Tricks of the Trade

Mount Rushmore image

Cross-Border, Multi-National and Multi-State Issues, Opportunities and Risks

In cross-border issues and investments, strategies used in one country often do not work in others.

There are different ways to operate that may not be familiar –– and the United States has some awfully good ones, even for citizens of other countries.

Even many persons within the United States seem slow to understand the major benefits of placing title to assets in certain wealth-protective and tax-friendly States, or in the very safe “special purpose” legal entities unique to the US and a few other countries.

Once popular offshore trusts are under attack and their dangers have greatly increased. However, word is getting out about safer choices, as described below.

What Has Changed In the World of Holding Wealth

Four years ago, while practicing law in Japan, my work on cross-border trusts and estates for high net worth clients forced me to reexamine the right jurisdictions in which to shelter client assets - as contrasted with the ones in which those clients reside. That led me to thoroughly examine the uniquely modern American, so-called “advisor-friendly,” trust administration industry and to note several very attractive features.

This has changed dramatically from when I first worked on trusts and estate planning and large multinational companies decades ago, and the differences are huge.

Yet, in exploring this with experts in several major US cities, even some outstanding lawyers and investment advisors I consulted seemed not even aware of this. Some of the differences are too detailed to explain here, but the changes are awfully important for clients.

What is new?
Travis H. Brown’s 2013 book, “How Money Walks, How $2 Trillion Moved Between the States, and Why It Matters,” explains what is happening.

Look at the contrasts between the very costly California, New York, New Jersey, Connecticut or Illinois, which clients often choose as places to live and invest, on one hand, and far better States in which to shelter title to their assets.

As the saying goes, if you treat money badly, it will move.

Note the vast wealth being moved by smart US citizens from the first group of States to the others. There are States that offer much lower costs, including low or no state or local income taxes, no estate, capital gains or capital investment taxes, and also much greater legal protections and flexibility. (Some others, believe it or not, are actually getting worse!)

Brown’s book, based on reliable US Census data, focuses almost entirely on tax costs. Look at the savings, which can exceed 13% per year in the above situations.

NOTE! The important federal tax reforms in December 2017 will have a huge influence in accelerating this movement of assets (and even some relocation of families) from the coasts to certain "red states" in the Central United States! Fortunately, some of these also provide the most modern, protective statutory frameworks for sheltering wealth!

The reforms, though reducing tax rates, do close several tax breaks, most prominent of which is the
deduction in federal income currently provided for payments of state and local income taxes ("SALT"). This puts a huge burden on those who continue to title their assets in the high tax States, since one can no longer reduce federal income taxes by the amount of those very high state and local taxes.

Where there are no such taxes, there will be no such impact. Can you visualize the difference in your tax costs? Fortunately, as Travis Brown shows, there is a way to cope!

To see who is affected, note how
Forbes recently ranked the best and worst States for taxes at

As you might expect, politicians in States like New York and California, in particular, are livid about this! They now have far more trouble justifying their exorbitant taxes and inefficiencies, since they can no longer soften the impact by using that deduction.

(Think about it, the deduction forces persons in lower tax States to subsidize their profligacy. Is that fair or justifiable? Why should you fund it?) Instead, you may benefit greatly by changing title to assets to a more favorable State! Why take a chance?

Keep in mind that proper ownership structure in a better location also offers other very real benefits, such as better asset protection from creditors and lawsuits, extreme privacy, freedom from excessive regulation, infinite duration “dynasty” trusts, security and great flexibility whether one owns a business, real estate or other assets.

You may even wish to set up your own private family trust company with private banking and investment powers, as many very high net worth US families have done.

The best trust jurisdictions offer all of these. Note that if you place title to assets in one of those can still live elsewhere, and hold assets located even outside the US. One can simply use a purely administrative trust company based there to do the paperwork and filings to comply with local law. Since such States continue to fine tune those laws, it is best to choose the right location and local provider, though for investment and other purposes, you can retain your existing advisors.

I’ve Been a Client Myself

As a client myself handling law matters in major multinationals, I have long worked closely with (and have actually hired) many top-quality lawyers, CPAs, investment advisors, bankers and other professionals, including the biggest firms in the world. In this area, I can now offer support (including the right structure and other advantages) to those advisors and their clients, without conflicting with their interests.

Domestic and Cross-Border Clients

I currently restrict my focus to helping clients protect their savings and businesses. I do this by diagnosing the best ways to shelter assets in the best safe haven in the world, the United States. They are free to choose their favorite places to reside, as well as where they choose to hold title to their assets and companies.

I also support advisors on how best to help their clients place those investments there. (Again, the assets can be physically located elsewhere as you choose, as long as title is held through a trust or other protective entity in the right State.)

Protected Investing In the United States • Results That Work • Extraordinary, High Value Outcomes