legal term meaning that if a person dies, the inheritance
will pass to heirs in equal shares. It means "by right of representation".
POUR OVER WILL: A will that transfers the decedent's assets that are
subject to the will to a trust that was already in effect prior to the decedent's
death.
POWER OF ATTORNEY: A legal document whereby, a person authorize
someone else to act for them.

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PROBATE: Court proceeding in which the authenticity of a will is


established, an executor or administrator is appointed, debts and taxes are paid,
heirs are identified, and property in the probated estate is distributed according
to the dictates of the will.
QUALIFIED TERMINABLE INTEREST PROPERTY TRUST: Also referred to
as a "QTip" trust, it allows a surviving spouse to postpone, until his or her own
death, payment of estate taxes that were assessed upon the death of the first
spouse. The surviving spouse is still entitled to all of the income from the
property.
REVOCABLE TRUST: A trust that can be changed by the trust maker at any
time. Living trusts are revocable trusts.
SETTLOR: Another name for a maker of the trust, also called "trustor",
"grantor" or "creator".
TENANCY IN COMMON: A form of joint ownership of property. Each owner
is able to sell or give a way his or her share of property, as well as pass it along
separately at death. There is no right of survivorship.
TESTACY: Dying with a valid will in place. All property controlled by the will
passes through probate.
TESTAMENTARY TRUST: A trust created by a valid will.
TRUST: A legal arrangement under which one person or institution controls
property given by another person for the benefit of a third party.
TRUSTEE: The person who, or institution which, manages the trust and its
property under specific instruction.
WILL: A legal document that is used to pass property to heirs following a
person's death. A will only becomes effective at the death of its maker.

Transfers
The purpose of the living trust, as mentioned, is to be able to transfer
property to a designated beneficiary(ies) without the usual hassles associated
with wills and probates.
However, your living trust can't transfer property it doesn't own.
Therefore, the first step in making the trust effective is to transfer ownership,
or title, of a property to the trust's name. It's safer to transfer the title to the trust's
name rather than to the name of the trustee since it is more likely the trust name
will continue even if you change trustees.
For the purposes of transferring title into a trust's name, there are two
classifications of property: that which has an ownership document and that
which doesn't.
Property without ownership documents include the following:
household possessions and furnishings;
clothing and furs
jewelry

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tools and most equipment


antiques
art work
electronic and computer equipment
cash
precious metals
bearer bonds
These items are transferred to a trust simply by listing them on a trust
schedule. That's it! Pretty simple, right?
Property that has ownership documents requires a reregistration of
ownership into the trust's name. Once the trust document has been established,
signed and notarized, this process should begin. The document of the title must
clearly show that the trust is the legal owner of the property or the trustee will not
be able to legally transfer any of that property.
The type of property owned by the trust which requires this reregistration of
ownership includes the following:
real estate
bank accounts
stocks and stock accounts
money market accounts
mutual funds
most bonds, including U.S. Government Securities
safety deposit boxes
corporations, partnerships and limited partnerships
cars, boats, motor homes and airplanes
If you set up a trust and fail to reregister ownership of a specific property, it
will remain outside the trust after you die. If you do not have a will, property will
pass through intestacy and your state's succession law. The chances of leaving
it to the person you wanted it to go to are reduced, and you will not avoid probate
of the property which is the purpose of a living will! Do not fail to reregister
property that has a title. You prepare a new title document for each piece of
property, transferring ownership into your trust's name. With real estate, for
example, you must prepare and sign a deed listing the trust as the new owner.
Then have the deed must be notarized and properly recorded. For bank
accounts, ask your bank for the proper form. You can usually accomplish this in
one trip.

Trustees
When you establish a living trust, you must name a trustee. In fact, you
should name both an initial trustee and a successor trustee in the event the initial
trustee becomes incapacitated and cannot serve.

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The trustee is the individual who or institution which actually manages the
trust assets that you transfer in, according to the specific instructions you've
given. The appointment is important, as this person or entity will have the
responsibility of honoring your wishes your after death.
The initial trustee is, most often, YOU! That's why it's called a living trust.
Since it's revocable, you can change assets in the trust as circumstances
dictate. While you're alive, the trust can conform to your specific wishes.
It is important to understand this: a living trust does not take the control of
your property from you- until you die. You handle it while you're alive. It's merely
tucked away in a convenient legal vehicle that takes over immediately after you
die and passes the property along to the people you designate without publicity
and without the potential lengthy delay and costs of probate.
If you've set up a marital living trust, usually both spouses are cotrustees.
When one spouse dies, the other spouse continues as the initial trustee.
It is possible to name someone else other than you and/or your spouse to
be the initial trustee. It is uncommon and unnecessarily complicates your trust
arrangements as you must keep separate records of the trust. You should work
with your attorney to select a capable trustee if you wish.
Because something could happen to the initial trustee, it's vital to name a
successor trustee. This is the individual who will be distributing your assets
according to your wishes after you die, or if you become unable to manage the
trust due to injury or illness. For property not held in the living trust, creation of a
durable power of attorney and a health care durable power of attorney can
designate someone else to carry on with the non-trust assets.
If your trust is a marital one, the successor trustee would not take over until
after the second spouse dies.
The successor trustee could also die or become incapacitated, so it's
imperative that you name an alternative trustee, too, to take over as successor in
that circumstance.
What does the successor trustee do? If your instructions are explicit as to
how you want property transferred at your death, then the job is somewhat
easier. However are still things you must do:
Obtain copies of the death certificate of the initial trustee
Present death certificate, copy of the living trust and proof of
successor trustee's identity to the various financial institutions or
organizations that have the property/assets
Prepare documents of title transfer from the trust to the
beneficiary(ies) as appropriate.
Supervise distribution of trust assets where no title is involved.
If necessary, the successor trustee may manage a child's trust if the
beneficiary is a child who has not reached the age at which the
initial trustee designated the property to be transferred. The
successor manages the property for that individual until he or she
reaches the specific age outlined in the original living trust. This may

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be the only task the successor trustee is actually paid to do. If


required, the successor trustee might also file federal and/or state
death tax returns.
It is important to name a successor trustee, preferably one whom you feel
will diligently carry out your wishes. It may even be someone who is also a
beneficiary of the trust assets. If there is any question about whom you should
name, consult with an attorney for suggestions.

Wills
A will is a written document detailing instructions as to how you want your
assets divided up after your death. You might also include information as to a
child's guardianship, how (or if) you are to be buried and the appointment of an
executor of your will.
The two main types of wills are:
attested
holographic
The attested will is the most common. It is usually prepared by a lawyer in
typewritten form and signed in front of several witnesses who have no benefit in
the will whatsoever.
The holographic will is made without a lawyer, written on plain paper in your
own handwriting, dated and signed. If your wishes are clear, this should be as
effective as the attested will. It will more likely be disputed than an attested will
and be subject to the interpretation of the courts, where anything could happen.
Attested wills are safer for carrying out your final instructions.
Most people think they should have a will. Many people do, however, do not
have a will because estate planning is generally not a high priority to many
people nationwide. There are many fine estate planners around the country who
work with individuals, but the average person doesn't put much thought, time or
effort into addressing this important financial task of preparing for asset
distribution after death.
Attorneys will be glad to help you do an attested will and may not charge
much to do so. They'll get paid later- when the will goes through probate court.
The payors will be your beneficiaries, who will see assets drain as a result of
legal fees and court costs.
Probate can be lengthy, especially if the will and estate is a complex one.
Not only does a will diminish the value of the property, it may also slow down the
time it takes to actually transfer it to the designated beneficiary.
A will does let you choose your heirs, but the advantages stops there. You
will not avoid probate, estate taxes (if any), death income taxes, privacy of
transfers or incapacitation. These are the primary reasons one should set up a
living trust INSTEAD of a will.
There is a will that is important when establishing a living trust. It's called
the pourover will. This document puts any assets you failed to place in your living
trust during your lifetime into the trust after your death. In effect, it "pours over"

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assets from the will to the trust. This document may also name the guardian for
minor or incapacitated children.
The pourover will is a "failsafe" device to ensure that any property left out of
the trust will be placed there. It is also a backup to the living trust in case it's
invalidated for any reason. The pourover will can substantiate the trust simply by
reaffirming its terms. It would be difficult for one or more heirs to challenge
successfully both a living trust and a pourover will if their conditions and
instructions are similar.

Estates
What is an estate? Exactly what are we trying to protect with a living trust?
An estate is essentially all the property you own (your assets) minus
anything that you owe (liabilities). This calculation, assets minus liabilities, will
yield a net worth for you. This is the value of your estate at the time it is
calculated.
The size of your estate is important. More important is the value of your
taxable estate. This will equal, roughly, the value of your estate less property left
to your surviving spouse or to charity.
The other estate calculation of note is the probate estate. This is the portion
of your estate that must go through probate before it can be distributed. Leaving
your assets via a will puts them through probate.
The difference between the taxable estate and the probate estate should be
considerable if you plan your estate properly. For example, let's say your estate
calculation is $400,000. By transferring the title of your house, valued at
$250,000 and your Chrysler stocks, valued at $75,000, to a living trust, you have
reduced your PROBATE estate by $325,000 to $75,000. Your goal should be to
try and reduce the probate estate to zero if possible.
Living trusts will save probate costs. They do not avoid death income taxes.
There are other things you can do, planning wise, to reduce your taxable estate,
but a living trust is not one of those. You can and should, however, reduce or
even eliminate your probate costs.
Proper estate planning, in general, can accomplish all of the following:
select your heirs
choose amount and time of distribution of inheritance to heirs
avoid probate
eliminate or reduce federal estate taxes
eliminate death income taxes
maintain control over your assets
maintain both privacy and flexibility
leave directions and the power to act if you are incapacitated
leave funeral instructions
leave organ transplant instructions

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make the administration of your estate as simple and quick to


execute as possible.
These are important goals. A living trust is one example of addressing these
goals in your estate planning. It is by no means the only thing you should do, but
it is a document that can help you and your heirs immensely.

Other Types Of Trusts


By now, you should understand the meaning and main purpose of a living
trust. There are, however, other types of trusts that should be mentioned that
assist in estate planning goals.
Living trusts are only truly functional when the creator of the trust passes
away. It avoids probate costs. Other types of trusts help you to avoid taxes.
MARITAL ESTATE LIFE TRUST: Commonly referred to as the AB Trust, this
trust is set up for coupl es whose combined estate is in excess of $600,000.
$600,000 is the amount of your estate which is exempt from federal estate taxes.
The marital life estate trust lets BOTH spouses take full advantage of the
$600,000 estate tax exemption.
When a spouse dies, property is left for the use of the surviving spouse
during the balance of his or her lifetime. However, the survivor never becomes
the legal owner of the property. If legal ownership is never bestowed, then the
property is not included in the survivor's estate and thus avoids being counted
for tax purposes.
The trust is complex and has important ramifications for the surviving
spouse which should be understood before putting this type of trust into effect.
QTIP TRUST: Short for Qualified Terminal Interest Property, it is a type of
marital life estate trust that is intended to postpone payment of estate taxes
when the first spouse dies. It only postpones them until the death of the second
spouse and the taxes could be higher then since the amounts would be
calculated on the then-current estate, but it saves the survivor a substantial
amount of money while alive.
GENERATIONSKIPPING TRUST: You may have heard of this type of trust
where the bulk of assets are left to the grandchildren, but the income derived
from them is utilized by the trustor's own children. In essence, the estate "skips"
the children, going directly to the grandchildren, but the use of the income is still
there for the direct heirs; the use of the property is not.
Current laws impose a tax on all generation-skipping transfers in excess of
$1,000,000. If an estate is worth more than that, the children may want to get this
excess property directly since they will have no access other than to income
from the property that was transferred to the grandchildren.
It all depends on the size and type of estate.
These are examples of other trusts. This isn't meant to say you should
attempt to set up every conceivable type of trust. The key is what your estate
and heirs "picture" looks like-this will govern the estate planning devices you will
utilize.

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Taking Inventory
To value your estate from both a net worth and living trust planning
standpoint, you must inventory your assets and calculate your liabilities first.
Assets: This is the first calculation. You should list each item and describe it,
indicating whether you own the property outright or the percentage of your
ownership if not. Then list the actual value of the portion you own.
Begin with your liquid assets:
cash
savings
checking accounts
money market accounts
CDs
precious metals
Next, list other personal property:
stocks
mutual funds
bonds
other securities
automobiles
jewelry
furs
art works
antiques
tools
collectibles
life insurance
Then, list your real estate holdings including your own home(s),
condominiums, mobile homes, land, etc.
Finally, list any business personal property including partnership interests,
copyrights, patents, trademarks, stock options, etc.
Add these up and you will have the total amount of your assets.
Then, list your liabilities by name and the amount you owe, including:
personal loans (credit cards, bank)
mortgage loan(s)
taxes due, current or past
life insurance loans
other personal debts

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Add all of these numbers up to arrive at your total liabilities. Subtract your
liabilities from your assets to arrive at your net worth.
This allows you to place a value on your estate. You can see how close
your estate is to $600,000. You can inventory property that has to be itemized for
the living trust anyway. You can separate property by titled ownership and
nontitled property.

Summary
Knowing where you are in valuing your estate is an excellent start to your
estate planning program. The use of a living trust is a clear example of using
estate planning to help you (and your heirs) save money and to avoid the
hassles of court and lawyers.
Living Trust Basic Form
This form creates a revocable living trust. A living trust is a testamentary
device, used instead of a will. Popularized by the infamous "How to Avoid
Probate" books, Living Trusts are a type of estate planning which have become
quite popular for many reasons. Although touted as a substitute for traditional
wills, a living trust also requires a pour over will. A pour over will bequeaths any
assets which have not been conveyed to the living trust, into the trust estate.
Virtually all living trusts are "revocable" which means that the terms can be
changed during the lifetime of the settlor. Irrevocable trusts create extensive tax
consequences and are not suitable for regular estate planning. The trusts
provided is revocable.

REVOCABLE TRUST

, referred to herein as Settlor, and , referred to herein as Trustee, (the


singular term "Trustee" shall refer to multiple Trustees if multiple Trustees are
appointed) in consideration of the covenants and undertakings herein agree:

ARTICLE I
CONVEYANCE OF PROPERTY TO THE TRUSTEE
Settlor herewith assigns and conveys to the Trustee, the property described
in Exhibit "1" hereto. All of said property, together with any income, accessions
and additions herein, shall be held by the Trustee in trust for the purposes set
forth in this revocable living trust.

ARTICLE II
REVOCATION
Settlor hereby reserves the right to revoke this trust at any time, by written
instrument. Revocation shall be effective upon mailing or delivery to the Trustee
of a notice of revocation. Trustee may resign upon 30 days prior written notice to
the Settlor. For purposes of this agreement, notices shall be delivered as follows:

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TO SETTLOR
[Write in your (the Settlor's) name and address below]

_______________________________________________

_______________________________________________

_______________________________________________

TO TRUSTEE
[Write in the Trustee's name and address below]

_______________________________________________

_______________________________________________

_______________________________________________

ARTICLE III
SUCCESSORS TO THE TRUSTEE
ADDITIONAL TRUSTEES
The Settlor during his lifetime may from time to time add additional Trustees
by notice to the then existing Trustees. In the event there are multiple Trustees,
the majority shall in any matter in which the Trustees disagree control. In the
event that the Trustees are evenly divided in the actions to be taken, the Trustee
with the longest tenure of service shall cast an additional vote to determine the
matter.

In the event that any Trustee resigns or is unwilling or incapable of acting,


during the Settlor's lifetime, the Settlor shall name additional or replacement
Trustees. After the Settlor's death, shall name the replacements for any Trustees
who resign or are unwilling

or incapable of acting. If is unwilling or incapable


of acting, shall name the
same. In the event that _____________ shall be unwilling or incapable of
acting, the Court having jurisdiction over states and trusts, located in County,
State of shall name the successor Trustees.

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ARTICLE IV
WITHDRAWALS BY SETTLOR
The Settlor may from time to time withdraw any portion of the corpus of the
trust (whether capital or interest) by written notice to the Trustee. The Trustee
shall be acquitted of all further responsibility for any assets so delivered upon
receipt by the Settlor.

ARTICLE V
POWERS OF THE TRUSTEE
The Trustee shall have the power to do all acts, institute all proceedings
and exercise all rights, powers and privileges that an absolute owner of the trust
property would have, subject always to the discharge of Trustee's fiduciary
responsibilities.

I further direct that the Trustee shall act without bond. Further, this Trust
shall be administered without the necessity for an administration thereof to be
through the court system. No entity dealing with the Trustee shall be required to
investigate or to confirm the Trustee's authority to enter into any transaction or to
administer the application of the proceeds of any transaction.

ARTICLE VI
COMPENSATION OF TRUSTEE If the Trustee is an individual, then the
Trustee shall serve without compensation, but with reimbursement for
reasonable and ordinary expenses. Nevertheless, the Trustee if an attorney shall
be entitled to compensation for legal services rendered to the trust, or if an
accountant, for accounting services rendered to the trust.

If the Trustee is a corporation or banking entity, it shall be entitled to


customary, reasonable and ordinary charges and expenses incurred in
rendering services to the estate.

ARTICLE VI
DISPOSITION OF TRUST PROCEEDS
After paying the necessary expenses incurred in the management and
investment of the trust estate, including compensation as provided for herein, the
Trustee shall accumulate the same during the lifetime of the Settlor. After
Settlor's death the Trustee shall distribute the net income of the Trust in the
following manner:

Please see exhibit 2


Should any beneficiary named above die, the Trustee shall distribute the
net income to the lineal descendants of the beneficiary. If any beneficiary dies

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and is not survived by lineal descendants, the distributions from the Trust shall
be adjusted to pro-rata increase all other shares.

ARTICLES VII
INVASION OF PRINCIPAL
After Settlor's death, the Trustee may apply so much of the principal of the
trust for the use of the beneficiaries at such time or times as in Trustee's
discretion Trustee may deem advisable for their health, education, support or
maintenance. Any amounts so applied to the use of any beneficiary shall be
charged against, or deducted from, the principal of any share then or thereafter
set apart for said beneficiary.

ARTICLE VIII
NON-ASSIGNABILITY OF THE TRUST PROCEEDS The interest of the
beneficiaries of this trust shall not be assignable, and beneficiaries shall not
have the right to pledge, assign, convey, or otherwise transfer, lien or encumber
any portion of the income or principal of the trust. All payments provided for by
the beneficiaries herein shall be made directly to them or their guardians as is
provided herein.

ARTICLE VIII
DISTRIBUTIONS TO MINOR OR INCOMPETENT BENEFICIARIES The
Trustee in his discretion may make payments of income or principal to any minor
or incompetent beneficiary by paying the same to the minor or incompetent's
guardian, or to the person having control over the minor or incompetent, or by
direct expenditure for the benefit of the minor or incompetent. However, the
Trustee may also pay an allowance in such amount as he may see fit from time
to time to the minor or incompetent. Further, in the discretion of the Trustee the
distributions for a minor or incompetent beneficiary may be accumulated and
shall thereupon be paid to the minor or incompetent upon their disability being
removed. Any payment under this Section shall operate as a full discharge of the
Trustee as to such payment.

ARTICLE VIII
ACCOUNTINGS
The Trustee shall, after the death of the Settlor provide a semiannual
accounting to all competent, adult beneficiaries detailing the transactions, if any,
of the trust. The same shall not be required to be audited, although the Trustee
may, in his sole discretion, may cause an audit to be performed from time to
time.

ARTICLE IX
LIQUIDATION OF TRUST

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If at any time the total of the principal and income of the trust is less than
$500,000.00, the Trustee, may in his absolute discretion, close out the trust by
paying the proportionate shares of each beneficiary to them. The Trustee shall at
that time deliver a final accounting to each beneficiary. Upon payment, the
Trustee shall be discharged from all further duties.

SECTION X
PERPETUITIES SAVINGS CLAUSE
Notwithstanding anything to the contrary herein contained, the trust created
by this agreement shall cease and terminate as is provided in Sections IX, 21
years after the death of the last survivor of trustors and all issue of trustors living
at the date of this agreement.

SECTION XI
DISTRIBUTION OF DIVISION IN KIND
On any distribution from the trust, whether it be an ordinary distribution or
one of principal, or a final distribution, the Trustee may apportion and allocate the
assets of the trust estate in cash and partly in kind, in Trustee's discretion. The
valuation, whether based on an appraisal, or not, made by the Trustee shall be
binding on the beneficiaries.

SECTION XII
LITIGATION OR COMPROMISE OF CLAIMS
The Trustee may compromise, or abandon, at Trustee's option any claim or
claim against the trust, or subject the same to arbitration. Or, the Trustee, in his
absolute discretion, may litigate any claim in favor of or against the estate.

SECTION XIII
NOTICE OF EVENTS
Until the Trustee receives notice of any death, birth, marriage, or other
event on which the right to receive distributions is based, the Trustee shall incur
no liability for any disbursements or distributions made in good faith. This clause
shall not prevent the Trustee from seeking restitution of any payments made in
error in his discretion.

SECTION XIV
DEFINITIONS - GOVERNING LAW
The words "child", "children", "descendants" and "issue" shall include
children legally adopted and the lawful descendants of such adoptees. This trust
shall be governed by the laws of _________________ [Put State here.]

SECTION XV

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SEVERABILITY
If any provision herein is found by a court of competent jurisdiction to be
invalid, the remainder shall govern. Dated:
____________________________________
__________________________________________

{Put the Notary Public's name here]


STATE OF ___________________
COUNTY OF _________________
[Notary Public's name here], being duly sworn states that they executed this
instrument for the purposes stated herein.
__________________________________________

Notary Public
My Commission Expires: ____________________

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TRUTH AND FICTION ABOUT OPENING A SWISS


BANK ACCOUNT

BY WILLIAM G. SCHLAKE
"If you can actually count your money then you are not really a rich man." J.
Paul Getty, American business executive 1892-1976."
To most people having a Swiss Bank Account is something for the super
rich, crooks, dishonest government officials or just a good way of "hiding away
one's ill-gotten gains." That's nothing but fiction and a common plot used over
and over again in a lot of Hollywood's B movies. There's nothing illegal or "fishy"
about wanting, or having a Swiss bank account.
The truth is Swiss banks welcome accounts from foreign residents all over
the world - especially the "West," and a vast number of average Americans have
accounts all over Switzerland. The main reason for wanting a Swiss bank
account has to deal with the legendary privacy such an account provides.
The Swiss have some of the tightest regulations in the entire world as far as
who can gain access to your account. If you're looking for a way to "protect'
assets from snoopy investigators, a Swiss account can be the ideal place.
The "big five" Swiss banks are listed below. All are familiar with foreign
accounts.
The Swiss Credit Bank in Zurich
The Union Bank of Switzerland
The Bank Leu (AG) in Zurich
The Swiss Bank Corporation in Basel
The Swiss Volksbank in Berne
To locate the current addresses of these banks and many others, visit a
Swiss Consulate located in most major US cities, or visit your local library for
further information.
Opening a Swiss account is much the same as with any bank. If you're
making a truly large deposit most people prefer to do so in person. If you decide
to open an account by mail, you'll first have to request the forms needed to open
an account; fill them out, then get your signature verified at a Swiss Consulate or
any of their affiliated banks in this country. This procedure is much like what one
does to open a mutual fund or other securities account and is nothing more than
a bit of red tape any financial institution puts you through and not an invasion of
your privacy.
While we're on the subject, its best to send your deposits by money order
which offers the most privacy. Bank drafts are also acceptable, but avoid using
bearer bonds or securities when making your deposit or you're required to file a
lot of red-tape at tax time. For protection have your lawyer execute a "power of

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attorney" over your Swiss account. Unlike American law the Swiss still consider
such legal instruments valid even after a depositor's death.
If you're not comfortable leaving a "power of attorney" with the bank,
discuss options with your legal counsel in case of your disability, or death.
OK, so much for the "how," of opening a Swiss Bank account, now it time
for a little information on the "Why." The main reason for having a Swiss bank
account for most people has to do with keeping one's financial status a secret,
and protecting one's assets from "attack."
Swiss banks offer the same range of services of other banks: checking
accounts, savings accounts, custodial accounts, etc. They also will hold other
valuables like stock certificates, gold, silver, and other property for a fee. Like
other Swiss accounts, they are protected under Swiss law from any snooping
unless you're engaged in criminal activity.
When it's time to make a withdrawal, it can be paid in the currency of your
choice. Swiss francs, American dollars, whatever you would like.
Unlike American law where law enforcement agencies, the judicial system,
and private citizens can gain access to all kinds of financial information under
Swiss law, except for extraordinary circumstances neither the bank's officers or
the bank's employees are allowed to reveal any information, relative to any
account to anyone, including the Swiss government.
No private citizen, or their legal representative can ever receive any type of
information about any one's Swiss bank account under any set of conditions.
That includes all types of legal proceedings that the Swiss classify as "non-
criminal behavior."
The Swiss consider tax evasion and many other "crimes" under US law as
"political offences." Things like divorce, inheritance disputes and bankruptcy
cases are examples of "private matters," and as such the secrecy of the account
is protected from any legal action to verify the presents of, or attempts to seize
any assets.
There are some notable exceptions. Three types of activity which the Swiss
consider illegal, and are bound by treaty with the United States to "open" the
account for possible legal proceedings are: organized crime activities, drug
trafficking, and "insider trading" of securities. In instances of this kind, the Swiss
authorities have the final say on whether or not to reveal any information.
The Swiss currently charge a hefty 35% tax on interest earned in Swiss
accounts but Americans get 30% of that tax refunded by showing that they're not
Swiss residents. To claim the refund there is a catch 22. You must identify
yourself, which of course give up your secrecy.
If you maintain the account in Swiss francs, and the franc increases in value
relative to the American dollar, you may also be liable for a capital gains tax
when you withdraw the money and convert it back to United States dollars. If you
sustain losses from any decrease in value they are usually not deductible.
There are no US restrictions on having Swiss bank accounts, but current
IRS regulations require you tell them what foreign accounts you have when you

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file your annual income tax return. If you answer yes, the Internal Revenue
Service requires more paperwork.
Interest earned in a foreign account is still taxable under present US Tax
laws, but you usually get to offset foreign taxes that you may be required to pay.
Consult with a tax expert to learn what present regulations are since they
change frequently and are beyond the scope of this report.
"Let us all be happy, and live within our means, even if we have to borrow
the money to do it with."
Artemus Ward 1834-1867

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CAMOUFLAGE PASSPORTS - THE


UNCONVENTIONAL PRIVACY TOOL

WHAT ARE CAMOUFLAGE PASSPORTS?


Camouflage Passports (CPs) are passports of countries no longer in
existence, e.g. former British or Dutch colonies such as Rhodesia, Zanzibar,
Dutch Guiana, Netherlands East Indies, &c. These states have usually changed
their names, typically after gaining independence. Thus, British Honduras is now
Belize, while Zanzibar fused with then time Tanganyika to become today's
Tansania. Upper Volta became Burkina Faso, and of course, some of the most
recent examples include the USSR and Czechoslovakia.
When American travelers became prime targets of hijacking and
international terrorism on an ever increasing scale, CPs were invented to afford
them some additional security. The idea was to present a potential hijacker with
a valid looking, non-American document to hide one's identity. Thus, it was
supposed, terrorists might pick someone else to harp upon, to take hostage or
even to kill.
CPs were never intended to be used as actual traveling documents at
border controls &c. Even today, we strongly advise against using them in lieu of
bona fide passports when crossing from one country to another: not all border
officials are as a dumb as they may seem, while you will certainly be inviting no
ends of hassle if you give them the impression of willfully hiding something from
them.
In some countries this may be a felony, but even where it isn't, people
caught traveling with "counterfeit documents" are always viewed with strong
suspicion. You may even face an espionage charge, depending on the current
political situation, and you shouldn't count on your home country's consulate or
embassy personnel being particularly happy about having to cater for someone
pretending not to be one of their citizens in the first place. Thus, their diligence
and eagerness to help could prove to be severely wanting - meaning that you
may have to spend weeks and months wasting away in a foreign jail, which is no
fun thing at all!
Do I really need one?
Probably not, unless you're being hijacked! :)
At least, that's the common sentiment. Actually, this prejudice is not a bad
thing at all as these passports obviously won't be of much use any longer, once
every man and his dog knows about them or even has one himself. So, the
fewer people actually employ them, the better for all concerned. After all,
discretion has always been a critical mainstay of personal security and safety.

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But let's check it out in more detail: if you refrain from traveling; if you are in
possession of a valid second citizenship for emergency purposes already and
have at least some of your assets stowed away in safety (preferably not in the
country where you are living most of the time, nor at the place where you
actually work); if you are in no need at all of truly anonymous banking - yes, in
that case (and in that case alone!) - it might seem a sheer waste of time and
money to obtain a CP, unless you are into collecting that sort of curios.
However, that will hardly apply to most of us! Plus: you can never actually
know before some nasty streak of events whether you are really in safety or not,
can you? What if your country's regime changes over night? If suddenly you are
victimized for being a Mormon, a Jew, a WASP, a black, a Muslim, a gay, a
communist, a veteran, an environmentalist - or because your spouse holds a
grudge and denounces you as a child molester, a porn fiend, a pervert, a drug
peddler, a mobster? Think of all the possibilities inherent in a social and political
system based on conformist and permanent state controlled brainwashing! And if
that's not enough: how about the IRS or your local equivalent to that agency?
What, if - just IF! - they find out - or ASSUME! - that you haven't filled in the
proper return forms for that kid you hired last year as a baby sitter?
Granted that no one can actually guarantee you the efficacy of a CP when it
comes to planning your escape or actually fleeing a politically oppressive
system. A CP is an emergency document at best. As such, you should keep it for
yourself and resist any temptation to brag with it at parties or when on a drinking
spree with your buddies. Keep in mind that a CP just might make the difference
between life and death when pressed for fast, decisive and - more importantly
yet - effective action. However, there are other, more obvious uses for a CP,
which is why we highly recommend procuring one or more.
What else can I do with a Camouflage Passport?
Ah, now comes the really interesting part!
Granted that one of the most frequent uses CPs are being employed for
these days is "highly unofficial", it is nevertheless of great interest if you want to
anonymize your banking assets. This can be quite critical in a world where the
purported "Drug War" has led to an increasingly restrictive banking practice the
whole world over. While border guards and consular officials are absolute pros
when it comes to recognizing false foreign documents, bank employees usually
aren't. Thus, if your name is "John Smith" and you have a CP from, say, British
Honduras on the name "James Miller" and use it to identify yourself when setting
up a new account with a foreign bank (never do it in the place where you are
actually living or working!), you can insure total anonymity even if that country's
banking laws do not permit of such a thing.
Because the bank will not be aware of your true identity, they cannot give
you away even if they wanted to. (To make this point very clear: most banks,
foreign or domestic, almost never actually want to - they are usually being forced
by law or coerced by other means if they actually do tell on you. Nevertheless,
this will hardly make any difference to you when caught in the mills of the
administrative system. Moreover, you can never be sure when this is going to

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happen - most any time could be right, depending on the winds of change and
current political developments - so "watch your ass", as the saying goes!)
Please keep in mind, though, that such a procedure is a criminal offense in
most countries. Obviously, the document alone is not enough, you have to
develop the bearing and behavior to go along with it. On the other hand, a
banker's job consists primarily of relieving you of your money, so the risk of
actually getting caught is pretty slim unless you botch the whole thing by not
adhering to the standard advice of always keeping a low profile. Better to look
and behave like an "average Joe" tourist or businessman from New Grenada
than trying an amateurish spiel at being a VIP of international renown, unless
you need that mask for some very serious reasons!
Are CPs legal?
Certainly, but a lot depends on how you use them. Possession is quite legal
in most countries including the United States and Canada. They are commonly
sold as novelty items and as long as you don't abuse them in an illegal manner,
you will hardly get into any trouble.
However, don't ever try anything illegal like leaving or entering the country
with a CP, never try it out in a traffic control, and most certainly don't ever try to
honk it off to someone else as a genuine item!
Actually, the latter has happened occasionally here and there. We frown
upon such a practice as it only makes life difficult for all bona fide people
involved in using CPs in a discrete, unobtrusive manner where absolutely
necessary, holding it in reserve for hard times i.e. emergencies. May you never
actually need it - but may you never go unprepared, either!

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ASSET PROTECTION

A.P.O.T. (TM) DEATH OF THE SUCKER PUNCH


In today's "sue first and ask questions afterwards" society, everyone is
under threat of having their assets wiped out for any reason whatsoever. The
good news is, a new nailed down, buttoned up Asset Protection Trust has been
designed to give you high calibre, low cost ($150) asset protection. It's called the
Asset Protection Offshore Trust (A.P.O.T.(tm) ). Not only does it help to make you
financially bullet proof, but it also places your funds into a healthy environment in
which they can grow.
The first question one is likely to ask, when faced with this tempting
proposition is, "What's the catch? How can an offshore asset protection trust
cost just $150? That's no more than the price of a good dinner."
PT Shamrock and their merry men have been around long enough to know
that before you give the nod to anything, you've got to turn it belly up and
examine the intimate details. Naturally you have to do this with a basic
knowledge of trusts and the environment in which they are sold.
The only reason you might think that the $150 price tag for such an
agreement is ridiculously low is if you are unaware that many professionals who
provide trusts link costs to the opportunity of the moment, and not to the basic
item which is in fact a simple agreement that, once activated, generates a
sequence of events that are designed to give you certain levels of financial
immunity from the many parties who would like to separate your ass from your
assets.
In the widely publicised 1996 case of O.J. Simpson, although a losing
defendant in a lawsuit, he still got to keep $25,000 a month in spending money.
Despite the fact that he lost all assets held in his own name, he was able to keep
all income from money he had placed in trust years before the lawsuits were
filed.

SIMPLE SIMON
Creating a trust is simplicity itself. A lawyer usually goes to a "form book" or
these days, to a computer service. His secretary types in the name of his client
and indicates the type of trust document desired. The resulting "hard copy" is
printed out. This trust agreement form costs the lawyer little or nothing; maybe
$10. Which is indication enough that his charges are based, not on real costs,
but on the wealth of the client and the assets involved. That is, he is doing what
most lawyers do, charges his clients for whatever the traffic will bear.
During the period 1980 to 1995, thousands of wealthy people, on average,
spent US$50,000 each on lawyer's fees to accomplish the same results that you

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can have by taking out a $99 A.P.O.T.(tm). Why is there such a vast price
difference, or should we call it an apparent discrepancy? In most cases its a
matter of perspective and where your head is.
On the other hand if you look for answers, soon enough you will find them.
Which explains why people who are generally hands-off, and therefore easy
targets, will pay $10 for a certain brand of Aspirin, when the identical product,
turned out by the same manufacturer, can be purchased, possibly with a little
effort and inconvenience, and the right contact, for $1.
In the case of the A.P.O.T. (tm), the effort and inconvenience are marginal,
and your contact is PT Shamrock who is an authorized facilitator of this "no
bullshit" agreement.

ROLLING WITH THE PUNCHES


A trust involves at least one person and at least some property or assets.
Let's say you have to deal with your irresponsible fourteen year old kid, who
even has trouble managing his lunch money. As a consequence you decide that
since your fourteen year old is going to squander any money placed under his
control, you will place a million dollar gift to the kid in trust. You open a bank
account styled, "Papa In Trust For Irresponsible Kid." You then hand the kid a
piece of paper that says you (Papa) will invest and manage the trust assets,
collect the interest and gains, pay the kid's school fees, and also give him a
weekly allowance for the next 21 years.
When the kid reaches maturity at a certain age, say 35, Papa, the trustee,
will turn everything in the trust over to him. Until he, the kid, reaches the
specified age of maturity, he is powerless to touch the principal, which is why this
kind of trust is often referred to as a spendthrift trust. For the next 21 years the
money is also protected against any creditors who would like to deprive the kid
of his rightful finances to be, which would also include Papa's creditors. A trust
agreement in fact can make provisions for all kinds of eventualities. For
instance, if Papa dies before the kid reaches 35, a successor trustee (a lawyer, a
bank, or the kid's Mom) is appointed to take Papa's place as trustee.

BULLET PROOFING
Due to the proliferation of lawsuits, government confiscation's, and new
laws enacted to "protect us" from ourselves, many if not all wealthy people,
especially in the United States, have set up Asset Protection Trusts. By having
title to assets like stock or real property held by foreign corporations or trustees,
these assets can be hidden and protected from creditors. At the same time
ownership benefits (like income) can still be enjoyed as before.

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UNSHACKLED
American citizens are forbidden by law from investing their money in at
least 99% of the opportunities of the world. Before most securities can be
purchased by a US citizen, they must be "approved" by the Securities and
Exchange Commission. Gaining such approval is an expensive bureaucratic
procedure. It's much like winning an okay from the Food and Drug Administration
for a life- saving new drug. Most companies never bother. As a result, most of
the world's best performing mutual funds can't be legally sold in the USA or to
US citizens.
The way out of this dilemma is a comparatively simple one, which entails
establishing an offshore trust to hold these forbidden investments. From this
point of advantage you can often do considerably better than you can with the
very limited, legally approved deals for US citizens. Succinctly put, with an
A.P.O.T.(tm) you have the right to choose.

INVISIBILITY
If you are in dispute with a Federal Regulatory Agency, it is very easy for a
low grade bureaucrat to press a button on his PC. He enters your social security
number, and is able to quickly identify your bank accounts, securities, and real
estate. Another few buttons are pressed ... just like that your property is "frozen,"
and your bank and brokerage accounts are transferred to the government.
With your assets held abroad in an A.P.O.T. (tm), it is not possible for a
creditor to locate them with any precision. In fact it is virtually impossible to
confiscate trust assets. Why? The lawyers of bureaucrats and plaintiffs don't like
difficult investigations and long, drawn out court procedures. Especially if
lawsuits must be filed and pursued abroad. As a result, in most foreign
jurisdictions (unless the local governments are collaborating), not even Big
Brother can get at your assets.
While Americans cannot expect any protection in Canada or vice-versa, co-
operation in seizing the assets of Americans in most countries only comes into
play when the issue is involved with serious crime, such as drug dealers, child
porno rings, or bank robbers. Conversely, with an A.P.O.T. (tm) it becomes
possible for you to personally access your funds, instantly, in cash, twenty-four
hours a day, anywhere in the world.
It is also likely that if your A.P.O.T.(tm) assets are earning excellent returns,
you won't simply pull funds out for consumer spending. It is more likely that when
you need cash you will borrow against these offshore assets. In view of this
probability a credit line can be arranged in advance.

SHARK REPELLENT
It is well known that ambulance-chasing lawyers are constantly sniffing out
potential defendants by identifying high net worth individuals. By keeping some

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of your assets in an A.P.O.T.(tm) you can lower your visible level of wealth. This
makes you a far less attractive victim. Before a contingent fee lawyer will file suit,
he always gets a full report on his target's assets. Since funds and properties
held in an A.P.O.T.(tm) are invisible (or at least less discoverable) much litigation
can be avoided or favourably settled.
The same reasoning, reducing your visible net worth, goes for repelling
other blood sucking pests and predators who seek an unwarranted share of your
wealth. The list includes burglars, kidnappers, extortionists, ex-spouses, tax-
collectors, disgruntled business associates, crooked cops, insurance sales
people, and bent bureaucrats seeking bribes. The less well heeled you seem,
the more of a repellent you become.

YOUR WORD
Particularly where your heirs are likely to squabble over their inheritance, it
is likely that most of your estate could be eaten up in legal fees. Also, in some
jurisdictions, the "forced heirship" law provides that you must leave all or a
certain percentage of your property to a forgotten separated spouse, or to a child
who detests you (and vice versa).
Assets in an A.P.O.T.(tm) can, upon your demise, be given to any person or
be used for any purpose you designate. Once again you have the right to
choose who gets the benefit of your estate. You don't have to let the State make
those choices for you.

MOBILITY
Many countries have controls on foreign remittances that make it
impossible to move money to where it is needed. Many Chinese-Americans
were criminally charged years ago for simply sending subsistence money to
aged parents on the mainland. Expat Cubans face similar risks today.
Wealth taxes and other taxes eat away at your savings and profits. An
A.P.O.T.(tm) can help you save on taxes, and allow you to spend or invest your
own money as you please. Certain "roll-up" investment funds convert taxable
income into non-taxable, unrealised capital gains.

WHAT IF?
What recourse do you have if a trustee doesn't do his job right? The most
important asset of any money manager or trust administrator is his reputation.
This is why it is important to deal with an established firm that has a good
reputation, in depth management, client references, real offices, real employees,
and good communications with customers. In taking out an A.P.O.T.(tm) you will
have such a trust administrator working in your interests.
Besides all the usual court remedies (which take too long and are too
expensive), your biggest element of control is that you can complain.

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Letters to the local regulatory bureaucrats will cause a legitimate operator a


great deal of trouble. You can also make your grievances public by writing to
journalists and editors. Such complaints made in financial publications and on
the Internet will cost a trustee dearly. Receiving bad publicity for not providing
the services you bargained for, will cost much more than he could gain from
mismanaging or stealing your account.
In the final analysis, dealings with a trustee, or any bank, is mainly
dependent on trust. If you start modestly and build up assets, trust and
confidence over the years with your trust manager, you should do very well.

FROM THE HORSE'S MOUTH


To give you more insight into the nuts and bolts of the A.P.O.T.(tm), Marc
Harris provides answers to the most common questions relating to the operation
of an A.P.O.T.(tm)
Q: Do I have to give up control over my assets with an A.P.O.T.(tm)?
A: Look at it this way: Do you give up control when you let a pilot or good
cab driver take you where you want to go in a strange country? Not really. The
professional will probably get you to your destination faster and safer than you
could do it yourself. If you are unhappy you can change drivers (trustees) at any
time. An A.P.O.T.(tm) which you can call "The Your name Trust" is run by you.
You call the shots. Only legal title is in the name of "Your name Trust." There is a
foreign person who is in nominal control (your pilot), but he does exactly what
you want.
Q: Are the assets physically in the country where the trust is established?
A: Normally not. You can have a Panama trustee with a bank account in
Switzerland or Singapore. You can have access to that bank account anywhere
in the world with an ATM (automatic teller machine) card. Securities or mutual
funds may have assets all over the world and be quoted in daily papers.
Q: How can I find out my net worth and check on the performance of my
assets?
A: You can do this by fax or telephone. Conventional regular statements can
be mailed or faxed, but if you are on the Internet, The Firm of Marc Harris, s able
to provide encrypted, strictly private instant statements, upon demand.
Q: If there are political problems (i.e. wars, revolutions) in the country of the
trust, does this affect me?
A: Not at all. The Swiss moved all their gold holdings and bearer securities
to New York City when there was a Nazi invasion threat. The Firm of Marc Harris
and the bulk of their 250 employees are currently in Panama. Most investment
securities are now held as book entries in clearing houses. These are at major
business centres like London, Zurich, Singapore. At the first sign of problems in
Panama, all functions of M. Harris could be easily transferred to existing facilities
in a dozen other countries. The customer would never be affected by such
changes as e-mail facilities and telephone lines would be electronically adjusted.
However, insofar as investment banking and shop-registry functions, Panama

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has a hundred year history of stability as a leading offshore banking centre. In


spite of the USA invasion a few years ago, normal business functions continued
and most local property damage was reimbursed by the Americans.
Q: Can I invest in any stocks, property or other assets that I choose?
A: Yes, but it is best for you to start with a small discretionary account
owned by your A.P.O.T.(tm) Once you get the hang of using your A.P.O.T.(tm),
you should have a personal meeting with your account executive to go over your
objectives. You can visit us at the office abroad that is most convenient for you,
or communications can be handled in many other ways.
Q: Is everything you do legal?
A: Yes. We have a large staff of lawyers who keep us in compliance with all
laws of all the jurisdictions where we operate. We can also put you in touch with
our own in-house lawyers and certified public accountants who are licensed in
your home country for tax planning and other advice. We can also prepare and
certify your financial statements, income tax and other returns. Naturally, these
services are billed to you at a cost which will usually be considerably less than
the cost of similar services stateside.
Q: Do you offer other services?
A: Yes. Discount stock brokerage, no load mutual funds, tax and estate
planning, corporate, trust, foundation establishment and management, foreign
exchange trading, offshore captive insurance companies newsletter and Internet
publishing and a full range of financial services at competitive prices. We also
offer expatriation and new citizenship services.
Q: Do I have to use your people for any or all of the services you offer.
A: No. You have the right to choose what services, if any, you use in
connection with your A.P.O.T.(tm).
Q: What are my reporting requirements in my home country with regard to
an A.P.O.T.(tm)?
A: Certain forms need to be filled out and filed. We provide you with these
filled out forms. It is your sole responsibility to file them if you choose to do so.
Our firm, unless requested by you to do so in writing, reports nothing about your
account to anyone.
Q: How much money do I need to have to get started?
A: With as little as ten thousand dollars, we manage to help clients. If you
want to give up being sucker punched, for your unique Offshore Trust (A.P.O.T.
(tm)) and referral reference, or further information, please contact:

E-mail: mailto:CarltonPress@offshore-manual.com
Web site: http://www.offshore-manual.com

North America:
CARLTON PRESS INC.
Empire State Building, Suite 3304, 350 Fifth Avenue,

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New York, NY 10118-0069, USA


Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438
ICQ# 19921677

Europe:
CARLTON PRESS LTD.
St. Georges House, 31A St. Georges Road
Leyton, London E10 5RH, GREAT BRITAIN
Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168
ICQ# 16070169

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GETTING A SECOND CITIZENSHIP

BY ADAM STARCHILD
Consideration should be given to the acquisition of more than one passport.
The acquisition of multiple passports of course presupposes that you are willing
to accept multiple citizenship-and this is not at all a bad idea for many people.
With terrorism on the rise, international travel can be particularly hazardous to
citizens of certain countries. Hostage-takers and kidnappers who have
commandeered planes and boats have often looked at passports in deciding
who shall live and who shall die.
A second passport may also give you access to travel in countries where
your own passport might not be used because temporary or permanent travel
restrictions. If you think this can't happen to you, consider all the Canadians who
were refused permission to land in Spain a few years ago during a Spanish-
Canadian fishing rights dispute.
For others, the benefits of a second passport may not be quite as pressing,
but dual citizenship does nonetheless convey several advantages. Many nations
have laws which restrict the purchase of real estate properties.
Typically, coastal properties and those in large desirable metropolitan areas
are off-limits to foreigners. Such practices have been widespread throughout
Europe, Asia, South America-even in Mexico. Paradoxically, some of the
available properties have remained unsold for long periods of time, not because
they are outrageously priced but rather because locals could not afford to
purchase them.
The acquisition of a second nationality could be your key to living like a king
or queen in one of the world's most desirable cities. Financial advantages of dual
citizenship include the ability to purchase otherwise restricted shares in
emerging foreign companies. Many foreign stocks and mutual funds are only
available to local citizens. Issuers will require affidavits from potential buyers.
Present the appropriate second passport as proof of citizenship and you are
home free.
GET YOUR MONEY OUT OF THE COUNTRY BEFORE YOUR COUNTRY
GETS THE MONEY OUT OF YOU.
It's legal. It's easy. It's Invisible. Its Offshore. Many years ago I was in a
minor dispute with a government agency.
They were wrong. I was right. No question about it. They thought I owed
them a few thousand dollars in taxes. I knew they owed me considerably more in
rebates and refunds. We figured the case might be heard some years down the
line.
Maybe in some administrative supervisor's office; maybe in court. But more
likely, the odds were, that my high priced Certified Public Accountants would
settle the claim. Probably in my favor. That's what I paid them for.

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It was no worry for me at the start. If the accountants couldn't work out
something, it would go to the lawyers. "My team" would insulate me. I was well
insured, and well protected against every contingency. So I thought!
Similar differences of opinion had been resolved by negotiation and
compromise a hundred times before. In those days, I had a sizable business to
run: hoards of employees, rents to pay and a big payroll to meet. There were
projects to complete. I was busy! Couldn't be bothered with giving a lot of
personal attention to a piddling small tax claim amounting to less than a day's
rent for my firm. So maybe I refused to take a call and had staff refer some
squeaky voiced government guy to my accountants. I didn't even remember the
incident. The disputed matter seemed a vary little thing, like a baby leech on your
butt when you're up to your eyeballs in alligators.
DOODOO HITS THE FAN
While at my desk, 9AM one foggy Monday morning, a good, reliable
supplier, "Mrs. Zanadu," burst into my inner office unexpectedly: "How could you
do this to me?" She was waiving my bounced check for $75,000. Her people had
done a good job and I'd authorized full payment for her on the prior Friday. I told
her, "Calm down- let's have a look?" I knew our check was written against a
good account. We had more than enough on deposit to cover this check several
times over. There was a credit line too.
"There's been a mistake," I exclaimed. "You take this downstairs to our
good friend, the Bank Manager, Mr. Moneypenny, He'll set things right!" I was
writing a humorous memo to Moneypenny, my bank manager about not smoking
any more grass. Told him to cash this attached $75,000 check immediately for
Mrs. Zanadu, and to kiss her fine fanny seven times. That was when my ex-wife
the former Morgana De Medici (actually La Fey) burst in screaming:
MORGANA [FIRE BREATHING LADY DRAGON] ENTERS HISSING
"You dirty, low down %$#@#$*. It's enough that you $#@$ me in our
divorce, but how could you do this to your own kid?" Her scenes were nothing
new. "My dear, sweet lady love of my life, what was this itsy bitsy anger all
about?" I asked. Sent Mrs. Zanadu on her way, and gently but firmly told
Morgana the Terrible, "Calm down darling sweetness, have a seat. Have this
cuppa soothing Tizana Tea I made for myself. Tell me what's on your mind.
Please dear. Don't be upset." "$$#@# you + your ^#@$#@!!% your tea"
She blurted, angrily, as my peace offering hit the wall breaking the cup into an
irretrievable archeological artifact. "The G-Men just seized your daughter's
Christmas and birthday money: Two Thousand six hundred thirty six dollars.
And if you, you %$$$#@#$, don't hand it over in cash in the next thirty
seconds, my lawyers, Stabbim Grabit & Ballsqueezer, will make you wish you
were never born." I knew better than to argue with Morgana, so I went into my
petty cash drawer and pulled out $3,000 cash. "No need to threaten me.
You know I love you still, and I love our wee baby. I don't know how this
happened. But I will take your word for it. Here, this three grand is for our little
Snookums. You keep the change and get your pretty hair done up in a Beehive

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or whatever you like. You always look so beautiful when you're mad." I said it
(about her looking beautiful when she was mad) even though it wasn't

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INTERNATIONAL DRIVING PERMIT

International Driver Permit is issued under International Law and valid for
five (4) years. International Driver Permit CANNOT be assessed points, revoked
or suspended.
Photo Scan! Your photo and signature are scanned and printed on each
card at Super High Resolution. Includes holographic security seal (not shown) at
no extra cost. Quality is guaranteed or your money back. IDP's are printed in
brilliant colours at high resolution.
IMPORTANT! State issued licenses supersede an international driver
license in the state or country they are being used. Also, an IDP is not valid in the
country of issue. If you do not understand this, DO NOT order the IDP.
PLEASE NOTE: All orders are processed and sent within 24-48 hours from
receipt of you're application forms (normal delivery time is less than one week.)
All personal checks may be held for up to three weeks, in addition to processing
time. Orders paid by cash or money order are sent immediately.
Important! Make all checks and Money Orders payable to Carlton Press.
ONLY US$200.
Forfurther information, visit our web page at http://www.offshore-
manual.com/cp16.html
Mail, fax or e-mail your orders to:
E-mail: mailto:CarltonPress@offshore-manual.com
Web site: http://www.offshore-manual.com

North America:
CARLTON PRESS INC.
Empire State Building, Suite 3304, 350 Fifth Avenue,
New York, NY 10118-0069, USA
Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438 ICQ# 19921677

Europe:
CARLTON PRESS LTD.
St. Georges House, 31A St. Georges Road
Leyton, London E10 5RH, GREAT BRITAIN
Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168 ICQ# 16070169

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CITIZENSHIP - INSIDER'S GUIDE TO INSTANT


CITIZENSHIP'S AND SECOND PASSPORTS

How to legally obtain a second foreign passport or driver's license.


Argentina, Guatemala, Panama, Venezuela, Brazil, Dominican Republic,
St.Kitts/Nevis, The Bahamas and the Republic of Ireland all have acquisition
programmes.
Citizenship acquisition programmes are available through an extremely
reputable, well established, recommended Immigration Consultant who
represents countries whose passports offer visa-free travel to numerous
destinations.
Citizenship of these countries can be attained by naturalization in a few
months, waiving the normal three to five year residency period. For a
comprehensive analysis of each country, see havens. Consultant controlled
programme Guatemala, Peru, Panama, Venezuela and Brazil offer programmes
that are controlled by our recommended consultant.
These can be processed in 60 to 90 working days. (In cases of emergency,
for a priority rush fee of US$5000 per application with a minimum of five orders,
documents can be processed in 18 to 24 days.)
Everything is included in the processing fee specified in the section
allocated to each country. There are no additional costs and no further
investments necessary. Since your money is placed in an escrow account
controlled by you, your funds are never at risk. If delivery is not made within the
specified period of time your funds are released to you in full.
You will not have to make a visit to your chosen country in connection with
your application, nor will you incur any tax or other obligations by virtue of your
having become a citizen of another country. It is not necessary for you to
renounce your present citizenship and no one will be notified of your new
nationality.
Should you require another identity and/or name other than your own,
official, legal, name change documents must be filed. Your name change will be
recorded by the issuing country, but nowhere else. There is an additional fee for
this procedure.
All passports come complete with exit stamps.
SOME COMMON QUESTIONS AND ANSWERS
These are questions that have been posed to our consultant on many
occasions, and his replies.
Question. What can I gain from second citizenship?
Answer. Many people see a very ominous trend developing in the "free
countries of the world". Every year, more and more of our freedoms are being
shaved away. Already, many Western Governments have removed their citizens

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right to obtain a second passport (and therefore to travel) if the hapless citizen is
having any of a number of civil disputes with government, including tax disputes.
Even if the citizen is completely in the right he cannot leave. This would have
been inconceivable just ten, fifteen years ago. Unfortunately, things seem to be
getting worse rather than better and many thoughtful observers are becoming
quite concerned for the future of freedom. For the moment our firm is holding
open a window of opportunity that allows one to obtain what many forward
thinking individuals now consider an essential element of insurance against
further loss of freedoms. How long we will be able to keep this window open is
uncertain at this time, but many feel that this is a very appropriate moment to
obtain supplementary citizenship, against some future "rainy day".
Question. Which countries can I visit without visas?
Answer. For St. Kitts/Nevis, a Commonwealth country, the major visa-free-
travel countries are limited to: Bahamas, Bermuda, Denmark, Finland, Hong
Kong, Korea, Norway, Sweden, Thailand, United Kingdom and Venezuela. Visas
are required for all other countries. We do not recommend St. Kitts/Nevis
passports at this time. Regarding the Bahamas, another Commonwealth country,
the major-visa-free-travel countries are more extensive than Belize and St.
Kitts/Nevice. Bahamian documentation is also not recommended at this time due
to the large investment required to get involved. If you already have an excellent
passport, we do however, recommend the Bahamas as a domicile for you to
obtain Permanent Residency. The island lifestyle is superb and the available tax
benefits for Permanent Residents are very advantageous.
The Republic of Ireland, a respected member of the European Community,
offers the best visa-free-travel in the world, plus holders of Irish passports can
live and work without a visa in any EC member country. Effectively if you or your
family are Irish Citizens, you become citizens of the UK, France, Germany, Italy,
Netherlands, Belgium, Luxembourg, Spain, Greece, Denmark, Portugal and
soon Austria, Sweden and Finland. The cost for your entire family to become full
naturalized citizens of Ireland in 90 to 120 working days is substantial. If you can
afford it, then without doubt Ireland is the top of the list. Our next best selection is
Venezuela which provides excellent Visa-free-travel at a fraction of the cost of
Ireland.
Question. Is it difficult to obtain visas?
Answer. All of the Central and South American countries have excellent
diplomatic relations and visas are easily obtainable (while you wait or overnight).
You can apply in your country of "residence". Commonwealth countries require a
longer wait.
Question. Where do I take delivery of my passport?
Answer. Delivery is normally made in Switzerland which is greatly to your
benefit. Switzerland is the easiest country to enter on your present passport and
if you like you can travel out of Switzerland on your new passport. The Swiss do
not stamp visa-free passports either upon entry or exit. Passports that need
visas like St.Kitts/Nevis and the Bahamas will be stamped. Delivery can also be

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made throughout the world by courier service. The price includes air courier
delivery from the country of origin to you.
We also offer a personal delivery service (for a minimum of five orders)
whereby the completed documents will be picked up and delivered to you by a
personal courier at a fee of US$300 per passport to North America or US$600
per passport to selected European countries, Asia and the Far East, plus air
travel expenses
Question. Why is there an additional cost for family members?
Answer. A few countries such as Argentina and Bolivia allow additional
family members to be included in the original passport which greatly reduces the
cost to additional family members. However the countries currently on offer issue
a separate passport for each family member and the processing time is the
same for each. Remember a passport is for life, so even if a child is newly born,
he will need a passport to travel and the cost is the same. There are however
reduced rates, in some cases, for children under the age of 18 years. If family
members are processed at a later date than when the original application was
processed then the cost is the same as the original, as the processing
implications are the same.
Question. For how long are passports valid and can they be renewed?
Answer. Most passports are valid for ten years, but may have to be
extended at the end of five years. This is not a formal renewing process requiring
new forms and photographs. Your present passport is simply taken to any
Consulate and is stamped, extending it for a further five years, usually while you
wait. At the end of ten years a new passport will be issued through a Consulate
or Embassy, new forms and photographs are required. The process will take a
few days depending on Consular policy and upon passport traffic at the
particular office.
Question. How is payment made and is my money at risk?
Answer. We are obliged to pay in full, in cash, in advance for your passport
package (which is only of value to you) before your application is even
considered. Your full payment therefore must be placed in an escrow account
with Swiss Bank corporation (SBC), one of five remaining AAA rated banks in the
world or another legal Firm on the consultants choice. The money remains your
property while it is in the account. It takes two signatures (yours and that of our
representative) to release the funds. The money is only released to us when you
receive your passport package. If you do not receive satisfactory delivery by a
specified time then your money (upon your request) is returned to you in full. You
are never at risk. We assume all risk.
Question. Are prices negotiable?
Answer. All prices are fixed. To the best of our knowledge we have the only
reputable organisation offering these services. We have an impeccable record of
delivery, which we are very proud of. We will deliver valid passports, valid ID
cards and valid drivers licenses through the naturalization process in the
specified time, waiving the normal 3 to 5 year residency requirement and under
absolute confidentiality and security, delivered to your door. Our fees are not

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expensive for the service offered and you receive a degree of integrity and
reliability that is absolutely without equal.
There are many travel documents of dubious validity being sold by other
firms at the moment, you can be totally confident that those supplied by us are
exactly what they are represented to be.
Question. Are there any countries on offer but that you do not recommend?
Answer. As a last resort, we will offer Paraguay, Chile and Peru. We will not
however accept any responsibility for these countries because of constant
political and legal changes. There are also potential problems related to
customs, immigration and passport renewal procedures.
Question. I am a little sceptical. What else should I avoid?
Answer. Remain sceptical, Investigate thoroughly before you part with your
money. Obtaining a second passport is a major step, and you must choose the
firm with which you deal as carefully as you would choose a surgeon. Avoid any
firm which asks for advance up front consultancy fees. You will never again see
your money or any documents. Your money must go into a protected account
with a reliable bank where it takes your signature to release any funds. This is
the only way your money is safe.
Question. Are my affairs kept confidential?
Answer. We are professionals of many years standing. When you become
our client your secrets and your privacy are absolutely safe. No one and no
other government or any other authority will be notified that you have applied for,
much less obtained, a second passport. It is a private affair.
Question. Is it possible for me to obtain documents under a different name?
Answer. Yes. The question often arises from Middle Eastern clients whose
surname might subject them to terrorism. Therefore once we are satisfied that
your record is free of criminal convictions, it is possible to apply under a different
name, by using a deed-poll legalised name change procedure. We can legally
change your name in the country from where your new passport will be issued.
To do this we must file the documents necessary for a legal name change in the
issuing country, which will then al low us to apply for the passport in the new
name. The name change will only be recorded in the issuing country and
nowhere else. The additional fee is US$7,500 but we must emphasise that
although it is perfectly legal to carry out this task, we must first be satisfied that
your intentions are proper.
Question. What advantages do Latin American passports have over other
passports?
Answer. Legally every Latin American has two last names. Firstly, his or her
father's last name, followed by his or her mother's last name. For example if your
name is John Doe because your father's name was Jacob Doe and your
mother's maiden name was Sarah Smith then your full legal name, carried in
your Latin American passport is John Doe Smith. Legally you may call yourself
John Doe or John Smith or John Doe-Smith, and legally you may travel in any of
these names, open bank accounts in any of the se names, hold assets in any of

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these names and maintain credit cards in any of these names. Since most
people (i.e. creditors, friends, associates, tax authorities, and even ex-spouses)
have no idea what your mother's maiden name was this is a perfect opportunity
to protect your assets by using a legal alternative name. And it is 100% legal.
Question. Do you plan to offer any other countries in the future?
Answer. Yes. We do hope to be able to offer other countries in the future
under our expedited naturalization process, including several other EC
countries. For the moment however, the countries that we offer represent the
best choices available in the world today. If there was something better available,
we would have already made arrangements to be able to offer it to our clients.
The vast majority of our business comes from referrals by satisfied clients.
The reasons for this are simple: service, security and satisfaction. Our years of
experience, global research and worldwide contacts keep us instantly informed
of new developments. If we do not offer a particular passport, there is almost
certainly a very good reason.
Question. What is involved in the application process?
Answer. You will submit a completed application form (which we will supply
to you) along with passport photos, a police clearance, a copy of your present
passport and copies of your birth and marriage certificates. We cannot accept an
application if we have any doubt as to the intent or background of our client. In
the interest of time-saving, if you have ever been indicted or charged with a
criminal offence (except for political offences), or if you have ever been
imprisoned for one year or longer , please enclose full details with your
application.
In cases where a police clearance cannot be obtained because of political
instability in your country of origin, your attorneys affidavit, on our affidavit form
may be acceptable under some circumstances.
When you become our client, your application is received in absolute trust
and is covered by the Attorney-Client Fiduciary Privilege of total confidentiality. If
for any reason your application is refused, your entire file will be destroyed, and
your escrowed funds returned to you in full immediately.
Question. How do I start the Process?
Answer. Simply notify us through PT Shamrock Ltd. that you would like to
begin and tell us which country you desire. We will fax you the application form,
a copy of the escrow agreement, together with our final letter of transmittal. You
will then simply complete the application form, along with the other required
documents and a bankers draft in favour of the escrow account. Things will then
get underway immediately. Most of our clients prefer to wire-transfer their funds
directly to the Swiss Bank or other legal Corporation Escrow Account, so we also
provide wire transfer instructions.
After the payment is funded in the Escrow, we will consider your application.
We will inform you when your application is accepted and ready for processing.
At this point all you need do is sit back and wait for your papers to be delivered.
The process is really quite simple and absolutely secure.

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Question. Will your prices increase?


Answer. Our prices will go up. All prices are quoted in US dollars. The
prices in the February 1, 1998 Fee Schedule list. (These prices are specified in
the sections on each country and are subject to change without notice). All
prices are however, firm once your application has been accepted, there will be
no further increases. Fees include Air Courier delivery and cover all banking
fees, escrow fees and taxes, if any. Your payment is fully inclusive - except of
course for the direct government investments required by Uruguay, St.
Kitts/Nevis, The Bahamas and Ireland.
Question. Why do you sell passports and how do I get started?
Answer. PT Shamrock Limited does not sell passports. We act solely as an
introducer to liable sources known from many years in business through our
numerous contacts. Should your application prove successful we receive a
referral fee from the legal firm. That legalize aside the large majority of applicants
are successful, none have lost money. However some referrals had their escrow
deposits returned due to delays in obtaining their documents in a timely fashion.
Should you have any questions, do not hesitate to ask. You will be required to
provide "proof of funds," in order to proceed. This includes a bankers draft or
cashiers cheque payable to the legal firm, or a copy of a bank statement with
sufficent funds on credit.
Question. How do I get in touch with you?
Mail, fax or e-mail your orders to:

Sincerely,
For and On Behalf of
CARLTON PRESS INC.
Dr. K.F.B. Weiss
President & CEO

E-mail: mailto:CarltonPress@offshore-manual.com
Web site: http://www.offshore-manual.com

North America:
CARLTON PRESS INC.
Empire State Building, Suite 3304, 350 Fifth Avenue,
New York, NY 10118-0069, USA
Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438
ICQ# 19921677

Europe:
CARLTON PRESS LTD.

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St. Georges House, 31A St. Georges Road


Leyton, London E10 5RH, GREAT BRITAIN
Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168
ICQ# 16070169

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OFFSHORE AND ASSET PROTECTION GUIDE 1

MERCHANT BANKING & BACK TO BACK LOANS.

STARTING AN INTERNATIONAL BANK


When a notorious bank robber was asked why he robbed banks, he
reportedly replied, Because that is where the money is. International investors
have discovered for themselves that owning a bank can be even more lucrative
than a career in bank robbery. Because running one's own bank dramatically
demonstrates the benefits of offshore financial operations, it is the first case
study of what can be accomplished once the investor breads free of domestic
confines. Banking is not as exotic as it might seem at first glance. A bank is
merely a company organised much like other companies. It is built upon trust
and it flourishes, as all companies do, by keeping promises. The following
material is of equal importance to the user as well as the organiser of any
international business organisation.
HISTORY OF BANKING
Banks were originally warehouses that stored the gold and other valuable
property of customers. These warehouses often were operated by goldsmiths
who had to safeguard their own stock anyway and issued receipts for the stored
valuables. If a buyer wanted to make a payment to a seller, the buyer might sign
his warehouse receipt over to the seller or write an order (draft) to the goldsmith
telling him to pay some of the buyer's gold to the seller. This was easier and
safer than taking his gold out of the warehouse and personally delivering it to the
seller. A short time after gold warehousing began, warehouse owners figured out
that, gold being gold, they could lend out some of the gold and earn interest,
keeping enough on hand to take care of day-to-day withdrawals. Thus fractional
reserve banking was born.
Whether or not fractional reserve banking was begun with the knowledge of
the depositors, it soon became the way most banks did business. Banks came to
pay interest on deposits instead of charging storage fees. Today, depositors lend
money to a bank and that bank in turn lends most of it to borrowers, acting as a
loan broker.
Banks are more than that, though. In a real sense, banks make money.
Their debts, their promises to pay, are money. A bank account balance, which is
nothing more than a debt owed by a bank to a depositor, is treated as money by
the depositor himself, by those people he makes payments to, and by the
government that counts those bank balances in the monetary statistics. Money
has become paper, and banks are able to create money in the course of their
day-to-day operations. For example, let's say a deposit of US $ 1,000 is placed
in Bank A. Assuming that banks are bound by a 20 percent reserve requirement,
(which is higher that that percent normally required by regulators), then Bank A
can loan out 80 percent of that money. Bank A thus loans US$800 to Mr. Butcher,
who deposits the money in Bank B. Bank B lends US $ 640 of Mr. Butcher's

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money to Mr. Baker, who deposits it in Bank C. Bank C lends US$512 of Mr.
Baker's money to Ms. Stickmaker, who deposits it in Bank D, and so on. Notice
what has happened. The bank accounts of all of the parties still reflect the full
balances that they have deposited, even though most of the money was lent out.
As the original US$1,000 works its way through the system, it has multiplied to
almost US$5,000. All of this new money was created by the banks involved.
Because banks have this unique power to create money, the right to start a
bank frequently has been sought by financiers to benefit from their operations
and jealously guarded by the entrenched financial establishment. It is more
difficult to start a bank than to start perhaps any other business. Brains and
money are not enough; political muscle is necessary to overcome the opposition
of the established banks who enjoy their monopoly position and fight to preserve
it. The bank regulators have established a close relationship with existing banks.
Each side benefits from the status quo and no one wants to wee new
competition shake things up. The banks will take money and loan it out but they
resist letting their clients get into the game. The following pages explain how to
start an offshore bank and gain the benefits of banking.
GETTING STARTED
Although it is difficult to start a bank in most of the large bureaucratic
countries, there are many nations whose laws are not as strict. In fact, there are
jurisdictions where people have been able to start banks just by incorporating a
company with the word bank in its name. This has allowed a number of casual to
damage the reputation of other banks. When this happens, the local government
often restricts the issuance of new licenses and tries to clear the deadwood out
from among the old licensed firms. Other jurisdictions, such as the Cayman
Islands, have had reasonable bank regulations for some time and so have
prospered as financial centres.
When just starting out in banking at a low level of capitalisation, the best
strategy is to incorporate the bank in as good a banking environment as one can
afford, then to build up enough of a reputation for keeping commitments to start
doing business in a better location. Most of today's large banks started with one
person or a small group of people who offered nothing but their promises and
reputations.
Bank formation is a very political activity everywhere, so it's impossible to
know what jurisdiction will be best by the time this introduction is printed. Once a
site is selected, a local professional will help obtain the bank license. The local
assistance of a registered agent will be needed, in any case, and a well - known
local professional can open many doors during the organisation process. A
travelling to selected locale to find one. The formation process itself can teach a
great deal about how things are accomplished in the chosen haven and in the
offshore world in general.
A short aside about preparation is in order here. It is important to learn as
much as possible about investing before moving into the international investment
community. Someone uncomfortable doing business with his local bank or
broker will not enjoy overseas dealings. It is essential to put in the preparation

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time required by complex ventures, otherwise one may be better off accepting
the services of an established international organisation.
One shortcut is to buy a bank that is already in existence. This saves a
good deal of time and should end up costing about the same as doing it from
scratch. There are companies that make their living by establishing banks and
then selling them to interested buyers. These companies range from clean to
shady and the normal rules apply about knowing what one is buying before
paying. It is a good idea to contact the regulatory authorities in the country where
the bank is located to check on the company's reputation. In addition, contact an
independent local professional in the area to get an opinion on the legitimacy of
the proposed sale.
ORGANIZING THE BANK
Bank organisation will be different for each jurisdiction entered. Many banks
are incorporated in two tax havens to facilitate business continuity in case the
laws (or the government) change in the primary county. The following decisions
are common to most banks and are followed by a typical application process.
CAPITALIZATION
Capital requirements vary from virtually zero to several hundred thousand
US dollars. The lower end applies to countries with no banking laws. The
potential banker merely organises a regular corporation and calls it a bank. The
more sophisticated tax havens, such as Cayman, The Bahamas, and St.
Vincent, have reasonably high capital requirements. This capital need not be
cash. Marketable securities, real estate, bonds, and even personal property may
be used, provided their value can be proven to the authorities. When carefully
structured, most of the money can be borrowed. The borrower must be able to
honour the note, however. In most cases, capitalisation must pass through at
least one other bank in the tax haven to prove that it does exist. A country that
requires the assets to remain there will not remain on anyone's list of desirable
tax havens. A country such as Anguilla couldn't begin to absorb that much
capital.
NAMING THE BANK
The selection of a good name is paramount to a bank's success. One's
good reputation and financial strength will be associated with the bank's name,
which will be difficult to change once business has commenced, both legally and
in the minds of clients and correspondents. The bank can create money only if
others accept its paper as money. this trust is dependent, in part, on the
institution's name.
The name should be clean and distinctive. Avoid long, wordy, difficult to
spell names. Consider selecting a name in another language to reflect
transnational business dealings: Banco de Carib, Banco National de Columbia,
or Bankhaus Caveat.
Other names create the impression that the bank is substantial, such as:
Swiss International Bank Limited, European Pacific Bank Limited, and The First
Bank of North America. European Overseas Bank was derived from European
American Bank and California Overseas Bank, both multimillion dollar banks.

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Still other bank names are directly associated with the owner. Some
examples are: Kennedy International Bank and Trust Company, Alexander
Bankcorp Limited, and Banque Peterson. The bank name may also describe the
types of activities it conducts, such as EP International Trade Bank, Financial
Guarantee Bank, and Caribbean Savings Bank.
The international trademarks of other firms must be avoided. Some
corporations will sue anyone with names vaguely similar to theirs. Recently, City
Bank, a multibillion dollar New-York-based bank, filed suit against 4 million dollar
City Bank of San Francisco for having a similar name. While the small bank
could win the suit, it might not be able to afford the legal fees. In addition, this
type of harassment can affect acceptance of advertising by international
periodicals.
BANK DIRECTORIES
Bankers want to deal with other members of their club. There are thousands
of banks in the world, so even major ones may not be familiar to everyone. Two
recognised international bank publications looked to for information on the size
and legitimacy of banks are the International Bankers Directory, (better known as
the Banker's Blue Book), and the World Bank Directory, published by the R.L.
Polk Company.
Entry in one or both of these listings is highly advisable if a bank wants to
do business with organisations that aren't familiar with it or its associates. These
publications are serious about maintaining the quality of their listings. At
minimum, banks have to submit proof of incorporation. A new bank's
incorporator can probably handle the listings.
DIRECTORS
The bank's directors are elected by the shareholders to direct company
policy and appoint the officers of the bank. They are normally the largest
shareholders or their close associates. In some cases, outside directors may be
elected to advise on areas of expertise not available through the owners or
management. Large customers or potential customers may be included both to
add knowledge and cement business relationships. A bank directorship is a
prestigious and profitable position. The directors know that there is at least one
bank where they can get preferred treatment and they also receive a small
annual fee.
The stockholders of a bank sometimes prefer to keep their investment
confidential. For various reasons, they may not wish to appear to be associated
with either the ownership or management of the operation. In most tax havens,
the use of nominee directors will ensure this. These are appointed agents into
whose names the bank stock is transferred by agreement. They are the owners
of record but, per agreement, vote according to the instructions of the true
owners. A nominee will generally charge about US $ 500 per year for this
service.
RESIDENT REPRESENTATIVE OR OFFICE
All tax havens have local accountants, attorneys, bankers, or quasi -
governmental officers who act as local agents for banks or other businesses.

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These agents forward mail, answer inquiries, represent the bank to


regulatory agencies, and perform any other necessary services. They normally
charge a minimum fee for a basic package, plus additional time and expenses
for extra services. The bank is expected to pay the direct cost of telephones,
telexes, and postage. Annual costs for the agent's services vary greatly
according to transaction and communication volumes. The representative is
bound by the local bank secrecy and responsibility laws.
The establishment of an office offers many advantages over using a
representative. For one, the staff is fully dedicated to the bank's needs. A trusted
associate who already knows how the organisation operates can handle
transactions on site. This reduces crucial communication time lags and lowers
the legal exposure of conducting bank business in another jurisdiction.
The drawback is expense. The bank has to rent an office and hire staff.
Office equipment, supplies, and furniture are surprisingly expensive in less
developed tax havens. An expatriate manager has to be paid wages that are
about equal to the home salary. As most tax havens do not encourage outsiders
to enter their job market, expect difficulty in getting the necessary entry and work
permits for a manager.
Lastly, remember that business in less developed countries runs more
slowly and more inefficiently than in the industrialised world. Whether dealing
through an agent or one's own office, patience an tolerance are necessary to
successfully manage the bank.
INCORPORATION
It is possible for the owner to travel to a particular tax haven and follow
through on the major items of bank incorporation. It's much the same as trying to
act as one's own general contractor. Any money saved will probably not
compensate for the time and aggravation expended. It is advisable to retain a
well - connected professional experienced in dealing with the particular
government and bank licensing. Bureaucracies like to deal with friends. Most tax
havens have local attorneys or advisors who specialise in chartering offshore
banks and corporations.
The incorporator advises the owner on the information required and the
form of the documentation necessary, submits the application to the proper
authorities, and follows is through the maze of local bureaucracy. Nominee
directors are hired by him if necessary. The incorporator helps the owner decide
whether to use a registered representative or to open an office. He also helps
implement decisions. The incorporator can assist in defining the structure of the
organisation, supply information about local conditions, provide marketing ideas,
and contribute many more useful services to aid the profitable birth of the bank.
HOW TO PROFIT
As a profession, bankers enjoy high status and the trust of the business
community, with a reputation for being conservative. However, the reader who
has had many dealings with banks has probably been frustrated by their lack of
imagination or, possibly, by incompetence. The fact that bankers consistently
make money is an indication of how easy it is to be a banker. The innovative

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services that major banks cannot or will not offer. The remainder of this
introduction covers various services that have been successfully offered by
major international banks as will as tax haven banks.
DEPOSITS
The key to conventional banking profitability is for the bank to borrow
money at a low rate and lend it out at a higher rate. The least expensive source
of money is deposits: non-interest demand, interest - paying savings, and time
deposits.
The broader the deposit base, the more stable the bank's money costs will
be. The longer the terms of the deposits, the lower liquid reserves need be. One
St. Vincent bank was opened by a large US manufacturing company just to take
advantage of the US - St. Vincent float. The firm estimates that opening a bank
just to pay suppliers added US $ 500,000 to its profits. However, some debtors
are hesitant to accept foreign checks and will not authorise credit until they clear.
Since governments almost always accept these checks, they are an excellent
means of paying tax liabilities.
Another selling tool is the numbered checking account where no signature
is required, only the account number, although the secrecy regulations of most
tax havens do not require banks to even respond to inquiries about depositors.
Since each account has a number for accounting purposes anyway, this service
requires no extra effort. This offers clients the ultimate in confidentiality but
entails a heavy responsibility on the bank's part of protecting the identity of the
account holder. The account holder can have all checks and statements retained
at the bank or sent wherever requested. A post office box is recommended for all
confidential correspondence.
Savings accounts are an offshore bank's most attractive deposit service. A
tax haven bank is not required to report information on individual accounts to any
governmental agency. If the bank's client chooses to evade taxes in his home
country and deposit certain assets in his tax haven bank, he can considerably
increase the investment yield on his savings account. This is the simplest use of
a tax haven bank. It is a use over which the bank has no control.
This tax advantage means that the interest rate paid does not have to be
much higher than major bank rates. For example, the authors know of offshore
banks that paid 9 to 13 percent on US dollars while the Eurodollar rate was 10 to
11 percent. Interest rates vary with the amount and time period of the deposit. As
the offshore bank doesn't have a household name and isn't located in a major
money centre, it does have to pay slightly higher interest than major banks and
provide better, more innovative service. The offshore bank needs impressive
documentation, professional advertising, and an articulate staff. It must present a
substantial appearance so that people will trust it with their money.
Deposits are developed through business associates, family, friends and
the public. When advertising, the bank must consider the banking law of each
country in which it advertises. International publications with a multinational and
sophisticated readership, such as the Economist and the Herald Tribune, are
good vehicles for attracting clients. These ads should not be too pointed, so as

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not to attract regulatory attention. Each inquiry is promptly followed up with


brochure, rate sheets, and a signature card.
A mailing list is established with these names, for sending updated
brochures and announcements of new services every few months. Potential
customers are reassured by this proof of continuity. Actual deposits can arrive
months or even years after the first contract.
The bank can accept deposits in any major currency. In these inflationary
times, many people seek to protect their assets by investing their savings in a
hard currency, such as Swiss francs or German marks. These countries have
established a reputation for upholding the value of their currency and for
avoiding depreciation by inflation. The bank converts the deposits into the bank's
prime currency, figures interest on the original amount, and converts back when
the account is drawn upon. The cost of this transaction increases if the currency
deposited becomes more valuable than the prime currency, so the bank may
cover a larger deposit with a currency futures contract. However, this
complicates bookkeeping as a new account must be set up to record currency
valuation losses or profits.
A classic banking strategy for increasing deposits is to require
compensating balances for loans. A 12 percent loan with a 25 percent
compensating balances requirement produces an effective interest rate of 16
percent. A 12 percent loan of US$ 100,000 for example, accrues US$ 12,000
annual interest. If the borrower only gets the use of US$ 75,000, the actual rate
is US$ 12,000/75,000 or 16 percent. (Loan packages requiring a 100 percent
compensating balance are discussed under lending.)
Imaginative packaging of services helps increase deposits. Trust
administration requires that some money be kept in current accounts to pay for
current obligations and new investments. When providing management services
for other banks, insurance companies, or trading companies, the offshore bank
enjoys, in turn, the deposits and clearing services of these organisations, as well
as its management fees. Real estate administration and margin accounts also
provide cash flow through the bank.
LENDING
After the offshore bank has successfully attracted deposits, something must
be done with them. Lending money at a higher rate than interest paid on it
insures a profit, but only if the loan is repaid. Successful lending depends on
good business sense, the ability to read people and balance sheets, knowledge
of collateral, and negotiating ability. Spread the risk wide enough that one or two
bad loans won't cripple the bank.
Most tax havens do not have usury laws, so the offshore bank can charge
higher interest rates than are allowed in most countries. The bank can accept a
percentage of ownership in a customer's organisation as part of the fee for a
loan. When doing so, it tries to negotiate as high a compensating balance as it
can to take advantage of a bank's right of offset. This means that if the bank is
owed a past - due debt by the organisation, the bank can use any of the

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borrowing assets it controls to offset the debt. Therefore, any compensating


balance is money that will not be lost, serving to lower risks and increase profits.
Some loans can be structured with 100 percent compensating balances.
The loan is immediately transferred to a savings account in the bank. These
back-to-back loans have a spread of 1 to 3 percent, the difference between the
loan rate and the savings account rate. There are several reasons these loans
can be useful.
A corporation may need to show a higher capitalisation on its books than it
actually has at a particular point in time to enable it to get a loan form another
lender or better terms from its suppliers. A principal in the company can borrow a
sum from an offshore bank and use it to purchase a time deposit from the same
bank. He then uses this certified deposit to purchase more stock in the company.
As a result, the company's balance sheet shows increased paid - in capital and
increased current assets. The principal's personal balance sheet reflects a
higher level of debt and a higher asset value of investment in the company. The
interest paid on the personal loan can be deducted, while the company pays
taxes on interest received. Since the personal tax rate is normally higher than
the corporate rate, the tax reduction can cover the bank's free.
An entity producing foreign income can do even better. It can set up a
foreign trading company, for instance, to be managed by the bank. The trading
company buys a product at production cost and sells it at a normal profit margin.
The profit is then invested in a time deposit account. The amount of the deposit
can be lent back to the parent company at a 1 to 3 percent spread over the
Certificate of Deposit (CD) rate. Since the trading company is based in a tax
haven, it pays no taxes on either the profit or the interest received. The parent
company gets use of the profit and receives a tax deduction on the interest paid
by the bank.
Here's an example: Parent company A manufactures a product for US$
800,000, which it sells for US$ 1 million. The US$ 200,000 profit is invested in an
8 percent CD and is lent to A at 10 percent. A's tax rate is 48 percent and the
offshore tax is zero. The balance sheet shows ORIGINAL CASH FLOW $
1,000,000 sales (800,000) cost 200,000 profit pre-tax (96,000) tax @ 48% $
104,000 profit after tax
With an offshore company and back-to-back loan, the figures read as
follows: Parent A: $ 800,000 trading company sales (800,000) cost of goods 0
gross profit (20,000) interest paid @ 10% $ (10,400) foreign sales loss
Trading Company: $ 1,000,000 sales (800,000) cost 200,000 profit (16,000)
interest @ 8% $ 216,000 T. profit Corporate net: $ (10,400)
Parent A's loss 216,000 offset gain$ 205,600 net corporate profit (104,000)
profit after tax w/o offshore company $ 101,600 increase in net
So, in this example, the after - tax profit on the foreign trade portion of the
business increased by 98.9 percent.
Other loans made by the bank are covered by various levels of collateral.
Business loans can be backed by stock, inventory, and compensating balances.
Real estate or constructions loans, of course, are collateralised by the property.

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Personal loans also can be made. An interesting variation is accomplished with a


captive insurance company. It works in this way: A US corporation sets up a self
- insurance trust to cover employee hospitalisation and worker's compensation
claims. This trust reinsures almost all this risk with a foreign insurance company
that is owned by a principal or the corporation. The surplus is lent back to the
corporation as we have seen previously.
This allows companies to retain profits they would otherwise be giving to
insurance companies as well as accumulate cash reserves tax - free and obtain
current US tax deductions for most of the costs. Lending escrow money is
slightly more risky. The bank lends someone a sum that is kept in escrow at the
bank or a co-operating escrow company. The agreement must be written such
that the escrow cannot be closed and the money transferred unless additional
financing is obtained. This allows the client to tie up a property until money is
found to pay for it. This type of loan should require higher fees than the
previously discussed loans. If the escrow should close, the bank must pay the
amount agreed upon. Then there is no deposit to offset the bank's up - fronted
cash payments if the client cannot pay. Some banks have received 3 to 10
percent loan origination fees and prime rate plus 3 percent as interest on this
type of loan. A real estate expert should approve each escrow agreement before
the bank makes the loan.
An active securities brokerage profitably increases loan production. The
brokers sell the equivalent of a US margin account, allowing the bank's
customers to borrow a percentage of the value of their stock or commodity
purchase. The bank then lends up to 75 percent of the cost of listed stocks with
reasonable safety. A St.Vincent bank, for instance, has a margin account in the
US through which it does most of its trading. Through the account, the bank
purchases securities for its customers with complete secrecy and lets clients
borrow up to 75 percent of the value of the securities purchased at an interest
rate of about US prime rate plus 2 percent. The bank borrows 50 percent of the
purchase from its clearing broker at slightly less than prime rate. Thus the bank
makes about a 2-point spread on half the purchase price. If the bank watches
each open position carefully, the only risk is in huge moves or trading
suspensions.
Say there is purchase of 1,000 shares of EP Corporation at US$ 50 a
share. The shares are kept for 6 months and sold for US$ 60 per share. Prime
rate and brokerage interest rate is 12 percent. The bank charges 14 percent.
Purchase: $ 50,000 initial cost 500 comission 50,500 total cost Payment: $
13,000 cash 37,500 loan @ 14% 50,500 total payment
Sale: $ 60,000 gross proceeds (500) commission (2,625) interest @ 14% of
$37,500 $ 56,875 net proceeds 37,500 payment of loan $ 19,375 net to buyer on
a cash investment of $13,000 equals 98% annual return on investment
The bank borrowed $25,000 from its broker at 12% lending: $ 37,500 to the
customer @ 14% 2,625 interest received from customer (1,500) interest paid to
broker $ 1,125 net interest on $12,500 net loan 18% annualised return plus
$1,000 commission.

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The customer's return is speculative. The bank's return on investment is


stable. Another option for the bank is to purchase debt instruments, such as
acceptances, commercial paper, bonds, and promissory notes. Purchasing a
loan is much the same as making one, although the buyer may be able to get
some sort of guarantee from the seller to reduce exposure. Buying or selling
instruments allows the bank to balance its loan portfolio and spread its risks
much the same as reinsurance.
Care should be taken to ensure than loans are complementary to the
capital structure. If deposits are short-term, the bank should be careful about
making many long-term loans. It should not have too much illiquid collateral, for if
some large loans are defaulted, it may become difficult to meet short-term
obligations.
It's a good idea to keep the size of individual loans below 10 percent of the
net-asset base. While this seems like a conservative, corner banker's
philosophy, it is also sound business judgement for a small company. Not
following this practice reduces one's chances of becoming a big company.A
bank must make up for small size with innovation, service, and accommodation.
That is how it can surpass the corner banker and avoid the need to speculate or
make imprudent loans.
INVESTMENTS
A tax haven bank can make investments for its own portfolio, particularly
when the bank's owner wishes to make investments confidentially and to pay no
taxes on the gains. It is also possible to arbitrage investments, (that is, by a
stock in one's home jurisdiction while simultaneously selling it short offshore).
This is done so that the loss is suffered in the country where a tax loss can be
used, while the gain is made in a tax-free jurisdiction. This is most easily done
with commodity transactions. Although for tax purposes commodity transactions
are marked up to market at the end of each year, no such restriction applies to
securities transactions.
An Anguilla bank has been able to earn significant profits through
commodities brokerage by using some of its particular banking advantages. In
one transaction, it was able to purchase sugar in Central America by issuing its
own letter of credit to the seller. The L.C. specified that delivery and payment
were to be made at a future date. The bank then found a buyer at a higher price.
Receiving the buyer's letter or credit, the bank was able to immediately negotiate
it at a discount at the buyer's paying bank. Just by exchanging paper, the bank
made in excess of US $400,000 in profit with little risk. Anything short of the
physical delivery of gold bullion is a paper transaction; the fact that only paper
changed hands is what made it a banking transaction rather than an ordinary
warehouse transaction.
FINANCIAL SERVICES
The bank's array of financial services is its most important method of
gaining customers and deposits, as well as being a source of lucrative fees. An
offshore banking license normally allows the licensee to be a broker, agent,
insurer, advisor, manager, guarantor, and perhaps, even confessor. Each of

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these services can be contrived to increase deposit and loan business. In most
cases, the fees are competitive with those in a particular market. A few telephone
calls can provide the prevailing rates.
The authors have noticed that mere mention of involvement in an offshore
bank sometimes elicits the comment. "Oh, dirty-money laundering." Some
people imagine that a tax haven banker spends most of his time in the back
room counting $ 100 bills.
A banker who does that type of business undoubtedly knew his customers
long before his offshore banking career began and would never talk about them.
The money would be deposited, sent to companies who would lend it to others to
disperse it even more. A convoluted trail is necessary to obscure from various
regulatory authorities the sources and uses of these funds. Corporations are
easily set up in tax havens such as Panama or Honk Kong, where little or no
reporting is required. As long as countries try to impose confiscatory taxes on
their citizens and interfere with free trade, money laundering will continue.
There is a related service field that is easier to enter: moving money out of
blocked-currency countries. Many countries restrict capital outflow. Whatever
reasons may cause a country to block currency will also cause its citizens to
want to get their money out. Offshore banks can help these people control their
own wealth.
There are at least as many ways of circumventing currency laws as there
are countries making them. One technique works like this. A manufacturing
company wishes to convert blocked currency to US dollars, move the US dollars
offshore, then sell the offshore US dollars at a premium. The company arranges
for a letter of credit to be issued by an offshore bank in its favour. The credit is
payable by a Honk Kong company upon shipment of some high-technology
equipment. This credit is taken to a friendly banker who lends the US dollars
ostensibly to buy necessary supplies from the US. The funds are transferred to
the offshore bank and deposited in savings accounts or certificates of deposit.
The company then sells the US dollar funds to nationals at a 25 percent
premium over the official exchange rate. After selling, it repays the loan in
blocked currency at the official rate. The items are never shipped and the letter
of credit expires. The offshore bank gets a fee for the letter of credit as well as
new deposits. The original company makes 20 percent on the exchange rate.
The offshore bank also charge excess prices for goods and services to
entities in these countries and then deposit the excess in their accounts. Here
again, the bank gets fees and deposits. This is known as "over-invoicing'. Over
and under invoicing for currency and tax considerations is, today, Honk Kong's
largest service industry.
Several offshore banks have been successful in providing letters of
accommodation which can aid third parties in obtaining financing for their
projects. This is simply a letter from the bank stating that, upon the deposit of a
specified amount into a "sinking fund", it will issue a letter of credit guaranteeing
the payment of a larger sum in the future. For example, the letter might require a
US $485,000 deposit to guarantee a US $1 million payment in 10 years. The US

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$1 million is simply US $485,000 compounded annually at 7,5 percent for 10


years. The initial sinking fund deposit pays for the letter of credit. Note that the
bank does not commit to obtaining the financing or even the initial deposit. Its
letter promises so little that the letter must look very impressive for it to be able to
help anyone. This type of letter has been successfully used to establish
credibility, tie up a deal, and interest other lenders or investors in the underlying
transaction.
The bank can earn further profits from this venture by actually issuing the
letter of credit. It not only gets 1 to 2 percent of the future guarantee as a fee but
also a 10 year deposit paying a fairly low interest rate. However, if the client
could raise the sinking fund payment, he probably wouldn't need the guarantee,
so the bank loans the cash to him. It then gets a 2 to 8 percent spread over the
savings account rate.
The letter or credit must be written so that it cannot be opened (that is,
accepted) unless the underlying deal has a reasonable chance of success.
Otherwise, the note will not be paid and the bank will still be obligated to pay
someone the face value of the letter of credit at the future date. It cannot offset
the savings account because acceptance of the letter of credit moves the bank's
obligation to a third party, while the obligation to pay the bank remains with the
original party. Therefore, banks that issue many letters of commitment for
accommodation or credit are careful about lending money to support the letter of
credit.
These documents are most useful for reassuring private investors. A prime
bank will only accept the letter of credit when it wants to make a loan but needs
more documentation for its loan file.
A stand-by mortgage commitment is another type of guarantee. This
assures an interim lender that the client will have long - term financing available
to pay off the construction loan. To begin the project before normal long - term
financing is obtained, the developer will have to pay the offshore bank several
points for a stand-by commitment he hopes he will never use. The interest rate of
a stand-by loan is several points above prevailing rates to compensate for the
bank's risk in financing an uneconomical project.
The bank charter allows the bank to be a broker/agent for real estate,
commodities, securities, or insurance. This can be done for its own account or
for clients. Security and commodity transactions can be cleared through
established brokers at wholesale rates. The bank offers clients confidentiality
and the ability to avoid taxes.
A bonus for securities trading client is the ability to circumvent some
countries' restrictions on insider trading or trading in restricted stocks. A client
sometimes purchases the stock of a company he owns or represents because
he is privy to information not released to the public. He can profit from this
information through an offshore bank without various government or exchange
investigators hounding him. Care should be taken that the actual mechanics of
the purchase and sale do not violate the laws of any country where they are

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carried out. This can be accomplished in almost every instance with proper
structure and transaction planning.
Almost all tax haven bank charters bestow the authority to carry on the
business of a trust company, to receive assets into custody on behalf of clients,
and to manage, administer, and invest them in accordance with their
instructions. Competitive fees are low for this service and the responsibility to the
client is great. All jurisdictions are seriously upset by any violation of the fiduciary
responsibilities of a trust. Trust laws are complicated and competent legal advice
is probably necessary for each situation before a bank gets into this business.
Providing management services for other offshore organisations should be
profitable, particularly if the bank has an office in the tax haven. In the case of
offshore insurance and trading companies, we have already seen that the tax
advantages, particularly when coupled with the back-to-back loans, makes
management easy to sell. The bank earns fees both for setting up these
companies and for managing them.
This can also be true with bank management. If one want a bank without
the added overhead of a walk-in office, anther bank with an office can be the
perfect agent. The managing bank knows the business, can answer questions,
and act as correspondent. Both banks profit, one from lower overhead and the
other from more fee income.
The running of an offshore bank quickly builds valuable experience in
investment, tax, trust, negotiation, and such areas. The bank can sell this
knowledge as a consultant. Since few people in the world have been exposed to
the many types of international services available, the bank can almost always
show clients where potential savings can be made. A reasonable consulting fee
structure helps avoid wasting time with the merely curious. The bank may waive
fees if the client does purchase its services.
However, since service is an offshore bank's best selling point, it will offer
almost anything to keep its clients happy.
RELATED BUSINESS
The broad business charter granted by most offshore banking authorities
enables banks to participate in profitable related financial activities. Each of
these can generate fees as well as new deposit and loan business. Insurance,
investment banking, mortgage banking, title and escrow, and fiduciary services
can all fit into the business plan.
This introduction has discussed how managing captive insurance
companies can generate income. The next logical step is writing one's own
insurance policies.
The organisation can reinsure those captive insurance companies already
under its management, as well as insuring or reinsuring its own (and its
associates') risks. The bank keeps the profits and the investment capital. Until its
reserves have grown enough to pay large claim, it should reinsure at a
comfortable level.
Reinsurance companies keep low profiles but are easy to find in the United
States, Europe, and most island tax havens. It is relatively simple to decide what

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areas to insure. Compare premiums for the last five years with claims paid.
Check the most profitable insurance companies to see what lines they sell.
Consult an actuary before reinsuring for others; they keep track of statistical
probabilities of various claims and losses. Actuaries can be found in the
telephone directory of any major city.
An insurance company can also sell annuities, a lump sum payment that
guarantees the client a specified stream of income for life. The cost and payout
are derived from actuarial tables and suitable interest rates. Deposits derived
from annuities are particularly suitable for long-term investments such as real
estate. Accordingly, insurance companies can perform much of the same
investor services that banks do.
Investment banking, a related business which requires sharp financial,
marketing, and negotiation skills, can be quite lucrative. When underwriting a
large project, there are fees for packaging and marketing the issue. The
underwriter may negotiate a percentage of equity ownership or the project as an
added incentive. Deposits are created from the proceeds of the issue and from a
normal banking relationship with the client.
The prospectus is the primary document an investment bank uses to raise
money from the public. It must show a strong professional business plan and
detail a complete description of the venture and its risks. The successful
underwriting of a large project will bring the bank prestige as well as profit.
Mortgage banking is a less exciting but still valuable service. The bank can
invest in mortgages for itself or be an agent for others. Payment collections,
record maintenance, and remittances to the mortgages are an additional source
of fees. Entrepreneurs needing mortgage money can be cross sold such
services as financial guarantees, escrow loans, and tax reduction services.
A title and escrow company associated with the offshore banking and
mortgage banking business provides additional possibilities. The bank lends
money to a client who gives it to the escrow company to deposit back in the
bank. Thus the money never leaves the bank until the escrow closes. The
agreement can be written so that the escrow does not close until the client
resells the property or gets paid back without ever losing control of the money.
The bank receives escrow fees, loan fees and interest on the loan. The client
has tied up a large piece of property with little front money and can make a quick
profit on the sale.
This chapter has shown some of the ways that money can be made with an
international bank. Most of these techniques also apply to international
corporations generally. These techniques have worked for others. How far each
person can go with them or add to them will be determined by his or her
imagination, determination, intelligence, and salesmanship. The authors make
no ethical or legal judgements concerning the application of the techniques to
any specific case. Moral and legal standards vary widely among the jurisdictions
with which a transnational trader will probably do business. Accordingly, these
judgements must be left to the reader and legal counsel.

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Tax considerations have been treated rather simplistically due to the


differences in local laws. In almost all cases, tax problems can be solved legally.
An expert in the area's local law should be consulted.
FINANCE
In mature economies, growing businesses have problems securing
expansion capital. This leads to the slow growth and the negative growth trends
that have been the most significant features of the American economy over the
past 25 years.
Commentators spend a great deal of time wondering why the economy is
growing so slowly. The answer is simple: economic growth is slow because there
has been precious little capital accumulation. People have not been saving at
the rates that they used to because the government siphons off an increasingly
larger chunk of people's money. Government polices make it easier and more
beneficial to spend and consume rather than to save and invest.
Why should anyone bother to save when he will not be able to enjoy the
fruits of his savings because of high tax rates? Remember, consumption is not
taxed as much as earnings and leisure is not taxed at all. Instead of saving for
retirement, people are trapped in an old-age welfare program that keeps money
unavailable for investment in productive enterprises. By transferring wealth from
the industrious to bureaucrats and slackers, the government has guaranteed
that waste will replace industry.
The government has placed other barriers in the way of raising capital. The
rules and regulations of the SEC make it very expensive and time consuming to
raise money. A public offering usually takes more than six months to put together
and costs anywhere from US $50,000 on up. The SEC leaves a person with two
choices when he wants to market his securities: he can place them privately
among friends and relatives without active marketing, (this can be effective if
one's relatives are named Rockefeller), or he can register his securities with the
SEC do a public offering.
Private placements make it difficult to raise substantial sums of money
unless one is well connected. The SEC allows a maximum of only 35 friends and
family members, so they had better be willing to invest a lot. The seller can also
place shares privately with "sophisticated" investors who invest over US
$150,000, but they can be hard to find.
Public offering require the seller to file numerous pieces of paper and then
wait months for the SEC to approve the proposed sale. A huge company with a
staff of lawyers may be able to cope with the piles of paperwork required for a
public offering but a person just starting his own business may find it unworkably
difficult. This is doubly bad for the economy because employment experts project
that the vast majority of new jobs will come from small companies. No one
knows how many people remain unemployed because companies could not get
money to fund their start-up operations.
Public offerings are so expensive and so slow that they are useless for
taking advantage of immediate opportunities. By the time all the paperwork is
done, the chance has slipped away. Public offerings also require that companies

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disclose confidential business information to competitors and whoever else is


interested. This information sharing can be particularly damaging to new
companies in areas of emerging technologies. Recently, the National Security
Agency, (America's eavesdropper to the world), asked that one of its contractors,
an electronics company, withdraw its public offering. The NSA feared that the
annual filings that the company would have to make would give other nations too
much information about the relationship between the agency and the company.
These problems with public offerings have caused a number of major
companies to go private in recent years. They no longer wish to deal with the
burden of Securities regulators.
Individuals can use the international financial markets to go private too. This
chapter discusses how to legally sell securities in a broader market than that
allowed with private placements. The reader will learn how to improve his
balance sheet in a remarkably short period of time. He will also find out how to
tap into the international investment community, where the wealth of the world
feeds from restrictive taxes and regulations seeks new outlets for profit.
A large American institution recently found itself in some financial difficulty. It
needed to borrow a great deal of money. This institution had nearly exhausted
the resources of domestic lenders, so it turned to the international offer lenders
anonymity and tax-free interest to entice them to lend their money.
Thus the US government recently began to market its obligations to foreign
nationals. It repealed, (for some types of payments), the 30 percent withholding-
tax law that had required withholding taxes from payments made to residents of
countries without tax treaties with the US. It also allowed foreign banks to buy
securities and hold them for anonymous beneficial owners, as long as the banks
certified that the true owners were not residents of the US. These two new
regulations also apply to obligations issued by US banks and corporations.
The official explanation for these changes was that they allow large US
borrowers to tap the Eurodollar market directly for funds, without having to use
the numerous subsidiaries that they have set up in the Caribbean to get around
the domestic restrictions. The real motive, however, was that the US government
itself wished to enter the market to hold down its cost of borrowing, and to
reduce the risk that its massive borrowings would dry up the credit markets and
bring on a recession before the 1984 presidential election.
In order to play the informational money game, even the government of the
United States had to bow to the rules and give foreign lenders the conditions
they demand. It is not as generous with its own citizens. They remain subject to
the Bank Secrecy Act, which requires banks to reveal all fact about their
customers, and to the standby withholding regulations, which require banks to
withhold taxes from the interest payments of all account holders who have failed
to supply their correct Taxpayer ID or Social Security number. It might be worth
one's while to discover how to follow the example of the federal government and
large corporations and raise money overseas cheaply and privately.
BEARER DEPOSITORY RECEIPTS

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The Securities and Exchange Commission is limited by restrictions that do


not necessarily apply to a private company or individual. The basic restriction on
the SEC's regulatory authority is geographical; its authority does not extend
beyond the borders of the United States. It is therefore possible to construct a
series of domestic and foreign transactions that might not be legal in a single
country but that are legal in the country in which each transaction takes place.
Such a series of transactions requires careful planning and expert legal and
financial advice, but can be a fast and private way to raise money.
QUANTUM, INC.
Here is an example of how such a financing plan might work. Quantum, Inc.
is a small but innovative electronic company that needs money in a hurry for
substantial speculative research. An eventual breakthrough in the research
project would reap tremendous rewards but no breakthrough can be
guaranteed. For these reasons, Quantum would have liked to finance this
research by going public. However, because of difficulties and delays imposed
upon companies going public in the United States, a normal regulated public
offering cannot meet Quantum's needs. Time is of the essence in the highly
competitive field of electronics.
Step 1: Incorporate Honk Kong holding company. The series of transactions
necessary to generate capital for Quantum begins with the incorporation of a
Honk Kong company named Quantum Holding, Limited. Honk Kong has been
chosen for this example but any of 15 other jurisdictions could have been used.
Quantum Holding is incorporated and managed by nominees, and its scope of
authority is severely limited. The number of its authorised shares and their par
value identical to those of Quantum.
Step 2: Holding company purchases stock from Quantum. Quantum
Holding makes an offer to Quantum to purchase 10,000 shares of Quantum
stock, the same number Quantum would have issued if made a public offering. In
lieu of cash, Quantum Holding pay for the shares with a one-year promissory
note. This transaction is permitted under securities regulations because the
buyer is foreign and no offer to sell is made domestically.
Step 3: BDR are sold in London. The nest step is for Quantum Holding to
issue 10,000 shares of its stock, placing them with a St. Vincent bank that act as
depository. In exchange, the depository bank issues 10,000 bearer depository
receipts (BDRs). These BDRs are placed, on best-efforts basis, (in some cases
this function is not needed or can be performed elsewhere). Arrangements are
also made for the broker-dealer to act as market maker for the BDRs as well.
Note that these transactions do not take place domestically and do not involve
domestic nationals. Therefore, they are beyond the jurisdiction of domestic
securities regulations. In the countries in which the transactions occur, they
comply fully wit local laws and regulations.
Step 4: BDR proceeds are paid to Quantum. When the BDRs have been
sold, the funds generated from the sale are remitted to the depository bank in the
West Indies. Under prior agreement, the depository bank forwards them directly
to Quantum, on behalf of Quantum Holding, to retire the promissory note. As

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before, this series of payments is fully permissible in the jurisdictions through


which they pass. The only legal caveat that should be made at this point is that
securities regulations do not permit such a sale if there is a pre-existing intent to
distribute the bearer depository receipts domestically or to distribute them to
domestic nationals abroad, except by unsolicited private placements. Although
one cannot be held accountable for who ultimately possesses these bearer
documents, it would be improper for the distribution to be made with the express
intent of putting such BDRs in the hands of fellow citizens on a general offering
basis.
MAPLE LEAF REAL ESTATE, INC.
Another example of how bearer depository receipts work is provided by
Maple Leaf Real Estate, Inc. It is a publicly held company. However, large blocks
of its stock are held by management and promoters in lettered or restricted form.
These shareholders are active in a wide range of capital intensive business
dealings, many of which require a high degree of liquidity from their participants.
For this reason, the management of Maple Leaf Real Estate would like to
accommodate its needs for liquidity through the legal transfer of the lettered
shares.
Step 1: Shares are deposited and BDRs issued. To provide the needed
liquidity, an agreement is entered into with an offshore bank to act as a
depository for shares of Maple Leaf stock. Under this agreement, the depository
bank issues bearer depository receipts in exchange for shares of Maple Leaf
stock deposited by both Maple Leaf and other holders. These BDRs can be held
by the owners of the deposited stock or by the depository bank itself under a
placement agreement.
Step 2: BDRs are sold through London market maker. As in the case of
Quantum, arrangements are made to have a London broker-dealer act as a
market maker for the BDRs. Once this is done, the market maker may be
contacted directly for the buying or selling of BDRs. If preferable, the depository
bank places the BDRs with the market maker for sale on behalf or the depositor
of the original shares of Maple Leaf stock.
Step 3: BDR sale proceeds are paid to stock owners. The funds from such
sales are remitted to the depositors of the shares, thus providing them with the
liquidity they seek. In addition to the greater flexibility that holders of restricted
shares of Maple Leaf Real Estate now have, Maple Leaf itself raises capital from
new offerings, just as Quantum did. Note that in each case there is no restriction
on domestic buyers purchasing the BDRs on their own initiative. However, no
recommendation may be made to a local client to buy the BDrs through the
London market maker. On the other hand, a duty to disclose the existence of a
London market for the related BDRs arises when such information is material to
a domestic transaction.
GILT COMPLEX MINING
Gilt Complex Mining is a newly claimed, one-man gold mining operation in
Colorado. Although assay reports have been very good, (0.47 to 0.63 ounces
per ton), the extent of the ore body has not yet been fully determined. Another

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uncertainty arises from the fact that the ore is made up of complex gold-telluride
compounds that may be very expensive to refine. In spite of these problems, the
owner of Gilt Complex believes that the company's claim can be brought into
profitable production if enough money is raised. A number of social and business
associates have expressed an interest in investing but the funds they could
contribute fall short of what is needed to bring the mines into operation.
Because of the highly variable gold market, the delay inherent in a full-
blown SEC registration is considered unacceptable. As the company is in the
initial stages of development of its mining properties, its funds are already
committed to assessment of the claims, payments on equipment, and salaries.
There are no extra moneys available to pay for an offering of BDRs through
London as described in previous examples. An analysis of Gilt Complex Mining's
situation suggests that a two-stage procedure should be used to raise funds.
Step 1: Raise seed money. The first step is to raise as much money as
possible through domestic private placements. The owner's friends and
acquaintances, (numbering no more than the SEC-approved limit of 35), and
unlimited numbers of sophisticated investors, (those investing more than US $
150,000 in cash), can be approached and persuaded to invest.
Step 2: Seed money funds BDR London offering. This private-placement
seed money is then used to fund a Honk Kong holding company and BDR sales
in London as in the example of Quantum, Inc. These two steps complement one
another. The first phase provides money for the second and the second phase
gives the domestic private-placement investors an easily ascertainable fair
market value for their shares. All that they need do, if they wish to determine
what their shares are worth, is to find out what the BDRs are trading for in
London.
BUSINESS BALANCE SHEET LOANS
Wouldn't it be wonderful it one's business could create net worth just like a
bank? With an accommodating financial institution, it is possible. The case
history that follows shows how small businesses can use these methods to get
the financial help they need.
William Ballast is the owner of a wholesale distribution company. When one
of his suppliers announces a gigantic inventory sale, Ballast is eager to take
advantage of it. He knows that if he can increase his inventory with goods at the
lower price, his average unit cost will be lower and profits would increase
accordingly.
Ballast calls a financial consultant to discuss his problem. Ballast is advised
to submit a current balance sheet reflecting higher cash assets to obtain a more
favourable line or credit. Although Ballast favours such a move, he also wants to
avoid a long-term debt commitment. He fears that the interest payments from
such a debt would wipe out any gains made by buying the additional inventory
on sale.
Step 1: Owner borrows moneys from lender. The consultant suggests that a
personal loan be made to Ballast. The funds from this loan are to be placed in a
savings account in the name of Ballast's company. After the funds are deposited,

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the company would have a new balance sheet prepared according to accepted
accounting practices, which would reflect its increased liquidity. With the stronger
financial picture presented, the supplier could be more favourably disposed
toward extending the line of credit. Ballast is convinced that this is a sound
approach and enters into an agreement to implement the plan whereby the
funds would be provided by a lender supplied by his consultant.
Step 2: Deposit loan proceeds in company account. When the funds are
lent to Ballast, he simply endorses the cashier's check to the bank on which it
was drawn. At the same time, a passbook for a savings account, containing an
identical balance and bearing the name of Ballast's company, is issued and
turned over to Ballast.
Step 3: Increase company assets on balance sheet. Based on the updated
balance sheet, the supplier increases the line of credit for Ballast's company.
After the new credit line is established, the funds, no longer needed, are returned
to the lender. The cost of the program was kept to a minimum and the desired
profits realised.
ESCROW LOAN
Robert Jensen knows of a valuable parcel of land that he believes could be
profitably developed. If he could get an option on the property, he could organise
a highly successful joint venture to develop the land. Jensen is afraid that if he
doesn't act quickly, someone else will buy the land from under him. He needs
time to secure funding for the option and line up partners for his joint venture.
Step 1: Secure option on land. Jensen convinces the landowner to give him
90 days to raise the total purchase price of US $2million. In order to hold the
land for 90 days, Jensen needs to deposit 10 percent in an escrow account as a
demonstration of his financial strength.
Step 2: Borrow money to open escrow account. Working with a consultant,
Jensen arranges for a bank to loan him US$ 200,000 and hold it in an escrow
company account on his behalf. After the account is opened, the company
provides Jensen with documents showing that the moneys are on deposit. The
escrow company then writes a series of letters indicating the steps being taken
to assure the successful completion of the transaction. The satisfies the seller
and gives Jensen time to put his investment group together.
Step 3: From joint venture. Potential investors approached by Jensen are
excited by the project and are especially impressed by the fact that Jensen has
already secured an option on the land. They agree to fund the project with
Jensen as equity partner and project manager. Jensen contributes his option.
Step 4: Substitute new escrow account. The joint venture then opens a new
escrow account for US$ 200,000 and substitutes it for the one originally opened
by Jensen. The old account is closed. The funds in the original escrow, having
served their purpose, are returned to the lender.
As a result of the above transaction, Jensen now holds substantial equity in
a commercial real estate development worth several million dollars. His only
costs were a few points for the loan, the escrow account, and the supporting
documents that went to the various interested parties.

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If the reader can learn to think about money the way a banker thinks of it -
as a bookkeeping entry - then he can get his balance sheet to work for him. He
can also use this knowledge to provide sophisticated services to others through
his own financial service business. Balance sheet loans and bearer depository
receipts are natural products to sell through an international bank or financial
brokerage business.
For serious parties only, e-mail CarltonPress@offshore-manual.com. We
charge a US$35 finders fee (to avoid the merely curious,) we will pass along
your questions to the principal party involved. Credit Cards accepted.
Alternatively mail your questions along with US$35 to:

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