The best asset protection structure: Forever Free package
Contributed by Mundo
06 April, 2021
Today one of the most precious commodities on earth is no longer the house you own, the car you drive, or the clothes you wear, or even the size of your bank account. It is freedom.
The freedom to travel, the freedom from onerous tax and government intrusion, the freedom of privacy, the freedom to earn, hold and spend your money where and how you wish, and the freedom to live where and how you want is now rapidly becoming the most valuable thing on earth. Nowadays it is extremely hard to find societies which understand or respect true freedom. Indeed, wealthy and ultra-high net worth individuals have become targets of governments and international media. Wherever we look the sorrows and burdens of failed societies are cast at the feet of those that have succeeded.
Since 1994 the NTL group, Mundo's partner and sponsor, has been providing family offices and wealthy individuals with the very best second citizenship, tax residency, and wealth optimization tools available today. With offices in Europe, the Caribbean, Latin America, New Zealand and Australia, the NTL team has one of world's best structuring groups to comprehensively structure your personal and business affairs in such a way as to optimize your financial and personal freedom and that of future generations. We offer a highly personalized, boutique and confidential service for our elite client base, which takes care of all matters involved in the application and structuring process from document storage and correspondence in encrypted systems and scheduling meetings with private bankers.
Like many highly valuable things, what we offer is superbly crafted yet very simple in execution and design. Like a pink diamond the package we show you below is rare, timeless, and eternal. But unlike a pink diamond what we offer can never be taken away by anyone. Not governments, not creditors, not partners will be able to take this form you.
We belong to a unique and rare profession - craftsmen of freedom. And since 1994 some of the world's wealthiest individuals, family offices, asset managers, and their professional advisers have turned to us for our discrete and highly professional service.
If you are reading this article you are receiving information about a product that has not changed in over thousand years and is utilized by the world's wealthiest families and dynasties to protect and transfer wealth intergenerationally. We can guarantee, if utilized properly, this package will ensure that you and your children will be free of personal, inheritance, wealth, and most other taxes in perpetuity. More importantly, your wealth will never be taken away by anyone. In the next pages we describe how the product works via an integration of all its parts. We have summarized the information into 4 steps and only briefly described the legal and procedural mechanics, however your legal and tax planning team will be able to immediately understand the elegance of the concept.
Step 1: second citizenship for you and your family
OECD governments are now beginning to consider imposing wealth, inheritance, and income taxes on their citizens no matter where they live, and this initiative has already been started as a legislative movement in some European countries. Having a single citizenship exposes you and your family to multiple risks including information exchange, bank account seizure or difficulty in opening accounts internationally, political persecution, passport cancellation, travel restrictions, discrimination by other countries, and many more. One needs to only look at the multiple problems and restrictions placed on citizens of Venezuela, Afghanistan, Iran, and many parts of Africa to see the risks of holding just one passport. When one considers that Venezuela only twenty years ago was a thriving democratic country, one can see how quickly political events can affect those citizens that hold only one passport.
Today most countries do not prohibit or at least do not persecute citizens who apply for a second passport, it is predicted that within the next ten years there will be an attempt to prevent citizens from applying to obtain a second passport which is why the step 1 is so important. A second citizenship for you and your family today has become as important as having a secure bank account. The window of opportunity to apply is now while this area is unregulated and still the subject of debate.
We offer citizenship by investment in many countries, even those that do not officially advertise such programs. All our programs are perfectly legal and endorsed by legislation so that your passport and your children's passports are available forever and are passed on by birth. We are the leaders in the Caribbean citizenship by investment program and have our own licenses in all Caribbean jurisdictions [St Kitts and Nevis, Antigua, Dominica, St Lucia, and Grenada]. Indeed, our offices opened in many cases at the very initiation over the program and our lawyers and executives have over the years had a healthy input into the development and distribution of the Caribbean program. We have the oldest and most prestigious Caribbean citizenship summit held with the participation of the governments of the Caribbean and key industry participants where we discuss policy and promote the islands and investments. This gives our people a unique perspective and unique connections that are second to none. Our deep knowledge of the product allows us to give you detailed and comprehensive advice and support as to the necessary documentation for approval. We have never failed to obtain an approval once the client has passed through all our internal processes. We personally know all the professional developers on the islands and can advise on the best and most reliable projects and investments.
Some of the better-known advantages of Caribbean citizenship by investment are:
- Travel to Europe and the United Kingdom visa free as well as up to 130 other countries (China, Hong Kong, Russia). Having business or investments in some of the visa free regions is sufficient advantage alone. An example of some of the planning benefits is the E2 visa granted to Grenada citizens by the United States, which permits residency without paying tax on worldwide income.
- Some of the Caribbean islands have extremely strong banking secrecy laws and having the correct citizenship and residency means that your financial information is safe and as a citizen you will be entitled to greater protection by the countries, banking and privacy laws. The Caribbean banks have a long tradition of holding immense family wealth and some of the world's ultra-high net worth individuals choose to hold their accounts there.
- These islands have a territorial tax system which means that they do not tax foreign sourced income. Combined with the correct tax residency (which can also be obtained with citizenship) your assets have a high degree of safety and your income, if properly structured, is free of taxation forever.
- The Caribbean islands have a strong network of United States universities where subjects like medicine and law, business and engineering can be studied. Students have direct access to the United States universities and can transfer to America, further the degrees are recognized by the United States. In some cases, having a passport gives students better access and certain financial privileges. Another important advantage is that having a Caribbean passport allows entry under the Caribbean quota which is easier than other countries.
- In most jurisdictions the right of passport is passed on to future generations which means that all children and their children become citizens of the Caribbean.
- The Caribbean islands are some of the most beautiful living environments on earth, with clean water, organic food fantastic beaches and a variety of sports. With regular flights from many countries they make an ideal second home.
- The Caribbean has an investment option whereby you can purchase real estate or another investment and obtain citizenship essentially for free (with minor additional fees). This is an excellent option to pass on to your children and in some cases the investment can bring good returns.
We can go through all of the benefits in a confidential discussion, but once you are aware of the numerous advantages of becoming a citizen of the Caribbean you will ask why you did not do it sooner. Indeed, you will find that many of the world's wealthiest individuals carry a Caribbean passport.
We also offer other citizenship by investment passports including Vanuatu, Malta, Cyprus, and several destinations. Our experts can tailor a package which suits your lifestyle and your preferences considering multiple factors such as family size, educational requirements, travel, tax planning and others.
Step 2 - your tax residency
Today, tax residency has become one of the most important wealth planning and structuring tools for high net worth families.
The second step of the forever free package is obtaining residency and tax residency in a country that does not tax foreign sourced income. There are many options available, but the key is to legally structure your tax residency so that banks, tax departments and accountancy firms and other financial institutions will accept this for all reporting purposes. We provide a comprehensive structuring service so that you will be treated as a lawful tax resident of your new country of residence.
Should you require our concierge services will arrange everything from schools, medical services, maids and support services to complement your new lifestyle. We will also introduce you to key business and government contacts in jurisdictions where we have a strong presence. There are many options for tax residency in countries which have special regimes that do not tax foreign sourced income. Some examples are Caribbean islands, Panama, Vanuatu, Portugal, Serbia, Georgia, Malta, Cyprus and, surprisingly, in some cases the United States (E2 visa).
The key to a proper unchallengeable tax residency is rapidly becoming actual physical presence and turning the country into a center of life interest (home, school, business associations, etc.) You can also establish an actual operating business managed from the country of residency. Should you wish to consider tax residency in Latin America, we especially recommend Panama where we not only have a dedicated team but also are able to introduce you to business contacts and opportunities at the highest level.
These countries are open for business and present incredible opportunities for capital appreciation and investment growth as well as having superb medical, schooling, lifestyle, shopping, and social networking facilities. If you have interests in living within Europe but outside the EU tax net, in a high growth low tax environment, we can recommend Serbia and Georgia where we can likewise introduce you to contacts of the highest level and facilitate every aspect of your tax residency process. If you like the EU, there are many options.
Some of the countries which present the best current opportunities for tax planning and residency are Portugal, Montenegro, Malta, Cyprus and of course Switzerland (not part of EU but within CRS network). Our team can facilitate your smooth transition and settlement in these countries.
If Asia inspires you, we recommend Singapore where we have a partner office dedicated to all aspects of tax residency immigration and settlement. Singapore presents what we believe to be the best opportunity in Asia. If you like the relaxed island lifestyle then of course there is nothing better than the Caribbean. They present an island getaway lifestyle for the jet set community and offer superb tax residency packages.
If Oceania draws you, then New Zealand has been voted one of the best living and lifestyle destinations in the world. New Zealand offers a 4-year exemption on worldwide income provided that your investments are properly structured into a trust. It takes 5 years to obtain citizenship but after this you can live in Australia tax free without visa because under a New Zealand passport you will not be considered a permanent resident of Australia. It is not certain how long this opportunity will remain. We have a dedicated financial advisory firm and team in New Zealand that can take care of assisting you with investments, immigration, and lifestyle design.
Three hours from New Zealand we find Vanuatu, which is one of the world's lesser known offshore centers with solid banking. We have a team that can obtain citizenship and tax residency as well as assist you with all aspects of relocation. Vanuatu does not recognize personal taxation at all and all personal income in Vanuatu, including Vanuatu sourced income, is tax free.
If you like the America's then we can offer the island of Puerto Rico, which is an American tax haven with very low personal taxation and tax residency options. This is the preferred location for crypto investors and the advantages of tax residency is that the United States is not part of CRS. Puerto Rico also has some of the world's best banking facilities and residents have easy access to the United States. Another option is a Grenada passport with an E2 visa to America. This involves purchasing or creating a US business and obtaining an entry visa for the length of the business. We can source franchise opportunities in the United States as part of the package, whereby you are not taxed on worldwide income but only United States sourced income.
Tax residency has become one of the most important wealth planning and structuring tools for high net worth families. The information at the time of publishing this article will obviously change, we have only very briefly set out the world of possibilities now open to the international citizen. Our experts will of course advise and assist you with jurisdictions that are best for you, looking not only to present legislation but future indicated changes so that you and your loved ones will be forever free. Upon obtaining your new tax residency, we will take the next step.
Step 3 - the dynasty trust
The only instrument that has been tested by over 800 years of English jurisprudence as both a complete asset protection tool, an intergenerational wealth planning instrument and a tax optimization instrument, all in one, is the English trust.
NTL has the oldest trust company in the Caribbean, having established our trust license in 1994. St Kitts and Nevis has trust law and legislation which is considered one of the best in the world. This legislation has been modelled on British law but with extra protections and has been adopted by British colonies and commonwealth countries such as the Cook Islands, Caymans, and British Virgin Islands. There have been a number of tax cases, popularized by time magazine, whereby the American government tried to set aside such trusts holding vast sums of money, due to taxes owed by the settlors and beneficiaries, without success. It is indisputable that a properly established Nevis trust is unbreakable since not even the entire political and fiscal power of the American tax department can set it aside. It is little wonder that the Nevis trust is the preferred asset protection tool of many of America's high wealth families due to its limitless possibilities.
Although complex in design the basic principles of the trust are simple to understand. The owner [called settlor] gifts the legal title of property (cash in bank, real estate, stocks, gold, antiques, etc.) to a company [called the corporate trustee] who holds the beneficial or equitable title (the rights to income and assets) as trustee or custodian, for a select number of beneficiaries which can be the settlor himself, his children, family members or anyone including other companies or trusts.
The trustee then manages the assets for the benefit of the beneficiaries for as long as and on such terms as the trust deed indicates. Because the legal title is in the name of the trustee, if properly structured, the beneficiaries are not taxed on the trusts income and are not considered owners of the trust property so cannot be sued for debts. There are numerous advantages of an expertly crafted trust which we can set out in a detailed consultation, however some of these are:
- The dynasty trust creates a perpetual trust structure for yourself and future generations in perpetuity (forever) thus avoiding all forms of government wealth tax, gift tax, inheritance tax, and personal tax and preserving the assets in the family. This structure has been used by families such as the Rothschilds and the Rockefellers to preserve and grow intergenerational wealth whilst maintaining the accustomed lifestyle.
- The beneficiaries of the trust and their descendants cannot be sued by spouses, partners, creditors, tax authorities or indeed anyone since all the assets are owned de jure (in law) by the trust. That means you and your children and their children's children are protected forever from serious life events that financially devastate most families. These events may be bankruptcy, divorce, estate disputes, creditor claims, tax disputes and seizures. The trust also has a discouraging effect against kidnapping, extortion, and other forms of fraud since the beneficiaries cannot be forced to part with the assets, because they do not legally own them.
- The beneficiaries can have their cake and eat it too since they can maintain lavish lifestyle of yachts, houses, and all the necessary "toys" which they are used to during their lifetimes but are loaned to them by the trust until their deaths. This eliminates complex inheritance disputes and wills. This is especially important in jurisdictions with forced heirship rules.
- The settlor(s) or the initial owners of the assets can maintain full control during their lifetimes by properly drafted protector clauses which allow them to replace the trustee and to change the terms of the trust as protectors. Further, because they live in a tax-free jurisdiction (see step 1 and 2), any income they do receive from the trust can be legally declared as foreign sourced income and exempted from taxation.
- The trust pays no income tax whatsoever, no capital gains tax and indeed no tax in Nevis. By using carefully selected holding companies and investment structures it can minimize withholding tax in the countries in which it invests by taking the benefit of double taxation treaties. For increased protection, the assets can be held by and managed by an independent custodian trustee which is either a licensed asset manager, bank or financial institution which carries indemnity and liability insurance and is accountable to the trustee. The current family office structure or your existing custodian can comfortably fill this role so nothing needs to be shifted or transferred. We work with numerous multifamily offices in this regard.
The only instrument that has been tested by over 800 years of English jurisprudence as both a complete asset protection tool, an intergenerational wealth planning instrument and a tax optimization instrument all in one, is the English trust. It is important to note that the trust is established under your new passport and tax residency, which means that CRS reporting will be to your country of tax residency and eventually to your country of citizenship. It is to be noted that this is not a CRS avoidance mechanism since your information will be reported to the countries where you legally are tax resident but where tax on foreign sourced income is not levied. You and your family thus become essentially legally tax free, forever. You are not avoiding tax, nor are you planning your tax affairs, you are simply leaving the tax net forever. (We can provide Nevis trusts and Panama foundations, if preferred).
Step 4 - the operating company
The trust can own an operating company. Under the CRS rules all fiscal information of an operating company is only shared with the country of incorporation.
A further advantage is that the operating company can defer issuing dividends or taking profit by reinvesting in assets or operations. Thus, if part of your financial strategy is investing in or developing businesses that have at least 50 % of their balance sheet considered as operating capital, the operating company becomes a further part of your tax optimization strategy. In order to demonstrate how effectively this works in practice, let us take the example of a Panamanian free zone company.
Under Panamanian law a company in the free zone can operate worldwide and yet pay no tax on its foreign sourced operating income. It is not considered as an offshore company and therefore is not penalized under the offshore company regimes of Europe. It can sell services or goods or any other activities worldwide. The company will hold two or more accounts:
- An operating account which covers its general operations, wages, office costs turnover, etc.
- An investment account for example in a Swiss bank for holding passive investments such as stocks, bonds, etc.
The advantage is that the operating company can virtually roll over profit forever and continually put aside funds in its investment account thus growing the value of the business. The advantages include:
- In the case of the Panama free zone the operating company is a virtually zero tax vehicle which has substance and is not treated as an offshore entity or a tax haven company and can thus trade internationally with few restrictions (other free zone companies are available).
- The company can own other operating or passive holding companies in different jurisdictions but be treated as a center of management of worldwide operations thus minimizing tax rates.
- Whilst a trust must be externally managed, the company can be operated by you and your family as directors. This way you maintain daily control over funds and investments without breaching any tax or rules since income in the operating company is encapsulated as a corporate income and not attributed to any individual shareholder or UBO.
- The company, like the trust, obviously exists in perpetuity and can grow its wealth intergenerationally.
Whilst the principles of the forever free structure are eternal, the details are carefully worked out in accordance with your personal circumstances so that each structure is tailored to meet you and your family's requirements. Because the structure is elegantly simple, yearly maintenance fees are surprisingly low. There is no charge for the quantity of assets or funds in the structure even if we provide a trustee service. In this way we comfortably work with your existing asset manager, custodian, or bank.
Private wealth club
Once you have worked with us on the forever free structure, your family or family office will be invited to join Mundo's elite club of family offices and UNHWI. We will gladly welcome you to our Mundo family.
Contact us today and ask for a consultation with our experts.
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