Many times people place corporations, trusts, and
family limited partnerships in tax havens. Depending
upon the value and nature of the assets to be
protected, this can be well worth the extra cost. The
idea is that once a claimant has one their suit in the
United States, they would then have to begin a new suit
in the foreign country or countries in order to collect
on the assets, in addition to whatever built-in
protection there is through using such devices such as
foreign limited partnerships. Obviously if the
foreign partnership owns U.S. real estate, not much has
been accomplished, because it is too easy to attach the
real estate itself and proceed in a U.S. court,
ignoring the foreign judicial system. But if a family
limited partnership registered in Guernsey has bank
accounts in Luxembourg, an expensive nightmare has been
created for the creditor, who may find it not worth
proceeding, or who may be interested in negotiating a
much lower settlement just to get something. For a
fully detailed report on the various tax haven
countries and the legal structures available in each,
the best reference is The Tax Haven Report available
for $125, including airmail postage, from Scope
International Ltd., 62 Murray Road, Waterlooville,
Hants. PO8 9JL, Great Britain. Visa and MasterCard are
accepted.
In using tax havens for asset protection you are
not necessarily using either their tax advantages or
their secrecy provisions. You are simply using them as
a tax neutral place to base these entities, while still
paying your taxes and being able to disclose the assets
should you need to in a lawsuit. By using tax havens
for this purpose without being concerned with using
secrecy provisions in the laws of the haven country,
you don't put yourself in the position of committing
perjury and you haven't created some flimsy plan that
falls apart as soon as there is the inevitable leak in
your secrecy shield.
For similar reasons you are using the haven for
its tax neutrality, to avoid adding foreign taxes to
your situation, not as a way to avoid U.S. taxes.
Of course in some cases, with careful planning, it
is possible to achieve U.S. tax savings as well.
