How do you get started?
There are several ways your life events may compel you to choose the right offshore jurisdiction for you and your assets:
- You may be buying a high value property in the UK or elsewhere;
- Local rules may prevent you from having assets or making investments in your own name;
- You want financial security for you and your family and decide to hold some of your investments overseas;
- You are making either new business or investment decisions;
- You want asset protection and security.
Usually, either your good friend or a trusted private banker will tell you that now it’s the right time for you to choose an offshore jurisdiction to protect your wealth. This can also apply to an investment fund.
An offshore jurisdiction may become a necessity if you are not resident in the country where your investments are being made.
What are Offshore Jurisdictions – Are they Evil?
Hollywood movies and various OECD initiatives may make you believe that offshore jurisdictions are evil. They suggest they are not transparent and make it easy to launder money.
Reality is an offshore jurisdiction is the exclusive playground for the sophisticated wealthy individuals and their families. A good offshore jurisdiction is one of the most valuable wealth planning and protection tools.
The initial idea on the need of offshore jurisdictions envisioned clear goals:
- Make it easy to facilitate high value transactions;
- Protect substantial wealth and make it inaccessible to others;
- Nobody else needs to know how wealthy you are;
- It’s an exclusive only club intended for highly sophisticated investors;
- Only a minimum regulatory framework is required as these are sophisticated investors and only a very select few can afford to be in this exclusive club.
This is not evil, the ultimate goal is to make it easy to invest and make transactions fairly easy, safe and secure outside the prying eyes.
What is an offshore jurisdiction?
Two terms need to be defined to make it clear. Offshore means outside the country of your permanent residence. It may also suggest an island. For instance, Guernsey, Isle of Man, Jersey. These are a few islands to the UK and closest major offshore financial centres outside the UK.
It is not necessary to be an island to be called “offshore”. For instance, Switzerland famously does not have any access to an ocean. It is dead centre on the map of Western Europe. It is suggested that a quarter of the world’s wealth is situated in Geneva alone.
Wealthy Middle East families may not necessarily agree with this narrative. For example, Forbes had been famously missing out on several billion when trying to compare Middle East ultra high net worth individuals to the rest of the world.
It feels truly special when an opportunity arises to work with someone wealthier than Jeff Bezos was during the global pandemic. He was famously lauded as the wealthiest man in the world. Forbes, you were telling us non-truths once again?
Data manipulation is a different subject entirely. This serves just a reminder to exercise caution and not to believe anything you are being told as a fact.
Jurisdiction is the legal system of a country. For a country to be called a jurisdiction it has to have independence to set down its own law and derive rules.
Again, as you look at the different offshore jurisdictions some of them may have Belgian, British, Dutch or French flags in the corners of their own national flags. This means that these jurisdictions are not necessarily as independent as you may wish.
How do you choose an offshore jurisdiction?
What is the most simple criteria to choose an offshore jurisdiction to protect your assets?
I suggest several insights:
- Are they truly independent? Do they decide their own rules?
- How effective is their legal system? What assurance do you have?
- Are they on a blacklist of non-compliant jurisdictions?
- Can you read the language that the documents are drafted in?
- Does the law meet minimum professional requirements within the industry?
- What is your tax residence? Is this jurisdiction permissible for your tax residence status and compatible with the country’s of your tax residence legal system?
- Can your private bank work with your chosen jurisdiction? Or are you creating enemies with your bank’s compliance team and making it unnecessarily difficult for your private banker and yourself?
- What are your personal reasons for choosing this specific jurisdiction over other options available? Did your adviser say the jurisdiction is the flavour of the month and everyone is choosing it?
- Are you talking to salespeople or a genuine professional?
I always encourage you to apply the necessary scrutiny and independent thought. This is best achieved when working with an UHNWI advisor well versed in international taxation and offshore jurisdictions.
“Thank you very much I will have what my best friend is having”
This conclusion is not an uncommon outcome when working with a group of sophisticated investors who are also best friends.
However, no two snowflakes are the same. Care, attention to detail and caution need to take place for the profiles to be assessed individually and independently of each other.
What is the ultimately best solution for you alone?
What may work well for your friends, may not work for you at all. Exercise caution and prudence. Make sure you choose the best possible UHNWI advisor to work with.
It’s time for your own Global Wealth Strategy
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Saule Voluckyte, M.A.E.S, LL.B, FAIA
I have been working exclusively with UHNWI in Mayfair, London since January 2008. I built specialist knowledge and expertise required to serve ultra high net worth individuals investing, operating and relocating to the UK or Switzerland.
Within the industry, I am the single adviser who is able to traverse the different areas of expertise and bring a comprehensive approach across: global structuring, UK immigration, international taxation and FOREX to develop their global wealth strategy, while they build, grow and expand their wealth worldwide.
Previous experience as one of the senior advisors for the government, made me a go-to person when delicate and uncomfortable scenarios involving heads of state need to be handled with care and preserve privacy.