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    Category Archives: Offshore accounts

    Surprise – U.S. Is “Tax Haven” For Multinational Families?

    Multinational families are increasingly turning to high-end estate and tax planners to reduce tax bills when they shift money to children living in the U.S., whether or not their kids are U.S. citizens.

    Globalization has been an incredible force in the economy for years. Many individuals and families are, first and foremost, citizens of the world before they are citizens of any given country. As a recent Bloomberg article points out, this is a growing concern in any given tax authority. For many families hoping to pass on wealth, the solution is a careful system of offshore and U.S. based trusts or entities. As far as wealth transfer and taxation laws are concerned, there are two junctures. The first is the point at which wealth leaves one individual. The second is the point at which the wealth is accepted by another individual. Interestingly, at each of these points, taxation is triggered under the same set of laws.

    In the U.S., this means the transferor gets a gift tax or an inheritance tax on whatever falls under U.S. jurisdiction, and the transferee may get hit with anything from income to capital gains to real estate taxes, and even their own estate taxes down the line once they bequeath the assets.

    Being a citizen of the world often means that a failure to plan will subject you and yours to any number of taxes, perhaps in multiple jurisdictions. However, careful planning can yield some serious advantages.

    Ultimately, as is usually the case, it really boils down to your unique situation and the various borders you, your family, and your assets cross. If you are not careful, those borders (and their taxing authorities) can come back to bite you.

    Be sure to read the original article for additional information and ideas.

    Reference: Bloomberg (March 5, 2012) “Tax Pushes Global Rich to Offshore Trusts for U.S. Children

    Foreign Accounts – In the News Again

    If you’ve been keeping up with the IRS news, then you’ve probably been watching the developments on the treatment of offshore accounts. On one hand the IRS has been stepping up its treatment of foreign accounts and noncompliant taxpayers, but with the other hand it has been offering amnesty and incentives for coming clean. As a result, we’ve entered the third period of amnesty for foreign accounts.

    With all the commotion over illegal foreign accounts, it’s good to know that not all foreign dealings are illegal (or even especially taxed by the IRS), as a recent article from the Wall Street Journal points out. In fact, there’s actually an expanding number of legal ways to follow offshore dealings and with great tax advantages.

    With offshore funds, specifically hedge funds, a number of different deduction possibilities come into play and a number of taxation levels fall away with jurisdiction issues. For example, holders can take state-tax and other deductions curtailed by the alternative minimum tax, avoid some or all of the 3.8% Medicare tax on investment income taking effect in 2013 for most couples with adjusted gross income above $250,000 ($200,000, single), and avoid limitations on itemized deductions for upper-bracket taxpayers.

    Of course, there also are significant drawbacks to bear in mind, but those depend on how you employ the accounts. Finally, while powerful, funds aren’t the only means for taking advantage of acting as an “international citizen” first.

    Visit us at Meier Law Firm and learn how to properly set up your accounts.

    Laura K. Meier, Esq.

    Reference: The Wall Street Journal (December 10, 2011) “What’s Next for Offshore Accounts?

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