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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