If you plan on visiting potential trustees, make sure their jurisdictions have a suitable airport and adequate hotel accommodations. Determine the logistics ahead of time of how you can get to their locations if you choose to visit them in person. You will, of course, want to know if a selected jurisdiction’ s laws favor using this type of offshore trust and if the offshore trust is in full compliance with all applicable laws.
Therefore, you are going to want to speak with independent counsel in that jurisdiction and even request a legal opinion on the matter at hand. Remember, this pre-immigration trust is not an aggressive offshore asset protection trust which requires a very special type of jurisdiction with favorable fraudulent transfer statutes. However, if properly drafted and funded, the offshore pre-immigration trust may also protect your assets from future creditors.
"... failure to properly comply with applicable reporting obligations can result in substantial tax penalties..."
NOT UNDERSTANDING THE U. S. REPORTING REQUIREMENTS
Once you become a U. S. resident, you now have a number of somewhat complex reporting obligations. Anonymity is a myth. There is no such thing as secret bank accounts or invisible bearer shares these days.
For this reason, you must be thorough with your comprehensive corporate due diligence and make a complete list of all your worldwide bank accounts and global holdings. Otherwise, if you don’ t make full and complete disclosure to your trusted certified public accountant, he or she will not be able to properly inform you of all your new U. S. reporting obligations.
Do note that failure to properly comply with applicable reporting obligations can result in substantial tax penalties, regardless of how well the offshore trust is drafted.
NOT TAKING INTO ACCOUNT FAMILY NEEDS
Oftentimes, your desire to avoid U. S. estate taxation by fully funding an offshore pre-immigration trust may run afoul of your family’ s current financial needs. because you are deemed to have a retained interest( control) over the assets transferred to the offshore trust?
That is why it is so important to have your certified public accountant and financial advisors as part of your preimmigration tax planning team.
NOT CONSIDERING A CHANGE OF MIND
It may well be that after you move to the United States, you may have a change of heart. You may want to pack up and leave. What then? What will you do now that all of the assets are held inside the offshore pre-immigration trust?
First, depending on how long you have resided in the United States, you may find yourself facing an exit tax. Moreover, because the offshore trust is irrevocable, how can you transfer the offshore trust once you leave? These are critical questions that should be considered because nothing is certain, except death and taxes.
If you are thinking of moving to the United States, plan ahead. Otherwise, you may have unexpected adverse U. S. income and estate tax consequences because of the move.
Remember, you don’ t necessarily need to have a crystal ball and have everything planned out and finalized five years before the day you actually move to the U. S., although doing so would be helpful in avoiding the dreaded five-year income tax look-back rule that may be applicable if you do move to the U. S. within five years from the date you establish and fund the offshore preimmigration trust.
However, contrary to popular misconception, that five-year income tax look-back rule has no application with respect to U. S. estate taxation and your efforts to minimize your U. S. estate tax exposure with proper pre-immigration tax planning that utilizes an offshore pre-immigration trust.
LAZARO J. MUR
Founder of The Mur Law Firm, P. A., Lazaro J. Mur has been serving the international business community since 1985, has an AV Preeminent Rating from Martindale-Hubbell, has been quoted by The Wall Street Journal, is a former chairman of the Florida State Hispanic Chamber of Commerce, lectures on the topics of global asset protection and international tax planning on behalf of the National Business Institute and LawPro CLE, and is a contributing author for Mundo Offshore.
How are you going to pay for your lifestyle? How are you going to get your hands on money if you have already transferred all of your assets to the offshore trust?
More importantly, will dipping into the offshore trust result in unanticipated income taxation or even U. S. estate taxation
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