"The Doggy Bone"
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Dear Friend,Some weeks ago, I had a little e-mail correspondace with Frank about "what life is like when you have an Offshore Trust". He found it quite serendipitous - and I liked that comparison.
I recently got two more comments from Ian and from Charlotte about the same. They both had some difficulties seeing what exactly life would be like with an Offshore Trust. I promised to explain.
First off, it is not as difficult to describe as "life after death"! For that, you have to trust your belief and your God. I know, when times are rough and you lose someone you love dearly, that can become a major challenge... (my personal experience is that you are better off hanging on to that belief, though...)
Your "Rich Uncle"
An Offshore Trust is really to be compared to a rich uncle. An uncle that loves you dearly. He will do anything for you - if he can. The best of it is that he is not mortal! You know that he will survive you, and that he will be capable of managing his affairs in a sane way, beyond the time when you no longer can yourself...
With a live uncle, you might have your doubt as to whether or not this loving support can continue forever. You have all kinds of good reasons for not trusting it: sickness, accidents, even death can quickly smash the picture - and everything you relied on could be history!
With your Offshore Trust, this will never be the case. It will continue to exist, and its management is taken care of in such a way that it does not depend on any individuals. All the people that are involved are "replaceable". Even the country the Trust is established in can be changed, if circumstances make that move wise.
"It's in the wife's name"...
Sometimes, people remind me of the guy we all know and whose wife owns everything. They have separate estates, and he does all the risky things, business-wise. She sits on all the assets, and together, they laugh at his creditors when they drive away in her Mercedes...
Although there are some very valid analogies to an Offshore Trust, I don't like this comparison. Mostly because it contains too many elements that are totally untrue when we talk about an Offshore Trust. The most objectionable one being the unethical behavior of this "famous" couple.
But also, following through on the mortality discussion, no marriage will last forever, at least not legally. I certainly do understand why many people, emotionally, wish that those two would get divorced, so the guy could get what he deserved... Just too bad that she would escape her moral responsibility as an in-sworn partner...Next, you are not a crook or a criminal because those who are use some of the same tools you want to use legitimately. My point is this: you are not a murderer because you own a gun, and someone else uses a gun to commit a murder. If you like driving a Mercedes, this does not make you a drug trader, regardless of most drug traders preferring to drive Mercedes too! Unfortunately, because of the way we constantly get exposed to "flash sensations" from the media without ever being given a chance to actually get all the facts, we very quickly get emotional connections established in our brains which really screw up our perception of reality.
The word "offshore" becomes synonymous to "crime", "suspiscious activity", "money laundering", "drug trade", "fraud", "scam" etc.... Totally unreasonable! But difficult to erase from our subconscious minds...
It is the same a lot of people have experienced in their childhood. Those self-limiting beliefs that got installed by our parents and teachers, not in any evil intent, but simply to teach us "reality".
Programming that lasts
"You can't do that!"
"You have to do this!"
Back to your "Rich Uncle".
His immortality and reliability should now be established. Also the fact that he in no way whatsoever represents anything that needs to be hidden because its compliance with the law could be doubtful. The only reason for me to recommend keeping a low profile about this is that I do not consider it being very smart to show a hangman your collection of rope for sale when he approaches you with no other purpose than finding a way to hang you...
A little more about reliability. When you establish a Trust, you set up a "Trust Deed" together with the Trustee. This "Trust Deed" is really the birth certificate for your Trust. It is a 12-15 page document that lines out all the rules for what your Trust can and cannot do. What the Trustee can and must and cannot do. What the role is of the Protector, your ultimate appeal possibility if the Trustee needs to be reprimanded or removed from the office of the administrator of your Trust. How you enter into the picture as the Settlor (= Grantor in the US) and also as the Beneficiary.
Once the Deed is signed, the Trust is born - and from there, nobody can change it! It has to be administered in accordance with the rules that are written in the Deed. It does not depend on anybody's mortality, not even your own.
Those rules are important to understand. They really give your "Rich Uncle" a legal and very enforceable obligation to take good care of you! Being the Beneficiary, you are the entire purpose of the Trust's existence. Think about it: this is what many lovers claim but very few live up to - committing to devoting his/her entire existence to the pleasure and benefit of the other! Very nice words - and very, very hard to make reality of...
In "real life", such committed love can only exist if it is mutual. But then it can exist. We all know the legends - most of them very tragic, because it is not until push comes to shove and death gets involved that we can know if that commitment truly was there or not. But Romeo and Juliet knew because they experienced it when they were alive. Their deaths proved it to the rest of us. (At least, that's what I believe Shakespear wanted us to see.)
But your "Rich Uncle" is not that demanding... he will not make his unconditional love to you subject to your reciprocate commitment! So, you can commit as much or as little you want to him and his welfare; he will still have no other purpose of his existence other than benefitting you and making your life more pleasurable...
This really means that you do not have to make your life with your Trust totally integrated with the Trust. You can, if you want to. And I promise you that you will want to, at some point - but you can let it happen in small increments, as you get more comfortable with the relationship...
Let me give some examples.
Protecting yourself and your family where no insurance will
My first concern when I got my Offshore Trust were my personal assets. I was, back then, doing business in the environmental hazardous waste industry as consultant. I was doing soil remediation and reclamation projects of contaminated sites. Although my partner Bill and I did incorporate our business, incorporation did not do anything to the liability we were both facing: Directors of corporations that commit an "environmental offense" are personally liable to the law... In reality, we could lose everything we owned, due to one single human error that would lead to a major contamination. An accident with a truck on the road was enough. Or simply bad luck in our drilling for samples - you can never sample everything!
We tried to get a professional errors & ommissions insurance. The price tag for the 2 million dollar coverage we knew we needed was $15,000 per year per Director, with a $5,000 deductible per event....
Well, my PIL Trust was a simple $1,000 expense.
No kidding here! As soon as I got my Trust established, I rushed getting my assets transferred to my "Uncle". My savings accounts were simple. I withdrew the money, took the cash, went to another bank and got a bank draft which I sent to the Trust. The amount was fairly small, so I did not expect any problems tax-wise by taking out the cash. I went to a different bank to get the draft, so there was no connection to report to the government about my money being paid to PIL. Just a precaution to avoid hassle....
However, most of my assets back then were tangible (my grand concert piano, my vehicle, my music collection being the most important ones to me), so I gathered copies of all papers showing my ownership. I took pictures (in duplicate) of everything. I sent both pictures and documents to my Trust administration (PIL) with a Letter of Wish stating that I wanted to donate these items to my Trust.
Two weeks later I got a letter couriered back with the Custody Certificates. Those certificates clearly describe the items, and they state my Trust as the owner. However, my use of those assets was granted by them being given to me in custody.
That did it! I could sleep again. I knew now that, in case we got sued for liability, I could afford to lose any lawsuit that might come. I would not even have to defend myself... I could just let those stupid creditors force me into bankruptcy - and I would not lose anything... They could not touch my Uncle's belongings! And they could not stop him from letting me use them as I wanted to!
Life is risky!
Even with my legal insurance (PPL wasn't available where I lived back then), I would still not want to ever own my treasures... they are far more safe in my Uncle's possession.
I seriously do not comprehend why people dare to own assets they value. It takes no more than a bloody accident to strip you of everything! The classic is the car accident Harland Stonecipher got involved in some 29 years ago in Oklahoma. There was no discussion that he was not at fault - but he nevertheless got sued by the other party - and it almost ruined him just to defend himself! Well, that was his inspiration to start PrePaid Legal... But that was only because he won the case - had he lost it, there would have been no second chance at life for him.
Most people understand that they have to have medical insurance. Otherwise, sickness could ruin them. Hospital bills are not cheap...
But how can you then still ignore the fact that you're THREE TIMES more likely to have to defend yourself in court than ending up in hospital, sick? I am sorry, it makes no sense to me... legal bills aren't cheap either! Not to mention losing a case...
A double-layered protection
My protection is a two-level one. First, I use my PPL membership to be sure that I, at all times, know exactly where the limits of the law are - and what my options are for avoiding trouble. Prevention is always the best medicine, and the benefits I have enjoyed from my PPL membership have paid for that membership till I am at least 150!
But I take no chances. I cannot rely on being able to prevent everything that possibly could cause a liability issue to aim at me. So, for that coverage, I rely on my Uncle. He owns everything I value as mine.
I let him buy everything I need, even my groceries. He pays my rent, my hydro, my insurance, my gas - everything! I use his credit card and his debit card. For larger sums, I fax him a request to send a check to those I want to pay. If I need anything signed, I get him to do it! In some cases, I have asked him to wire the money directly - which is faster (but also more expensive). I never sign a check - I just pay cash with money I got from his debit card in the nearest ATM machine. I keep no record of my use of his money. I don't have to. By law in his country, he pays no taxes and has no tax return to file, so why should I bother?
I have on-line access to his accounts, so can always check on the status. It is like having my own credit card. I really don't feel any difference, but it is not mine, so although I can use it as if it was, I do not need to worry at all about taxes and tax returns. My uncle's money is none of my government's business!
Yes, this is the serendipitous part of my relationship with Uncle. The other part is less easy. Although I don't need to fear the legal consequences of liability, I am still the one who is responsible for Uncle's ability to support me! I have to make some money to enable him to demonstrate his love, and I am happy to do so!
Please also understand that my lack of fear for liability does not give me any reason for being irresponsible. I cannot "just do whatever I please" if it involves violating ethical rules or breaking the law. If I provided a sloppy customer services, for instance, Uncle's business would soon be toast... But, acting responsibly in accordance with your own ethical principles is far more pleasant when you do it because it makes sense to you - and not because you fear the consequences of making a mistake...
It is really the fundamental difference between the slave and the craftsman. It is the essence of freedom.
You remain responsible for your own life...
So, I work for Uncle, and I work hard. He is the only boss I want. He is a very good boss. He never complains, never reprimands, never gets upset - he only expects me to do what I find is right to do - so that's what I do.
Sure, Uncle owns all my businesses. Every dime I make will, in principle, be his. I get no salary - but I don't need one either... he pays everything for me! And I am happy accumulating wealth for him!
I could get him to pay me salary if I wanted to - it would be simple to include me on the payroll in one of his businesses. But I am past the point where I need it. (When you have your Uncle newly born, it is a different story - you might want to introduce changes gradually, so you don't attract too much attention from the taxman's side. Audits are never fun, and there is no reason to outright invite one...)
But seriously, working for myself and working for Uncle is really the same thing. There is still only me as the responsible party. But it gives me a lot of peace to know that when I work for Uncle, everything ends up benefitting me. Uncle pays no taxes - and has no obligation to even file a tax return. And my tax return is very simple...
Because I can rely so heavily on Uncle, I can save a lot of money in liability insurance, for instance, even after quitting in the environmental protection business. Except where mandatory by law, I do not need that extra protection of my assets - because I have nothing to lose in a bankruptcy! Seriously, my savings every year could pay for another Trust - but I only need one... as you know, Uncle is immortal!
My family. I care about my loved ones. I know that all it takes for my fiancee to access and use my Trust is for her to send a copy of my death certificate to the Trust. She will then instantly get my life insurance paid to the Trust - where there is no delay because of probate, and no taxes or legal fees to pay... My Uncle just gets a Niece to replace his Nephew... He is prepared - I already sent him a Letter of Wish telling him.
Well, it became a long story - but the essence is this: life is much simpler when you have a Rich Uncle to take care of you! You get rid of all your worries of possibly losing what you have because of events you cannot control - and you get an increased motivation for taking responsible care of yourself and your family.
I feel like I am preaching, but I am really only telling you the truth of my own experience...
Use it to your benefit!
Lost an issue or want to check something in a back issue?
------------------------------------------------------PS. For those who still haven't got their will in place, I suggest reading this article. It is quite an eye-opener, although it does not cover the option of your Trust being Offshore....
I know that most of us don't like to talk about these issues, because "you can't do that". We are taught that it implies assuming someone's death, and that is insulting. In fact, this is stupid! I certainly assume that ALL OF US will die! It is only a question of WHEN... But because we don't know the time, it is so much more important that we protect our loved ones from the financial and emotional disaster that follows when we don't have these formalities in order. Believe me, I talk from experience!
If you are uncertain about how to go about this will stuff, get yourself a PPL membership. Seriously. You have two valid excuses for not doing it:
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