November 2004 Archives

By Jonathan Curshen -

Unfortunately, there are a limited number of qualified US and UK experts in the field of asset protection law, so proceed with great caution before choosing your personal advisor for such an important project. This is an area of financial activity where cutting corners can be very costly. Knowledgeable APT attorneys tend to be expensive but well worth the price, if qualified. We list some of the best attorneys at the end of this section.

The legal structure of a foreign asset protection trust is much like that of a domestic US or UK trust. The grantor creates the APT, transferring assets to it, to be administered according to the trust declaration by a managing trustee for individual named beneficiaries, or a class of beneficiaries, the trustee may determine in his discretion.

By Jonathan Curshen -

In most asset-haven countries, very little information about an APT is registered with the government. The actual terms of the trust agreement and the parties involved need not be disclosed. Most of the registration information filed is not available to the public. If there is any public record, it may be no more than a registry of APTs by name, date of creation and the name of the local trustee. This does not reveal the trust grantor or the beneficiaries. In these privacy conscious countries, a trustee is allowed to reveal information only in very limited circumstances, and then, usually, only by local court order.

AMSTERDAM - Nearly three-quarters of expats in Europe have invested offshore, according to a new study.

And a similar percentage claim to have either matched (46 percent) or outperformed the stock markets (33 percent).

But the number of expats who think markets will grow in the next year has slumped to 53 percent compared to 82 percent in February, when the survey was last undertaken, and 28 percent in March 2003.

By Bill Cara -

While it could be a good speculative investment, gold is usually a poor investment for conservative investors unless you are into writing puts or calls for additional income. The gold futures market is that much more dangerous.

Gold futures contracts give the gold speculator the biggest bang for the buck. Similar to contracts for commodities, they can be handled by most brokers and are actively traded on the New York Commodity Exchange and the International Monetary Market in Chicago.

By Bill Cara -

All the economic powers of the world are high rate income tax jurisdictions. Without lots of your money they wouldn't have as much power.

The United States is the only major country in the world that taxes its citizens globally, wherever they reside, in or out of the USA.

Unlike citizens or resident aliens of most other nations, a U.S. person can't escape by moving offshore. U.S. persons must pay annual income tax (IRS Form 1040) on all income earned from any source anywhere in the world.

By Jonathan Curshen -

A trust may be created for any purpose that is not illegal or void as against public policy. A trust can hold title to and invest in real estate, cash, stocks, bonds, negotiable instruments and personal property. Trusts can provide care for minor children or the elderly; or pay medical, educational or other expenses. A trust can provide financial support in an emergency, for retirement, during marriage or divorce or even carry out premarital agreements.

To the uninformed, the trust process may seem complex and difficult, but in fact a trust is one of the most flexible yet efficient legal mechanisms recognized by law. Compared to the alternatives, it can provide superior asset protection and can assure your bounty will be distributed exactly as you see fit.

There are eight criteria governments consider to determine your personal tax status. The most important of these are citizenship, residence, and domicile. In addition, your marital status, source of income, location of assets, timing, and status of beneficiaries may impact your tax status.

Citizenship, the status of being a citizen of a specific nation state, signifies a person's legal status and carries with it numerous consequences. Among associated political rights are the right to vote, to hold public office, to own land and the right to travel with your country's official passport and protection.

Your actual residence, the place where you live, has a major impact on whether and how much your national government will tax you and your assets. The situation is complex because there is no uniform international legal definition of "residence." Most countries consider a person a resident for tax purposes if, during any tax year, the person spends more than a specified period of time there. In some countries, the period is 182 days (approximately six months) annually. In others, it is as little as three months.

By Bill Cara -

The info on the new gold ETF is at this link.

The ETF Fact Sheet is at this link.

The GLD Prospectus (for U.S. investors only) is at this link.

By Bill Cara -

There are probably twenty good reasons for chucking your mutual funds and replacing them with Exchange Traded Funds (ETFs). Let me give you three: ETFs perform better, manage risk better and cost less.

If you are an active trader, let me give you another: you trade them exactly like you do stocks.

So overwhelming are the comparative benefits, it’s only a matter of time before the small ETF industry (US$150 billion) grows to the size of the $8 trillion mutual fund industry.

ST. KITTS and NEVIS, Nov. 16 /PRNewswire/ -- Jonathan Curshen is an expert in offshore asset protection strategies. He specializes in wealth protection, foreign asset protection trusts, international business corporations, worldwide investing, yacht registrations, and global banking. Mr. Curshen is a member of APOI (The Asia Pacific Offshore Institute), ITPA (The International Tax Planners Association) and has been a featured speaker at countless seminars.

By Bill Cara -

In the previous article, I stated that some investors ought to consider an all-ETF portfolio rather than continuing to invest in mutual funds, where 80% of you are falling behind the market averages due to under-performing portfolio managers and the high fees they charge.

Depending on your risk profile, I believe that large-cap, blue-chip equity Exchange Traded Funds (ETFs) should be a core holding for any all-ETF portfolio, occupying as much as 50 percent or more of your total investments in securities.

By Jonathan Curshen -

Unlike almost all other nations, the U.S. taxes all worldwide income of its citizens and of those persons with permanent U.S. resident status. Internal Revenue Code (IRC), section 61 states: "Except as otherwise provided . . .gross income means all income from whatever source derived . . ." The IRS and courts interpret this to include income of every nature and place it may be earned in the world, including offshore trust income.

Under U.S. tax law, foreign asset protection trusts as such are "income tax neutral," as are domestic trusts. That simply means all trust income is treated as the grantor's personal income, reportable annually as gross income on IRS Form 1040 and taxed accordingly at applicable personal income tax rates. The fact that a grantor's trust is located in a foreign nation does not negate the grantor's personal obligation to report trust income.

BOSTON (AFX) -- The World Gold Council has filed its last registration statement with the SEC for an exchange-traded fund tied to gold bullion, signaling the ETF could be launched as soon as next week. The highly-anticipated fund would allow U.S. investors to invest directly in gold via an exchange-listed security for the first time. Gold ETFs have already been listed in England, Australia, and South Africa.

This story was supplied by CBSMarketWatch. For further information see www.cbsmarketwatch.com or visit www.gold.org

By Jonathan Curshen -

It is estimated that in recent years 600,000 or more U.K. citizens have been driven into exile because of high taxes. Once domiciled abroad, in Italy, Portugal, Singapore, or Bermuda, many Brits used to return home like migratory birds to spend six months annually "vacationing" in England. Stay one day more and under the law they would be liable to pay U.K. income taxes.

Realizing this, the tax collector, Her Majesty's Inland Revenue Service, adopted rules making long stays by former Brits more difficult. Today if a Brit maintains a home or apartment within the U.K., even a single day's visit results in full income taxes on all worldwide income. Without a U.K. home, the allowable non-taxable visit is 90 days per year, but only after an initial three-year continuous absence.

By Jennifer Mulrean -

In the heyday of Net stocks and do-it-yourself investing, the question wasn't whether you traded stocks online, it was with whom. It seemed like everyone was doing it. By the time the market peaked in March 2000, there were 12 million to 15 million online brokerage accounts, and more than a third of all trading on the New York and Nasdaq systems came from these accounts.

You don't have to be Alan Greenspan to know things are different today. The market has tumbled. Trading volume from online accounts has plunged a whopping 40%, says Gomez Inc., the Internet research company.

By Bill Cara -

A mere blip on the radar screen compared to the ubiquitous presence of mutual funds and hedge funds, I hold the view it will be just a matter of time before Exchange Traded Funds (ETFs) gain the upper hand. Investors buy mutual funds for the simple reason they are sold, and rather than buying securities and funds based on your own decisions, most of you are sold them. You simply go to the salesman and ask him what is it you need and you blindly accept as the truth all that he says.

At the end of the day, however, I contend you will switch to ETFs because the intelligence of the average investor is too high not to see through the massive selling deception on the part of mutual fund distributors and peddlers of IPO stock.

By Bill Cara -

You will see in the Trader Wizard pages that I strongly recommend Exchange Traded Funds (ETF). ETFs are investment funds designed to track a market index and whose units are traded on an exchange pretty much like shares of listed companies. I even believe that most investors, including professional and sophisticated investors, could be very successful with an all-ETF portfolio.

Buying tracker funds is referred to as passive-aggressive investing. In fact, because of their passivity, and my belief in the need for independent investing, ETFs might look like something I’d never recommend. To the contrary, there should be a strategic role for them in your portfolio. You’ll see them in all my model portfolios.

By Bill Cara for the Trader Wizard -

If you don’t have the time to watch your portfolio closely but also don’t want a financial advisor, you should consider Exchange Traded Funds (ETF). ETFs will allow you to enjoy the markets while fully invested in a conservative, low-cost, buy-and-hold portfolio. They are vastly preferable to investing in mutual funds.

Whether you are a passively conservative, enterprising or speculative investor, Exchange-Traded Funds (ETFs) give you the best of all worlds: the advantages of traditional mutual funds, with much lower fees, plus the liquidity of stocks that are re-priced throughout the day.

We can no longer travel freely throughout the world without thinking of our safety. As the world grows increasingly more conflicted, it becomes important for us to protect ourselves and our families. This is not just in the U.S. People, as well as governments across the globe, are beginning to feel the effects of conflict.

Even though we enjoy great freedom, today we have less say so over our own destinies in such matters as how we earn a living, our cherished financial privacy, even how we raise our children. We are all being increasingly scrutinized by both the governments who we pay to protect us, as well as criminal elements.

There is a way out, and it is to make sure that you have a safety net. There are countries all over the world that you never hear anything about. They are not in the news. There is no political, economic, or religious conflict. The people from these countries live their lives in a peaceful, quiet fashion and do it quite comfortably. The governments are stable. These are the perennial neutral countries like Switzerland, Canada, Sweden, Monaco, Gibraltar, Belize, Costa Rica; and some of the lesser known: Barbados, Malta, St Kitts & Nevis.

Would there be an advantage to be a citizen in one of those peaceful, friendly countries in addition to your present citizenship? Yes, if you have assets you'd like to remain private, there is an advantage of dual citizenship. Financial privacy in some of these countries is protected by law. If you need tax protection from high tax rates, yes; there are tax advantages for citizens of these countries--if you know which ones to offer them. And if you travel a lot, yes--there would be a distinct advantage. These countries offer "Neutral" passports that don't attract attention.

There is an apt analogy between multi-national corporations doing business around the world, and individuals who legally hold dual or multiple citizenship, using their passports for world travel and business.

By registering under local laws in more than one political jurisdiction, a corporation has the right to do business in each country where they qualify. Or a corporation in one nation may choose to set up a subsidiary company in a foreign nation where they do business. The subsidiary company may be owned by a parent company in a foreign land, but the local government treats it as one of their own domestic corporations, i.e., as a local citizen.

In fact, to induce a foreign company to set up shop, many governments offer special concessions, tax holidays, discounts on energy and raw materials, free land, subsidized local labor, cash grants and other attractions. Why? Because ruling powers want to stay in office and that's easier to do when the local populace is employed and prosperous. Foreign capital means local jobs.

By Bill Cara -

Last week, I received the following request from Beijing:

A question: you mention technologies that enable regular investors to invest globally. Are you aware of a brokerage that offers investors with $30-50K accounts, say, US, Canada, Japan, HK, Singapore, and Thailand stocks at internet broker prices? A discussion of inexpensive ways to directly invest globally would be great. Thanks! /RoyC

I wrote back to say that Interactive Brokers and HSBC both do a pretty good job. Today, I’ll elaborate for public consumption.