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Foreign jurisdictions and offshore banking privacy laws can provide excellent and legitimate estate planning with asset protection opportunities. In most cases we are using the International Business Company, IBC, and the Foreign Limited Liability Company, FLLC, as our base to build on. Our two main reasons for such a program is asset protection from litigation and estate planning. The FLLC is formed in a jurisdiction such as Nevis and the IBC is formed in Nassau, Bahamas. The IBC controls 1% of the FLLC with the US resident as Director of the IBC and the IBC as General Partner of the FLLC. The US resident usually owns the remaining 99% as a limited partner. The estate planning is obvious through the usual LLC or Family Limited Partnership discounts. The asset protection is through the various privacy laws in foreign jurisdictions and the inability to sue a foreign IBC or LLC on a contingency basis or from US soil.
As soon as the IBC and the FLLC are formed, we file a form 8832, Entity Classification Election, notifying the IRS that we want the entity considered a Corporation for legal purposes and a "disregarded entity" for tax purposes. We also file for a US tax identification number for the FLLC. During this process we are also opening a domestic US checking account in the name of the FLLC somewhere in the US and another somewhere through a foreign bank such as Ansbacher. We leave approximately $5-10,000 in the foreign bank as a money market account to establish a reason for the foreign entity other than pure asset protection. This minimizes the fraudulent transfer problem or Law of Elizabeth, as it is known. The balance of the money can be used to purchase US mutual funds, annuities or life insurance. Using life insurance, we have the foreign entity set up an Irrevocable Life Insurance Trust on the life of the US resident. Quite often we use a Spousal Lifetime Access Trust. The asset protection is accomplished through the IBC and the FLLC and the life insurance trust also provides another layer of both state and federal asset protection in most cases. Also, we have provided the gifting and discount evaluation for a LLC and provided federal estate tax free death benefit from the SLAT.
Securities Offered Through Mutual Service Corporation, A Registered Broker/Dealer - Member NASD and SIPC
Asset Management, Inc. is not affiliated with Mutual Service Corporation.
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