The past global trend has been that life insurance or trusts based plans were set up offshore for the purpose to be an after tax contribution savings plan financed and administered through either an insurance company or trust company arrangement.
In today’s automatic exchange of financial information annually reported they are not acknowledged tax and reporting compliant in Automatic Exchange of Financial Information (AEOI), Foreign Account Tax Compliance Act (FATCA), Common Reporting Standard (CRS), Double Tax Treaties (DTA) or Intergovernmental Agreements (IGA).
Life insurance and private trusts no longer function for asset protection
When used to achieve its original purposes in financial planning, namely to ensure income continuation and the proper use of funds in case of death or disability, both offer respectable solutions and hold a valued place in financial planning. The reality of identity rules and regulations in tax havens is that life insurance and trusts no longer function for asset protection.
That being said, for the purpose of structuring based on tax deferral and long term investment of assets, they have been distorted into contracted structures that have little or nothing to do with their original purpose. Therefore the following nine caveats should be considered when evaluating them:
The 9 Caveats of Insurance and Trusts
- retirement plan law is not driving their tax reporting and compliance ; which means
- they are not recognized in governance globally and are in fact highly restrictive contractual arrangements that may or may not be in the best interest because;
- they are not recognized in double tax treaties or tax information exchange agreements and;
- they are not acknowledge tax or reporting compliant in AEOI, FATCA or CRS
- they require contributions and participation to be reported;
- they must be included in one’s personal worldwide tax liabilities;
- they are difficult or even not possible to adapt compliantly; for example aS. connected persons (U.S. Persons, U.S. residents, U.S. Aliens, and Green Card or Professional U.S. work Visa holders worldwide).
- they may not be recognized as tax compliant in some countries
- they call out beneficial ownership secrecy and privacy concerns
Retirement Law, not tax law, is a key to ”deemed compliant” secrecy and privacy
International retirement law provides an effective, straightforward means to manage the shortcomings of insurance and trust laws. Designing an effective Clean Nominee Bank Account framework with pension law is crucial to these benefits:
Ownership of assets within this regulated, recognized retirement plan is crucial:
- the rules governing cross border estates, where someone has assets in more than one country at the time of their death, can be quite complicated and can sometimes leave a person uncertain as to whether their wishes will be followed upon their passing. This is due to the often conflicting laws of different countries and
- the process can be just as confusing and time consuming for heirs who may have to wait years before receiving their inheritance and
- at the same time the cost of settling cross border estates, with lawyers based in each country that assets reside, can be excessive and
- there have been examples of estates of several hundred thousand Euro being eroded by costs that eat up over half the estate.
- enhanced secrecy and privacy recognized legal non-disclosure
- asset protection and
- tax and succession planning while providing
- global access to multinationals and high-net worth individuals world-wide in
- full compliance with the newest development in international disclosure
- one-stop pre-authorized KYC & AML
- clean nominee bank account
You want to save for retirement, then you construct a Clean Nominee Bank Account retirement plan framework that is recognized tax compliant and exempt from FATCA and CRS and by so doing you are exempt from capital controls.