We often get questions about offshore bank accounts here at Royal Legal Solutions. Offshore bank accounts are one avenue for real estate investors to protect their assets.
We thought it was time to give you a straightforward guide to how these accounts work. Also, what you need to do to open one, and how to manage an offshore bank account like a pro.
Of course not. You might see criminals talk about their offshore bank accounts bursting with hidden millions. That's for primetime television. It's storytelling stuff, and the truth is less glamorous and much saner. Almost anyone can open an offshore account. Furthermore, almost anyone can enjoy asset protection benefits, privacy, and other perks.
An ordinary real estate investor may use an offshore bank account for a few reasons. Some primary uses include:
You can prevent lawsuits altogether if used with other asset protection tools. But that's making a dent in the surface of the power of these accounts.
These accounts are not "for criminals." But, it would be dishonest to imply criminals don't use offshore accounts to hide their money.
So, have certain types of criminals exploited offshore bank accounts? Sure. But most countries don't like hosting criminals, even in their banking systems. Many have enacted legislation to discourage crimes by using an offshore account. Such crimes include money laundering or establishing offshore accounts.
Pay attention to how any country you're considering banking responds to these threats. A strict rule of law is desirable in your banking host country. It provides stability.
You can expect a lot of variation between countries. Each gets to make its banking laws, and how financial privacy is one thing to consider. Yet even amongst this variation, there are some common threads. It's vital to be clear that your situation will determine which benefits you use.
Here are a few top reasons ordinary people take advantage of offshore banking. It might surprise you how downright innocent or dull they are.
Destabilization of currencies isn't the stuff of dystopian fiction. It can and does happen worldwide, more often than you think. You may feel you have to be ultra-wealthy to worry about global banking stability. That's far from true. This problem impacts a considerable percentage of people.
Most Americans don't worry about the U.S. Dollar. Look at what happens in countries like Zimbabwe that experience genuine financial crises. It got so bad that the government lopped zeros off their bills to combat hyperinflation. The country set a world record by printing trillion-dollar bills. That trillion-dollar note may seem like a fun novelty to buy on eBay. But, it was serious business for everyone who relied on that currency to live.
Americans suffer from thinking instability happens to "other" places like Zimbabwe. But if you look at actual statistics, you might find our system isn't as secure as you think. Our banks over-leveraged themselves. That caused a crisis many times in recent history. Even if you assume financial crises are flukes, we can still look at worldwide economic data.
For instance, the World Economic Forum measured the soundness of banks in countries worldwide. Their Global Competitiveness Report measured the perceived safeness of a country’s banks. Then, they ranked the world's nations in order of perceived safety. The results may surprise you!
Where do you think the U.S. ranked? At the top?
The American banking system is the 18th safest in the world. 17 countries outranked the USA. They're the ones you want to look at if stability is a significant motivation for your accounts.
Offshore banking can mitigate instability. Even if the world outside is in chaos, you can rest easy if your money's sheltered offshore. You can use an offshore bank account to protect your money from conflict and uncertainty.
With offshore accounts, the U.S. Dollar doesn't confine you. You will select which currency or a mix of money you'd like to default to for your bank account. The ability to diversify appeals to many real estate investors. There may be economic advantages to exploring possible alternatives to your primary currency. Insufficient research could cost you. When in doubt, call a pro.
Litigants file 15 million new lawsuits yearly in the U.S. That's one lawsuit for every dozen adults. Real estate lawsuits, in particular, are always a genuine threat. The threat grows as you become more successful. In our litigious society, protecting your money is ideal.
You can protect your assets with domestic tools. Offshore bank accounts offer you the luxury of moving everything of yours into security. You're moving the assets into a different jurisdiction rather than an entity structure. The principle remains the same.
Because you choose where to place your funds, you stay in control without being at risk. Generally, it is more difficult to "go after" foreign-held assets than domestic ones. Also, you may receive extra asset protection from your host country. You get to choose which legal rulebook you will play by. That's a tremendous advantage for anyone building wealth with their business.
Your privacy is one reason to consider offshore banking. Switzerland is famous for their protections. If privacy is a significant motive for you, ask yourself: from whom? Because it is possible to have privacy from people and governments alike. It will likely help you plan to know if your primary concern is, say, creditors over the Taxman or vice versa. You can evade interaction with either through the intelligent use of offshore bank accounts.
Interest rates with foreign bank accounts are often higher compared to American banks. Instead of shopping from a few select banks, you now have the entire world of finance from which to pick and choose. If you want a high-interest savings account, you can have that.
An attorney and financial advisor may be able to offer more insight into your situation. The benefits of offshore banking aren't even specific to real estate investors. Anyone in the West may want to consider the higher interest rates to find better deals overseas.
No true one-size-fits-all asset protection plan involves only offshore banking. Reaping its benefits is easy and not time-consuming. There's a final one that is huge but more difficult to quantify. There are emotional benefits. Knowing you have an emergency plan that can withstand a financial disaster. It's tough to hang a price tag on genuine security.
Are you ready to speak with an expert? Learn about our comprehensive solutions you can use to achieve financial freedom. Reclaim your time, protect your assets, and build your legacy. Book a FREE discovery call now.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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