Asset Protection Mistakes

Reply To:	Larry Rubenstein <ler351@gmail.com>

Here is a quick guideline to avoid making Asset Protection Mistakes.

1. Shifting Ownership of an existing company into the name of an offshore entity:Every company and corporation actively engaged in business in any country must first register or be licensed to conduct business in that country. Basic International Law requires knowing who is conducting a business, regulating all businesses and being able to tax the profits from every business. Transferring ownership title of an existing local company to an offshore corporation or foundation requires that entity to register as a foreign company doing business where the existing company is located. That ends anonymity. That also subjects the foreign entity to taxes. If the offshore entity fails to do this, it is operating as an illegal business. That leads to a dangerous legal concept called"Piercing the Corporate Veil". In other words, government agencies and their courts can require the illegal company to open their books, financial records, and ownership. It also exposes the owners to civil lawsuits as individuals rather than being protected by the"corporate shield" many countries laws allow. However, if the offshore entity owns real estate or non-income producing properties, they will be treated differently because they now own a "Passive Investment" which differs from actively engaging in a business. Owning a business with employees or an apartment building collecting rents are active businesses.

2. Simply Opening Personal Offshore Bank Accounts: Some people think that is all there is to Asset Protection. Your name on a personal bank account anywhere in the world proves that you own that bank account. Checks and bank wires going to that offshore bank account leaves a clear trail to the account's owner. Clearing banks and intermediary banks monitor and record every check and bank wire. However, if you use a Panama Offshore Corporation with anonymous "Bearer Shares", the corporation's ownership does not appear in any government record or database. Panama Corporations and Foundations are as anonymous as you can get especially when you use "bearer shares" which other "tax havens" do not have. Forget about a personal account in an offshore bank if you seek anonymity and privacy.

3. True Anonymous Bearer Share Corporations: Instead of having corporate shares issued to a specific named person, the advantage of "Bearer Shares" is that there is no name on them, thus total anonymity. Few countries even have legal "bearer shares" corporations. Non-lawyer companies which offer these must keep a log book identifying who holds every numbered bearer share and to record any transfers of ownerships. "Know your Client" international rules require copying client's passports and other identification documents. Rather defeats the anonymity of having bearer shares. Panama does not require recording of bearer shareholders, thus guaranteeing total anonymity! While Panama lawyers are required to follow the international rules to "Know Your Client", this information is protected by Panama's attorney-client privileged information law. That privilege can only be defeated by a court order involving serious criminal or terrorist acts.

4. Using Offshore Trusts: A Trust is only a written agreement as to how assets will be held and distributed. Trusts provide limited anonymity and protection worldwide. Panama Private Interest Foundations are an international unique hybrid of Trusts, Corporations and traditional European Foundations. Panama Foundations do not have stocks, share certificates, or even owners. The person who creates a Panama Foundation remains anonymous and still controls the Foundation. A Panama Foundation can own the bearer shares of a Panama corporation providing another shield of anonymity. Offshore Trusts do not have that advantage. A Panama Foundation owning the bearer shares of a Panama Corporation is the ultimate in Offshore Anonymity and Privacy.

5. Using Countries With Tax Treaties: Countries who sign tax treaties with other countries open the doors for the citizens of one country to be investigated by the revenue agents and tax authorities of his/her home country. Panama has no tax treaties with any other country.

6. Using Countries with Storms & Hurricanes: Every Caribbean offshore haven island has storms and hurricanes often disrupting power, communications, and transportation for days. Panama does not have hurricanes and tropical storms.

7. Corporate Renewal Expenses: Most people setting up Asset Protection entities in foreign countries fail to ask about the renewal fees for offshore corporations. Sometimes it costs more to renew than the initial set up fee. The client is stuck with high renewal fees because of the numerous assets and complex structure created makes it difficult to cease operating. Panama's renewal fees are small compared to other "offshore havens". Panama's government only charges $300 annually for a Corporation or Foundation renewals of registration. Law firms like Panama Offshore Legal Services only charge an additional $450 per year for their 3 nominee directors and registered agent.

8. Verifying Good Standing: Sad to say there are a lot of crooks and fraudulent companies pretending to create offshore corporations, but never register the corporations. Always ask for a Certificate of Registration stamped and sealed by the government and a Certificate of Good Standing in later years to verify the corporation is in good standing and registered with the government.

CONCLUSION: Panama has no tax treaties with any country. Panama has real anonymous corporations and foundations. Panama has excellent attorney client privilege laws. Panama has what is probably the world's strongest bank secrecy laws. Panama has excellent banks with billions of dollars of assets. You cannot find any other country with this combination because it does not exist anywhere else.

Reprinted from legal firm newsletter as a public service for information purposes. 

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Larry Rubenstein

6424-9919

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