The purpose of an offshore trust is to protect your assets from creditors and lawsuits. Making use of an offshore asset protection trust is like putting your money in a lockbox where it’s going to stay secure and protected. Your trust is not like a bank account, so you should not be withdrawing funds whenever you feel like it.
However, if you require assets at some point, there are ways to get money from your offshore account, dependent upon the location of your offshore account and the rules of your bank. Withdrawals from an offshore account can be made by customers by using a credit card or debit card. When you open an offshore account, you can request a VISA or MasterCard debit or credit card so that you can make purchases or withdrawals of cash. Most banks allow you to use your credit or debit card to withdraw money at any ATM, but it’s important to be aware of any fees or other limitations that may be attached to using an ATM away from the bank’s country or region.
Other options for withdrawing money from your offshore account in the country in which you reside include making use of an online bank wire transfer. The use of checks is not recommended because many businesses will not accept a check from an international business.
Reporting and taxes
When making withdrawals from offshore funds, you should first do some homework when it comes to taxes and your tax liability. If you use a bank transfer to move money from a personal offshore account that was opened in your name to an onshore personal account in your name, the transfer will be registered in both banks. The result is that the IRS will know that the person who transferred the money is the same person that received it.
By law banks have to report all cash transactions in excess of $10,000. These cash transactions need to be reported on IRS Form 3520 – Annual Return to Report Transactions with Foreign Trust and Receipt of Certain Foreign Gifts. Upon receipt of the transfer, you are responsible for reporting the amount received during the current tax year along with your annual tax filing.
If you hold assets in an offshore account, the tax ramifications should be of serious concern to you. The United States government levies taxes on the earned income of its citizens anywhere in the world and has a very strict process for declaring overseas assets. There are a variety of forms that need to be filed to remain in compliance with the IRS. Therefore, you should seek the advice of asset protection experts to ensure that you’re not in danger of non-compliance.
Answering your specific questions
Asset protection plans help legally protect your assets without engaging in tax evasion, fraudulent transfer, or the illegal concealment of assets. Without proper planning, you are increasing the risk of losing your assets to creditors and frivolous lawsuits.
At the Jeffrey Verdon Law Group, our goal is to provide the necessary legal advice to protect your assets from frivolous legal attacks. Take our online lawsuit exposure test, and complete our checklist to determine whether asset protection is right for you.