I spent last week in The Bahamas, at our annual Total Wealth Symposium (TWS), held at the Atlantis Resort on Paradise Island, just across the channel from Nassau Town.
No — since I know you’re wondering — it wasn’t all work and no play for me. In fact, I took my wife and daughter so they could benefit from a last summer fling before winter hits … my colleague Chris Orr predicts it may be a cold one.
On one of several father-daughter snorkeling dives between TWS sessions, we came across a shoal of Caribbean reef squid. There were seven of them, aligned in a disciplined row, always facing us, precisely equidistant from each other. They seemed far more aware of our presence than the ubiquitous jacks, parrotfish and sergeant-major fish nearby.
The Bedford Park Opportunities Fund returned 13.5% net of all fees and expenses in the second quarter of 2021, bringing its year-to-date return to 27.6%. Q2 2021 hedge fund letters, conferences and more In the fund's second-quarter investor letter, which ValueWalk has been able to review, Jordan Zinberg, the President and CEO of Bedford Read More
Besides being intelligent, reef squid are also masters of disguise. Thanks to the chromatophores in their skin, one minute they are an iridescent purplish-brown … then semiopaque … then gone entirely … only to reappear when it suits them.
We should all be like reef squid … and we can. The TWS showed attendees how.
Hiding in Plain Sight
You don’t have to be invisible to be hard to pin down.
Many of the attendees at this year’s TWS were new to The Sovereign Society. Although they had the right instincts — that’s why they were there! — some had yet to shed damaging mythologies peddled by unscrupulous wealth-protection “experts.”
For example, during the Q&A portion of my panel discussion on the Foreign Account Tax Compliance Act (FATCA), one fellow asked why he should bother to go offshore if foreign banks were going to report his accounts to the IRS anyway. Isn’t the point of banking offshore to hide one’s wealth?
No, it isn’t. The point of banking offshore — of adopting any asset-protection strategy other than plain vanilla, in-your-own-name fashion — is to be versatile and a difficult target.
Like reef squid. They’re hard to pin down. Their coloration and patterning are constantly changing and adapting. It’s hard to know exactly how far they are from you. If the need arises, reef squid can blend into their surroundings so well as to become almost invisible. But they’re still there … typically close to a nearby bolt-hole in the reef. Before you can get close to one, they seem to disappear.
Squids and Tall Weeds
In my early days as a liberty activist in Africa and Asia, older, wiser colleagues advised me not to be the “tall weed.” Don’t attract attention to yourself, they said, like a plant growing above all the others in the wheat field. Let other people do that. That way, the clumsy oafs from the government will chase after them and leave you alone, and you’ll survive to grow into a tree too tough to cut down.
The ideal offshore asset protection strategy is a combination of the reef squid’s wily misdirection and the hard hide of a sturdy oak tree.
Putting assets into vehicles other than your own name — such as a trust, limited liability company, family foundation or similar structure — allows those assets to appear differently from different angles. Potential litigants can never be sure what’s really there, who owns what and how far they’d have to go to get at them. That makes pursuing them difficult and costly. So they go after someone else.
Of course, in this day and age, an adversary can follow the trail to your assets if they’re really determined. That’s why even more important than misdirection is to put them in jurisdictions that are too tough to crack. For example, a bank account owned for your benefit by a Cook Islands trust or a Nevis LLC is, for all intents and purposes, impossible to attack. Those jurisdictions just don’t implement foreign judgments, period. They have to be retried from scratch under foreign law, with a new attorney in a courtroom before a foreign judge on a small, faraway island. That’s why they almost never succeed.
But What About the IRS?
Fine, you may say … but surely the IRS isn’t going to let a little legalese get in the way of wealth confiscation when the time comes? What then? How is an offshore strategy going to help? Won’t they just force foreign banks to send your money back to the U.S.?
Ultimately, that could happen. But the TWS lineup of speakers tells us something important about that.
Of the many presenters, only two were from financial institutions. Instead, the majority of TWS presenters offered wealth in other forms: metals, collectibles, diamonds. Even the financial folks at TWS specialize in highly secure vehicles that are worlds away from a simple, sizable bank account.
Want to protect your cash? Get rid of it. Diversify your wealth so it looks like the shimmering mirage of the reef squid. Store it in places that are as tough as old oak to crack open.
That’s the secret to security.
Offshore and Asset Protection Editor
The post Asset Protection: What You Can Learn From Squids appeared first on The Sovereign Investor.