Sooner or later, you’ll reach a stage in your professional career where you stop focusing so much on making money and start focusing more on preserving that wealth. It’s not just higher business expenses and lifestyle creep that you’ll need to worry about; you’ll need to protect your money from creditors, bitter ex-spouses, lawsuit plaintiffs, and much more.
Don’t be surprised if the number of people trying to take your money increases astronomically as you make more of it!
However, you can prevent financial catastrophe by taking a leaf out of the books of other high-net-worth individuals like successful entrepreneurs and other professionals. Specifically, you should lean into offshore wealth management. Today, let's break down why.
A Few Definitions
Before we continue, let’s make sure we’re on the same page regarding a few critical definitions.
“Offshore”
You might hear the term “offshore” in relation to financial strategies and management and get a bad taste in your mouth. After all, isn’t an offshore bank account or trust somewhat illegal?
No, but that’s a common misconception. An offshore bank account, trust, or even wealth management strategy just means that the financial activity or instrument is in a country other than your own. It could be in Canada, for example. It’s still offshore just because it isn’t based in the US.
Therefore, an offshore asset protection trust, for example, is simply an asset protection trust in any jurisdiction other than the US. Offshore wealth management and other financial strategies can be highly beneficial for reasons we’ll break down below.
Asset Protection
Asset protection is a philosophy and strategy focused on safeguarding valuable assets, like real estate, stocks and bonds, liquid capital, vehicles, and much more against potential legal threats.
Say you're a successful businessperson. Sooner or later, one of your customers or former clients will want to sue you for one reason or another. Regardless of whether they're right or wrong, you'll need to safeguard your assets just in case the legal proceedings go poorly.
This is doubly true since the more money you have, the more money you may be required to pay in the event of an adverse judgment.
Asset protection involves taking steps to move your money and assets around so they are impossible for legal opponents to seize. It also involves investing or storing your money such that it’s protected against irresponsible spending, inflation, and other financial hazards.
Wealth Management
Wealth management is the practice of overseeing, maintaining, and adjusting your assets and overall estate so that it stays valuable in perpetuity.
Odds are you already practice some level of wealth management already, but if you're a newly high net worth individual without a lot of experience, you might not already have a premium accountant, for example, to make sure your books are airtight.
Wealth management can include accounting, investing advice, and asset protection. It's something that you'll have to do as a high-net-worth individual if you want to stay a high-net-worth individual; plenty of people make a bundle with their first successful businesses, for example, only to lose most or all of that money because they didn’t manage it wisely or responsibly!
Putting these terms together, an offshore wealth management strategy is one that focuses primarily or entirely on offshore asset protection and wealth management instruments. For instance, you might have one or more offshore bank accounts, an offshore asset protection trust, and so on.
Sound complicated? It can be, but remember that you don't have to create and enact an offshore wealth management strategy by yourself.
The Benefits of an Offshore Wealth Management Strategy
Provided that your offshore wealth management strategy is formulated correctly and then followed properly, you could see several big benefits.
Freedom from Limiting Laws
For one, you'll see freedom from certain laws that might limit your activities or money in the US. The US is a great place to invest and do business, make no mistake. However, sometimes, high-net-worth individuals find that their needs don't align with the laws or legal precedents of the United States.
In those instances, hopping across the pond or going to another jurisdiction could be just the ticket. This could give you the flexibility you need to achieve your financial, estate planning, or wealth management goals, whatever those happen to be.
Increased Investment Opportunities
Moreover, offshore wealth management strategies can unlock a broader range of investment opportunities. Many offshore jurisdictions offer access to exclusive investment products and markets that may not be available domestically.
These could include emerging market funds, private equity deals, or specialized real estate ventures. By diversifying your investments across different regions and asset classes, you can potentially enhance your returns and reduce your overall risk exposure.
Additionally, certain offshore jurisdictions may have lower barriers to entry for foreign investors, providing you with greater flexibility and access to global markets. Our qualified experts at Dominion can help guide in making the right call for your financial future.
Legal Defenses
For another, an offer wealth management strategy will provide you with far superior protection against legal threats.
Say that you are sued by an ex-business partner, an injured patient, or someone else. Even if the lawsuit is successful, if your assets are stored in an offshore trust, your legal opponents won’t be able to get those assets from you.
Why? With an offshore trust, you give up ownership of those assets, and the offshore trustee does not have any reason to comply with US court orders or mandates. In effect, any assets you store in such a resilient instrument are untouchable by creditors and lawsuit plaintiffs.
This is a kind of legal defense you can't get in the US. Over the decades, US courts have consistently sided with creditors or against high-net-worth individuals. So even if you have a domestic trust, odds are good that your assets won't really be secure.
Offshore trusts are the opposite; if they are drafted correctly, they act as well as steel vaults for your money, real estate, and other assets.
Of course, you need to have such a trust set up well ahead of time. You can't, for instance, wait for someone to sue you, then immediately scramble to start the trust setup process. The sooner you get your trust set up, and the sooner you begin your offer wealth management strategy, the better.
Economic Durability
In addition to the above benefits, an offshore wealth management strategy can be advantageous because it provides you with a certain level of economic resiliency.
With investing, it’s always wise to diversify your portfolio. This means not putting all of your proverbial eggs in one basket.
Rather than investing in a single company with all of your money, you might instead invest your money in a variety of different stocks, bonds, and other investment instruments. That way, if any one of those instruments fails, you won't lose all of your cash.
The same is true for your wealth management goals. By, for instance, keeping some of your wealth in the US, but other assets and liquid capital in offshore accounts, you diversified your overall economic base.
In this way, even if the US imposes a new tax law or has some economic trouble, the rest of your assets might not necessarily be impacted by the same issues.
True, it’s more of a global economy now than ever before. But some amount of national separation still exists for economies. Having some offshore assets could be beneficial in emergencies or when push comes to shove.
Why Don’t Domestic Defense Instruments Work?
Domestic defense instruments, like secure accounts or asset protection trusts, don’t work because US courts aren’t on your side.
In the legal system, everything eventually comes down to a judge’s interpretation. Whether or not one person is right or wrong is ultimately irrelevant. All that matters is whether the judge thinks you owe a creditor or lawsuit plaintiff money.
If the judge thinks you do owe money, you can’t point to your trust and say you can’t pay it. If the trust is based in the US, the judge will look at previous case precedent, decide that you can pay the money, and order that you do so under penalty of further fees or jail time.
As you can imagine, a domestic asset protection trust is no real defense at all. The only way to protect your assets is to make sure that a judge doesn’t have any legal right to demand compliance from you or a trustee. And the only way to do that is to make sure the trust and the trustee are based in a different jurisdiction. It essentially removes the power of the US legal system.
For this reason above all, an offshore wealth management strategy is absolutely key to your asset protection goals.
Get in Touch with Dominion Today
In the end, offshore wealth management is the ideal means to protect your estate, including your liquid cash, your real estate, and all other high-value assets under your name.
Not only does offshore wealth management give you more freedom and flexibility, but it also protects your estate far more than any exclusively domestic wealth management strategy.
It’s true that setting up and maintaining a viable offshore management strategy can be complex and time-consuming. That’s precisely why you shouldn’t do it alone. Instead, you should speak to the experts at Dominion. With a century of experience shared between our members, we’re the best people to help you set up, maintain, and continually improve an offshore wealth management strategy, including offshore bank accounts, asset protection trusts, and so much more.
You no doubt still have questions. So get the answers you need by contacting us today.
