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Choosing the Right People and Place
for Your Offshore Trust
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| Thursday, April 13, 2006 - Vol. 8 No. 74 |
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In Today's Letter: Comment: Choosing the Right People and Place for Your Offshore Trust
Offshore: Denmark Named "The Best Place to Do Business"
Wealth: The Middle East Markets Head for Severe Corrections
Privacy & Rights: IRS Credit Card Fishing Continues
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Choosing the Right People and Place for Your Offshore Trust
Today's comment is from Derek Sambrook, Member of The Sovereign Society Council of Experts and Managing Director of Trust Services, S.A., a licensed trust company in Panama. Derek has been a trust and estate practitioner for over 30 years.
Dear A-Letter Reader:
If you're attending The Sovereign Society's Total Wealth Symposium in Panama next month, you'll find Panama offers both privacy and a tax-friendly environment for foreigners. But even if you choose Panama as an offshore haven for your finances, you still need to secure competent representation with ongoing quality service.
You often hear about conflicts of interest in business. The danger of compromise is always present, particularly when using offshore financial services. Let's look at an example I've encountered since I first went offshore in the 1970s. An offshore bank has a subsidiary trust company, which manages millions of US dollars on behalf of trust and foundation beneficiaries. The financial welfare of the bank and its trust company are often inextricably linked. Therefore banks point any customers needing a trust company's services in the direction of their trust subsidiary. Conversely, when the trust company needs banking facilities for clients, the trust company will look to its parent bank to provide them.
The arrangement works for the parent bank, but not necessarily for its affiliated trust company (which shouldn't put the bank's profits before its fiduciary responsibilities). If the trustee is just opening a current bank account, earning no interest, then one quality bank is as good as the next. But this arrangement can get complicated if a customer needs a bank to do anything else.
The trust company crosses the line if fiduciaries (generic term for both trustees and foundation councils) keep large amounts of cash with a parent bank on current account which could earn interest elsewhere or hold investments or structured products with the parent bank when better choices are available elsewhere. The banker/fiduciary distinction might be more readily understood today, but the potential for conflicts remains, especially when trust managers are salaried employees of a parent bank and not independent practitioners.
Before you set up a trust, check if your trustees are affiliated with any other service provider and what commission arrangements, if any, are in place. Also, you should ensure your provider will serve the trust's best interests rather than their own. Most importantly, make sure your selected trust company specialize in trust services. Just as you shouldn't expect a delicious steak to be served in a fish restaurant, you shouldn't expect a company to necessarily offer the best trust services when it's not their specialty.
Always look for offshore service providers who are conscientious in their field and specialize in trust services. It's not difficult - you just have to find the right restaurant. And Panama is an excellent place to start when you're "dining" offshore.
Derek Sambrook
Managing Director of Trust Services, S.A.
www.trustservices.net
Editor's Note: Derek Sambrook will speak at the Total Wealth Symposium on May 17- May 20 in Panama. Click here to learn more about this event. Also, you can click here to read more of Derek Sambrook's writings.
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Denmark Named "The Best Place to Do Business"
The Economist just rated Denmark as having the best business climate. The rating was based on many factors, including Denmark's labor market reforms and high standards of education. Last year, Moody's ranked Denmark the safest banking jurisdiction in the world. So the country apparently has quite a bit to recommend to offshore investors. But you probably already knew that. Thomas Fischer of Denmark's Jyske Bank is on The Sovereign Society's Council of Experts. In A-Letter articles, issues of The Sovereign Individual and at Sovereign Society Conferences, he has introduced Sovereign Society members to such innovative financial ideas as the multi-currency sandwich and structured investments in hard and soft commodities that guarantee your capital yet give you up to 120% of the upside. We can attest not only to Denmark's friendly business climate-but to their astuteness as global financial advisors.
LINK: Please click here for more information.
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The Middle East Markets Head for Severe Corrections
The Middle East stock market has been the biggest bull market story of this decade, but that's all about to change in the coming months. Driven to the moon by surging energy prices and rising tourist revenues, stock markets from Cairo to Oman are enjoying triple-digit gains. Even adjusted for US dollars, the returns have been nothing short of spectacular. But since March, all bourses are in the midst of a severe correction following mind-blowing gains.
After soaring more than tenfold since the end of 1999, the Saudi Arabia Index in Riyadh has corrected 13.5% from its all-time high. Saudi Arabia, the world's largest oil producer, has ranked among the world's best-performing bourses this decade. The local bourse reached an all-time high on February 25, surging to 9,082.44. Recently, the Saudi Arabia Index stood at 7,855.77, up 9.3% in 2006, despite the correction. The stock market began to slide in late March following an exchange-implemented government measure to stem the market's decline. New rules in Riyadh now allow stocks to fluctuate by as much as 10% each day, instead of the previously imposed 5% band.
Other countries with staggering returns this decade include Egypt ( 832%), Qatar ( 685%), United Arab Emirates ( 580%), Jordan ( 489%), Palestine ( 436%), Lebanon ( 368%), Oman ( 201%) and Bahrain ( 81%).
Eric Roseman, Investment Director
The Sovereign Society
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IRS Credit Card Fishing Continues
In continued persecution of Americans allegedly using offshore bank accounts to avoid taxes, the IRS has gotten a San Francisco US District Court to authorize a wholesale fishing expedition into to the PayPal payment system. The IRS has demanded files from all Americans using PayPal accounts in Anguilla, Costa Rica, Cyprus, the Channel Islands, Hong Kong, Isle of Man, Luxembourg, Malta, Singapore, and Switzerland. The IRS got a similar blanket fishing license for VISA, MasterCard and American Express several years ago. This credit card witch hunt turned up only a little more then 1,000 US taxpayers, who accepted an "amnesty" and turned themselves in for using unreported offshore cards.
Previously the IRS had claimed millions of Americans were involved and billions in taxes had been illegal avoided. None of their numbers held up. Then, only AmEx resisted IRS demands and limited what information they turned over. The question is whether PayPal will protect their customers' privacy. PayPal already caved into NY Atty. Gen. Spitzer and stopped allowing US persons to use their system to place offshore Internet bets. LINK: Please click here for more information.
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