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Clients need to be cautious regarding setting up offshore bank accounts. There are a large group of
unscrupulous practitioners that solicit and persuade unknowing clients to trust the empowering secrecy
laws of the foreign jurisdiction and encourage them not report ownership of the funds to the Internal
Revenue Service. This is tax fraud and will get you in legal and financial trouble. The Internal Revenue
requires U.S. taxpayers to report any financial interest in any offshore account by filing a form 90-22.1
with their tax return.
A foreign bank account can be useful when asset protection planning. However protected funds often
remain in the United States. Judgment creditors can discover an offshore account by reviewing a client's
personal financial statement and/or the client's tax returns.
Professional planning would allow us to structure the offshore account so that the assets are not included
on the balance sheet of the client. A properly planned asset protection trust should do this since the
owner of the account is in the name of the trust not the client. The offshore account should never be in
the individual name of the client.
In addition clients can minimize the exposure to creditors from reporting the account to the IRS on the
required Form 90-22.1. Note that under tax law even though the client is not an owner for legal purposes
can be considered the owner of the accounts for tax purposes in a typical asset protection trust. There
are several techniques to minimize the risk from the filing of the 90-22.1, although this risk is minimal
if the trust is set up long before trouble arises.
Please feel free to contact us for more information about our
Asset Protection Services. Email Us
or give us a call at (800) 982 0462. We look forward to hearing from you.
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