In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind's experience with rulers, there was little to fear from it.
Stay at home is still the norm for Americans,
but it's a norm that is slowly fading.
Specific worries include:
exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups;fear of where income tax rates might climb;the prospect of losing a family business in a regulatory battle or simply through estate tax;the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly;the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls;the memory and precedent of the forced gold sales of 1933;
and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.
Most Americans still have yet to stick a single financial toe across the border, but more and more are considering it. Many, perhaps millions of toes are now twitching at the thought. Their owners want to end their absolute dependence on what happens in the US. They want to prepare for whatever is coming down the road, even though they don't know what it will be. They want to be as ready as possible, even though their worries can only guess at what's ahead.
Because internationalizing your financial life means dealing with the unfamiliar, the project can seem more complex than it really is, so it's best to start with the simplest measures, even if by themselves they don't give you all the safety you're looking for. Even from a simple beginning, what you learn with each step will make the next step easier to plan. Start with the first rung on the ladder of internationalization. Then climb, at your own speed, to reach the right level of protection.
It's best to buy the coins for cash, for maximum privacy. And there is a good reason to favor one-tenth-ounce gold Eagles. Gold coins mean readiness for troubled times; if you ever need to dispose of the gold in an informal market, it will be easier to do so with small-denomination coins that are widely recognizable and whose value matches the scale on which large numbers of people normally trade.
The premium on one-tenth-ounce coins (the price compared with the value of the gold content) is higher than on the larger coins ~ usually about 15% for the small coins vs. 5% for one-ounce Eagles.
In principle, there are legal avenues for undoing a freeze or a seizure. But you'd need a lawyer, and being suddenly penniless could get in the way of hiring one.
A foreign bank account protects you from being trapped in such a nightmare. The US government can get to your foreign bank account eventually, because it can get to you. But a lightning seizure is very unlikely, because it would require a foreign government to override its own legal processes, which it generally wouldn't be willing to do except in a grave emergency. So if your liquid assets at home were frozen, you would have cash outside the US to fund the legal cost of untangling the problem.
A foreign bank account is also a way to step back from the uncertainties of the US dollar, since the account could be denominated in another currency.
The US government has seen to it that Americans are no longer welcome customers at foreign banks. So forget about opening a Swiss bank account in your own name. However, if you apply in person (not by mail), you still can open a bank account in Canada. Be prepared to show your passport and to give the bank an original utility bill that confirms your place of residence.
The forced sale was a prelude to an increase in the official gold price to $35. The government's reason for wanting that price rise was to gain leeway for a substantial, though limited, inflation of the dollar while keeping the dollar on the international gold standard. The forced sale was a way for the government, which operated in a political environment that still disfavored deficit spending, to capture the profit from the price rise. That profit would be a kitty for more spending without more borrowing.
Today there is no gold standard for the government to stay on. And deficit spending isn't something politicians especially want to avoid; they've promoted it as a civic duty, to stimulate the economy. So the depression-era motives for a gold grab don't seem to apply. Yet you can't listen to a conversation between two gold investors without hearing the seizure topic coming up.
Are they just scaring each other? I don't believe so. There are two potential motives for the government to again treat gold differently from everything else.
If the dollar's slide in foreign exchange markets threatens to turn into a panic, the government might want to use gold sales to foreigners to mop up foreign-held dollars ~ in which case it might see a need to mop up the gold owned by its own citizens.
That's bad enough, but a second motive is a good bit nastier. At a visceral level, people who have centered their lives on government just don't like gold. It's an affront to the government's authority to command and control and an insult to government's supposed aptitude for solving economic problems. So disrespectful.
From their point of view, every ounce purchased by an American is another tomato hurled at the political class. And the purchasers still constitute a tiny minority of the voting population. What could be more satisfying and convenient for the politicians than to kick sand in the face of gold investors for being such lousy citizens?
It could be a prohibition on gold ownership coupled with a prohibition on sales of gold to foreigners. The only one left to buy would be the government, and being the only bidder, it would be a very low bidder.It could be a commandeering of privately owned gold, with token compensation like the $15 per day paid for jury duty.It could be a super tax, say 90%, on gold profits, which would get the job done slowly... or quickly if it were accompanied by a mark-to-market rule.
Or it could be something none of us has thought of yet.
Their gold wouldn't be the low-hanging fruit ~ it would be higher up in the tree and more trouble to get to. That's why, in a casino sense, gold overseas is a different bet and a better bet than gold at home.
Maybe it will turn out that storing gold overseas won't matter at all, in which case a little effort will have been wasted. And maybe it will turn out to matter a great deal.
Swiss annuities have long held a special place in personal financial planning. Such an annuity is denominated in Swiss francs, i.e., it's francs, not dollars, that are owed to you. The Swiss insurance industry has a perfect record; policyholders have never been hurt by a default. And a Swiss annuity comes with an element of protection from would-be lawsuit creditors.
The Swiss franc is, like every other modern-day currency, just a piece of paper. It's not redeemable for anything, not even a piece of chocolate. But the Swiss National Bank has a remarkable record of restraint in issuing new francs, which means that the franc's prospects for holding its value have long been rated better than for any other currency.
I believe that is still the case, despite the Swiss National Bank's current policy of suppressing any further increase in the price of the franc.
Under Swiss law, an annuity is protected from the owner's creditors if the beneficiaries consist of family members or if the owner has made a beneficiary designation that is irrevocable. For an owner in the US, that protection is not an impenetrable barrier to the winner of a lawsuit, but it is a barrier, and it makes the annuity a less-than-ideal prize for an attacker.
Earnings that are accumulating in a Swiss annuity are not eligible for tax deferral for a US taxpayer. The advantages are currency protection, the reliability of Swiss insurance companies and a measure of asset protection.
First, the property's value will depend on economic conditions in the country you've chosen, not on what happens in the US. If the economy of the foreign country grows and prospers, there is likely to be a spillover effect on the market value of your house, apartment, farm or patch of land ~ regardless of what is going on in the US.
Second, a foreign real estate investment would be hard to digest for any future capital controls imposed by the US.New rules could compel you to repatriate the cash you have in a foreign bank; rules forcing you to liquidate your foreign real estate and bring the money home would be another matter.Selling real estate isn't quick or easy.
How does the government compel an unwilling citizen to do what an eager seller often finds difficult to accomplish?
Third, as a potential prize for a lawsuit attacker, foreign real estate is a stinker. Even if he wins a judgment against you, foreclosing on your foreign property would be difficult to impossible, since it would require the cooperation of the courts in the foreign country, about whose rules and procedures the attacker's attorney probably knows nothing. But he does know that even if he persuades a court in the US to order you to sell the property, the inherent illiquidity of real estate would give you plenty of opportunities for foot-dragging.
Plan to spend a few weeks there.
Minimize your hotel hours, to maximize your exposure to the rest of the locale.
Try to meet Americans, perhaps expatriates, who know their way around the place and who can point you toward a real estate broker who won't try to treat you as an out-of-town sucker.
Buying foreign real estate isn't for everyone. It requires a big investment in time and effort, but it could repay you with an asset that is low on the list of things anyone might try to take from you.
As the LLC's Manager, you would open a non-US bank account or brokerage account in the name of the LLC and transfer your personal cash and investments to that account. Again as Manager, you would make all the investment decisions.
For a US person, a foreign LLC can be a powerful door-opener. It is welcome at many banks and brokerage firms where you personally would be turned away. This enables you to keep a wider range of assets outside the US, which puts more wealth beyond the reach of any arbitrary bureaucratic action. It also gives you investment choices that aren't available at home.
Notice the fundamental difference between a foreign LLC and what is going on at the first four rungs of the ladder of internationalization.
With the LLC, you no longer personally own the assets you are trying to protect; the company owns them. This makes the LLC a powerful device for reducing your family's exposure to gift and estate taxes. And with the right provisions in the operating agreement, it can provide strong protection against loss to any malicious lawsuit.
By its nature, a foreign business lives in a different environment than a business in the US. Economic troubles at home might not touch it.
If you already have a business in the US that has foreign customers or foreign suppliers, you may be able to relocate the business's non-US activities to a foreign LLC. Internet-based businesses are especially amenable to internationalization.
Locating your business in a low-tax or no-tax jurisdiction, if it is practical to do so, can reduce your overall tax burden. In many cases, a foreign LLC that operates a business should elect to be treated as a foreign corporation for US income tax purposes. That can allow the business to reinvest its earnings while it pays little in current taxes and you personally pay nothing.
To serve the purposes of protection and tax savings, an international trust is irrevocable (you can't simply call the institution you've chosen as trustee and say you've changed your mind) and discretionary (meaning that the trustee has a responsibility to decide when to send a check to you or to any of the other beneficiaries you've included).
Getting the protection and tax savings of an international trust doesn't require you to give up management control of the assets. The trust can be limited to owning just one thing ~ an LLC that you manage. The LLC owns all the investments, under your supervision as LLC Manager.
If you establish an international trust, it will be tied to you for income tax purposes. But at the end of your lifetime, it will completely disconnect from the US tax system.
At that point, for the benefit of your survivors, it becomes...
As you move up the ladder, you'll learn about the reporting requirements for US taxpayers.
[Every day you delay beginning your internationalization strategy is another day your bank accounts are hemorrhaging. Learn how to protect yourself.]