(Legal) Ways to Shield Your Wealth

Most people who organize personal consultations with me are looking for straightforward solutions to the challenges of moving or investing abroad. If they’re worried about government, it’s usually taxation.

But some folks I meet with are looking for more privacy, including keeping some of their wealth—even if it’s just a few thousand dollars—beyond the prying eyes of Uncle Sam.

Why would you want to do this? If you’re a law-abiding citizen, why should it matter?

Two reasons stand out.

First, I’ve seen dozens of cases where people who thought they’d never run afoul of the law do just that… through no fault of their own.

For example, did you know that if someone does something illegal on your property, your land and your home can be confiscated even if you had nothing to do with it? And that in such cases, the onus would be on you to prove your property’s “innocence”?

Second, governments and laws change. Just because something is a certain way today—doesn’t mean it will be that way forever.

For example, both major presidential candidates in this US election have flirted with policies that would impose taxes not just on your income, but on your wealth itself.

Just because you don’t have to pay a tax on the value of your stocks and other assets today doesn’t mean that will never happen.

Fortunately, I know some perfectly legal ways to put some of your wealth beyond the reach of both of those threats…

Let’s start with a unique fact about being an American. If you keep money in a US bank, you don’t have to tell the government about it. But as soon as you put money abroad, you’re subject to a variety of reporting regulations… with penalties so extreme that even the IRS ombudsman calls them “cruel and unusual.”

On top of that, the government’s definition of “money” is so broad that it includes things like limited liability companies, trusts, partnerships, safety deposit boxes, and other things you wouldn’t normally consider “financial.”

But there is a sure-fire and legal way to hold some of your wealth outside the US in complete privacy.

Under IRS rules, you’re required to report the existence and current value of all “financial accounts” you hold outside the US. The key thing that makes something reportable is its status as an “account.”

That includes bank accounts, brokerage and other investment accounts, as well as ownership interest in companies that hold other assets. For example, if you hold cash and gold bars in a safe deposit box in a bank in Europe, that’s considered a financial account because you and the bank have a “financial” relationship.

But two categories of assets aren’t considered “financial” under specific circumstances. One is cash. The other is any form of personal property, movable or immovable.

For example, if you own a home in a foreign country in your own name, not through a trust or a limited liability company, you don’t have to tell the IRS about it. It’s a form of wealth and has monetary value, but it’s not a financial asset.

The same applies to any personal property you might keep abroad, like gold bullion, artworks, collectibles, fancy cars, jewelry, and anything else of value you can think of. Cash in any currency also doesn’t have to be reported if it’s kept in your home abroad.

Of course, you probably don’t want to keep a ton of cash under your mattress or gold bars buried in the back yard.

That’s where private vaults come into play.

Vaults are not financial institutions. They are service providers. Their service is to secure and protect your property. For that reason, any personal property you keep in a nonbank vault, including physical cash, isn’t reportable to the IRS.

For example, let’s say you fancy gold as a long-term store of value, a hedge against inflation, and security against government taxation. With a few clicks of your mouse and a bit of online form filling, you can open a vault account in half-a-dozen secure foreign countries, buy gold from brokers associated with them, and have it stored and insured abroad without having to tell anyone about it.

And once you’ve got your storage space up and running, you can put anything else in there you like. And I mean anything: there are plenty of places around the world where you can store luxury vehicles, art collections, and anything else that combines value and volume.

I’m not saying that everybody should rush out and open a private vault offshore. But given that storage and insurance costs can be as little as several $100 a year, squirreling away some precious metals, collectible stamps or coins, or bundles of cash is a no-brainer for anyone concerned about an uncertain future.

If you’d like to know how… just drop me a line.