Offshore Financial Freedom 1 [1]

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Offsh ore Finan cial Freed om 1

OFFSHORE AND ASSET PROTECTION GUIDE 1

COPYRIGHT AND DISCLAIMER Copyright All text, graphics, the selection and arrangement thereof (unless otherwise noted) are Copyright © 1997-2016, Top Secret Publishing (TSP), 5025 N Central Ave #414, Phoenix, AZ 85012 USA. ALL RIGHTS RESERVED. Some of the articles contained in this report are considered Bonus articles, provided as a benefit to the reader. All Bonus articles are copyright their respective authors. Disclaimer Top Secret Publishing is providing this report on an "as is" basis and makes no representations or warranties of any kind with respect to its contents. The articles contained herein are sold for informational purposes only and all local laws apply. Any use or misuse of this information is solely the responsibility of the purchaser. TSP disclaims all such representations and warranties, including for example warranties of merchantability and fitness for a particular purpose. In addition, TSP does not represent or warrant that the information in this report is accurate, complete or current. This information was gathered from sources believed to be reliable, but cannot be guaranteed insofar as they apply to any particular individual. This report is sold with the understanding that the TSP is not engaged in rendering legal or accounting services. Questions relevant to the specific tax, legal, and accounting needs of the reader should be addressed to practicing members of those professions. Neither TSP nor any of its directors, employees, other representatives or advertisers will be liable for damages arising out of or in connection with the use of this report. This is a comprehensive limitation of liability that applies to all damages of any kind, including (without limitation) compensatory, direct, indirect or consequential damages, loss of data, income or profit, loss of or damage to property and claims of third parties. Top Secret Publishing 5025 N Central Ave #414, Phoenix, Arizona 85012 Fax: 443.596.2595 Internet: http://secret-solutions.com Email: [email protected]

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TABLE OF CONTENTS HOW TO CUT YOUR TAXES UP TO 50% AND PROTECT YOUR HOLDINGS FROM LAWSUITS..............................................................5 GATEWAY TO FINANCIAL FREEDOM.................................................22 ASSET PROTECTION PLANNING UTILIZING THE FOREIGN ASSET PROTECTION TRUST........................................................................ 26 IRS NOTES ON TAX HAVENS.............................................................33 GENERAL OFFSHORE AND ASSET PROTECTION NOTES.................37 WHAT THE IRS AND OTHER TAX AUTHORITIES DON'T WANT YOU TO KNOW... THE TRUTH!.........................................................................43 TAXES - HOW TO MINIMIZE FORCED ASSET REDUCTION................48 TYPES OF TAX HAVENS.....................................................................52 THE STRATEGIC USE OF THE PRIVATE TRUST.................................54 MAKING A TRUST WORK FOR YOU...................................................57 WHY YOU NEED FINANCIAL PRIVACY ..............................................64 WHO SHOULD CONSIDER GOING OFFSHORE? ...............................66 OFFSHORE BANKING........................................................................68 OFFSHORE TAX HAVEN BANKING AND TRUSTS...............................70 OFFSHORE TRUST INFORMATION ...................................................79 USING OFFSHORE BANK ACCOUNTS ..............................................82 PRACTICAL APPLICATIONS OF GOING OFFSHORE .........................83 OFFSHORE CORPORATIONS AND IBCS ...........................................84 TAX HAVENS ..................................................................................... 86 TAXES AND TAX HAVENS ..................................................................88 THE PT PHILOSOPHY ....................................................................... 89 INFORMATION ON OFFSHORE HAVENS............................................92 OFFSHORE BANKING......................................................................101 THE WORLD'S ONLY UNTRACEABLE BANK ACCOUNT ..................104 WILLS OR TRUSTS? THE CASE FOR LIVING TRUSTS ....................112 TRUTH AND FICTION ABOUT OPENING A SWISS BANK ACCOUNT 128 CAMOUFLAGE PASSPORTS - THE UNCONVENTIONAL PRIVACY TOOL ........................................................................................................ 131

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ASSET PROTECTION .....................................................................134 GETTING A SECOND CITIZENSHIP .................................................141 INTERNATIONAL DRIVING PERMIT..................................................144 CITIZENSHIP - INSIDER'S GUIDE TO INSTANT CITIZENSHIP'S AND SECOND PASSPORTS..................................................................... 145 MERCHANT BANKING & BACK TO BACK LOANS.............................152

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HOW TO CUT YOUR TAXES UP TO 50% AND PROTECT YOUR HOLDINGS FROM LAWSUITS   

ARE YOU PAYING TOO MUCH IN INCOME TAXES? DID YOU KNOW THERE ARE LEGAL WAYS TO CUT YOUR SMALL BUSINESS TAXES IN HALF? DID YOU KNOW YOU COULD PROTECT YOUR FAMILY NEST EGG FROM LAWSUITS AND BECOME JUDGMENT PROOF

The Disturbing Trends Every man, woman, and child in America will be sued an average of 5 times in their lifetime! Earn more than $50,000 a year and that number triples. YOU MIGHT BE NEXT! Courts are now letting "your creditors" seize assets held in the names of wives and children! 40 years ago a middle income family paid about 2% of it's earnings in taxes, today it pays roughly 44% (a 2,200% increase - and rising) According to the Government Accounting Office, in 1992 about 1.4 million taxpayers were mistakenly notified of I.R.S. penalties they didn't have to pay. The average taxpayer works 190 days a year just to pay the government taxes, and the rest of the year for his family. Retirement does not eliminate malpractice or liability exposure! You may be sued for events that happened many years ago. Pensions are also no longer safe. As a director or officer of a corporation, you can lose all of your personal assets if the corporation is sued! You can protect yourself if you are sued for $12 million but only have $1 million in liability coverage or if your liability insurance provider becomes insolvent! Do You Need An Strategy To Protect Your Income Or Holdings? Take This Test Now And Find Out Before It's Too Late! If you can answer YES to 2 or 3 of the following questions, this report is important to you, and if you can say YES to 4 or 5 questions the techniques you will learn in this report could be vital to your financial future. Ask Yourself The Following Questions: Do you have more than $100,000 equity in your home? Do you have liquid assets worth more than $100,000? Are you a director or officer in a corporation?

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Are you a general partner in any partnerships? Do you have an annual income in excess of $50,000? Are you single or divorced and contemplating marriage or remarriage? Do you own a boat or plane? Do you have teenage children? Do you own or lease equipment or residential or commercial property? Are you a contractor, manufacturer, physician, surgeon, architect, CPA, professional, or self employed individual? Have you been uninsured or underinsured for any period of time? Are you expecting an inheritance? A Proper Strategy Can Cut Your Taxes Up To 50% And Keep You From Losing Your Family Nest Egg In this report you will learn how a proper strategy can help you: 1. REDUCE YOUR SMALL BUSINESS INCOME TAXES UP TO 50%! 2. REDUCE SELF EMPLOYMENT TAXES! 3. ENJOY TAX FREE COMPOUND GROWTH OF INVESTMENTS! 4. SELL PROPERTY AND DEFER YOUR CAPITAL GAINS TAX! 5. PROTECT YOUR HOME, cash, investment real estate, stocks and bonds, life insurance, gold and silver, commodities and virtually anything of value! 6. REDUCE OR ELIMINATE EXPENSIVE LIABILITY INSURANCE PREMIUMS! 7. AVOID ESTATE TAXES, death taxes, and inheritance taxes, also avoid costly probate! 8. PROTECT A BUSINESS OR OTHER EXPENSIVE ASSETS FROM DIVORCE! 9. BECOME A MILLIONAIRE THROUGH TAX SAVINGS ALONE. 10. PASS ON EVERY PENNY OF FAMILY NEST EGG TO YOUR HEIRS! 11. Run your business in COMPLETE PRIVACY, without registering the directors or shareholders with any state agency if your business is organized as a Business Trust. Trust Introduction Many of these strategies utilize trusts, not alone, but in combination with corporations, limited liability companies, etc. You most likely know what a corporation is, but what is a trust? To state it in the simplest terms, "A trust is a right of property, real or personal. held by one party for the benefit of another."

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A trust, then is a Contract in which an individual sometimes called the the Grantor transfers property to one or more Trustees, to be held or managed for one or more Beneficiaries. There are over 50 types of trusts in use today for a variety of purposes. We cannot examine them all, but they include Living Trusts, Q-tip trusts, Charitable Remainder Trusts, Land Trusts, Children's Trusts, Foreign Trusts, and many more. What Is A Business Trust? The type of trust that we want to pursue is the Business Trust. What is a Business Trust? Chances are your accountant or attorney may not know what a Business Trust is. This is not surprising, as there are currently no courses covering common law business trusts in any major law school. The last known course covering common law business trusts was offered by the University of Oklahoma in 1954. Only a handful of the most sophisticated tax professionals understand and utilize Business Trusts. The Business Trust had it's beginnings in England in the 18th century, and is basically the ordinary trust adopted to the new purpose of carrying on a business. Two famous early business Trusts in England were Lloyds of London (1811) and The London Stock Exchange (1802). Business Trusts began operating in Massachusetts in 1827 to circumvent a prohibition in that state against the organization of corporations to deal in real estate. This is the origin of the term "Massachusetts Trust". The "Massachusetts Trust" is a form of business organization, common in that State, consisting essentially of an agreement whereby property is conveyed to trustees, to be held and managed for the benefit of the holders of transferable certificates issued by the trustees. These certificates, which resemble shares of stock in a corporation, entitled the holders to share in the income of the property. Massachusetts trusts, originated solely because of the hostility of some state governments towards corporations, and because those organizing trusts desired some of the same advantages of incorporating without incurring the regulatory burdens and restrictions placed on corporations. The trust has been employed in nearly every field of human activity. Recently it has been and is utilized in the field of commerce and trade in combination the corporation or limited liability company. Necessary Characteristics Of A Business Trust The definition given above for a Business Trust describes a flexible and efficient business organization. In fact, the Business Trust was historically such an attractive vehicle for conducting business that John Sears, in his authoritative work Trust Estates As Business maintained that the Business Trust represented "the ideal toward which much corporate legislation has strived, and will continue to strive, in vain."

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But the Business Trust described in this book is not the same as the traditional "Massachusetts-type" business trust. Due to changes in the tax laws since the 1930's, and due to the rise of a great deal of statute law regulating many aspects of both the corporation and the traditional Massachusetts business trust, the use of the Business Trust described in this book has required several modifications in order to achieve all of the desired benefits. A properly constructed Business Trust of the type described in this book, established for the purpose of operating an on-going business, must possess several characteristics. A Business Trust must be a non-grantor trust formed under the commonlaw and Constitutional right of contract. Most trusts formed by attorneys today are statutory in nature and mainly fall in the category of Grantor Trust, primarily because most attorneys and accountants do not receive training in Business Trusts and therefore do not understand them. As I mentioned before, the last known school course covering common law business trusts was offered by the University of Oklahoma in 1954, and no other known courses have been offered in the United States since that time. Good consulting professionals have been able to learn their business trust skills through personal contact and training with highly experienced attorney mentors, some of whom have been utilizing the Business Trust as a tax saving and asset protection tool for their clients. Today's Pure Business Trust must avoid those "corporate attributes" which would cause it to be treated and taxed like a corporation under statutory provisions regulating corporations. The four (4) main "corporation attributes" are: (1) centralized management; (2) continuity of life; (3) limited personal liability of trustees; and (4) easy transferability of beneficial interest in the trust. If the trust possesses any three (3) of these attributes, it will be taxed as a corporation . As long as a Business Trust established to operate a business does not have the "attributes "of a corporation (or an old-style Massachusetts-type trust) as discussed in treasury regulation 301.7701-2 it will not be treated or taxed like a corporation.

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A Business Trust of the type described herein is referred to by many names such as a "Pure Trust", "True Trust", "Contractual Company", and "Unincorporated Business Organization". Court Cases Establishing Validity Of Pure Trusts 1. Berry vs. McCourt, 204 NE end 235 (1965). A pure trust is a contractual relationship in Trust form. 2. Baker vs. Stem, 58 A.L.R. 462. It is established by legal precedent that pure trusts are lawful, valid business organizations. 3. Weeks vs. Sibley, (D.C.) 269 F. 155. A pure trust is still legal, even if formed for the express purpose of avoiding taxation. 4. Eliot vs. Freeman, 220 U.S. 178 (1 911). The creation of a pure trust is not subject to statutory law, and a pure trust is not subject to legislative restrictions as are corporations. 5. Schuman-Heink vs. Folsom, 15g NE 250 (1927). If it is free of control by certificate holders then it is a pure Trust. 6. Goldwater vs. Oltruan, 292 P.624 (1930). A Business Trust is lawful wherever contracts are lawful. 7. Morrissey vs. Cornmissioner, 296 U.S. 344 (1935). A Trust is taxable as an association if a corporate structure is maintained. Who Uses Trusts? Businesses Currently Operating As Trusts Include: During the past 10-15 years detrimental and restrictive tax laws and state regulations have resulted in the resurgence in the use of Business Trusts (mainly in combination with other forms of business, such as the corporation, or limited liability company): SONY, U-HAUL, Boston Celtics, Merrill Lynch, Chicago Merchandise Mart, Fidelity Magellan Mutual Fund (The largest in America), State Street Investment Trust, Edward II. Hines Lumber Company, Masabi Trust (traded daily on N.Y.S.E.), Bennet Paint, Scudder Funds. Kemper Funds Individuals Who Use Trusts Include: Ross Perot (Perot Investment Trust), Joseph and Edward Kennedy, Jimmy Carter (Former President), William Waldorf Astor, Bob Kerry (Senator), Henry Ford II, Hubert H. Humphrey (Former Senator), The Dupont Family, The Bunker Hunt Family, The Paul Mellon Family, The Rockefeller Family, Rupert Murdock (Media Mogul). Ronald Reagan (Former President), OVER TWO MILLION U.S. TAXPAYERS... Trusts Were Commonly Used By Our Founding Fathers, Including: Benjamin Franklin, John Quincy Adams, Alexander Hamilton

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Trusts Are Recognized As A Legitimate Tax Reduction Tool By The Following Brokerage Firms: Shearson American Express*, Merril Lynch*, E.F. Hutton*. Payne Webber*, Price Waterhouse**, Deloitte & Touche**, and many of the smaller brokerage firms. (*) Source: Wall Street Journal (**) Source: D & B Reports It's time to make the "MILLION DOLLAR "DECISION. The decision to ACHIEVE TRUE WEALTH THROUGH TAX SAVINGS! How much tax money will your family end up paying over your lifetime? Do you think your family will pay $200,000? How about $400,000? Getting warmer. Could it be $600,000? Keep on going. Taxes are the biggest expense in your life. Bigger than your home mortgage and your children1s college education combined. You and your family will probably end up spending over $1,000,000 In federal, state, and local taxes In your lifetime. Yes - the average household making $50,000 a year will throw away one million dollars in taxes over the years. But after a lifetime of hard work and paying huge taxes, 80% of all retirees wind up being totally dependent on an almost bankrupt social security system. But if you managed to save only $5,000 in taxes per year using our strategies and invested it (at 15% per year) in a tax deferred environment you would soon have a mountain of cash reserves, reserves you could count on in times of need or retirement. Take a look at the following chart: By taking advantage of legal loopholes you will have a $121,746 nest egg in 10 years. In 20 years you will have $594,050. In 25 years you will have $1,228,559 or over one million dollars from Invested tax savings alone. If you save even more, and get even higher investment returns like many of our other clients you could quickly achieve total financial independence and end up with a small fortune. Your yearly tax savings grow so large so fast because of the power of compound growth. Also, investments will grow and compound almost

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twice as fast in a tax deferred environment. Tax planning with trusts, corporations, and limited liability companies is the simplest and surest way to build your family's wealth. START TODAY! Summary You now know that:  A Business Trust is a LEGAL business entity  A Business Trust can be utilized along with corporations, partnerships, etc. to: PROTECT ASSETS AND REDUCE TAXES AND INCREASE PRIVACY You have also read in this book that TAXES on business profits CAN BE CUT BY AS MUCH AS HALF (50%) or more, by using a Business Trust along with other structures to: "GET TAX FREE FRINGE BENEFITS" AND/OR "SPLIT INCOME" AND/OR "UPSTREAM PROFITS" Get Tax Free Fringe Benefits You may be one of the 70% of small business persons organized as a sole proprietorship or general partnership paying high taxes. Right now, many of the things you are paying for with AFTER TAX income, could be paid for with TAX FREE income if your business is reorganized as a corporation. If your business is reorganized as a corporation, with you as one of its employees, the business can pay for many of your normal every day expenses and deduct them as a business expense. Every dollar deducted in this way totally and legally avoids self employment taxes, federal taxes, and state taxes (TAX FREE income). The following is a list of various TAX FREE FRINGE BENEFITS that can be provided to you as an employee of a business trust or corporation, and deducted as a business expense under the right circumstances:  Deduct depreciation on your home (')y making it the corporate home office)  Deduct depreciation on furniture and appliances (by making them corporate assets)  Deduct your mortgage interest from pre-tax (TAX FREE) income  Deduct home repairs and maintenance  Deduct home utility costs  Deduct home property insurance  Deduct health and accident insurance (employee, spouse, and dependents)  Deduct life insurance (up to $50,000 in benefits)  Deduct medical and dental expenses (employee, spouse, and dependents)  Deduct your meals (employee meals only - in certain cases)

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Deduct your clothing (business related only) Deduct your children's day care costs Deduct travel and vacations (business related) Deduct education costs (employee only - business related) Deduct business and professional club dues (does not include health clubs)  Deduct cost of company gym (exercise equipment)  Deduct legal expenses (employee only)  Deduct company car, airplane, or boat (business related) In addition, the following benefits are TAX FREE to you as an employee of a business trust or corporation:  Occasional personal use of company copying machine, occasional parties and picnics for employees and their guests, holiday gifts with a low value (non cash), occasional tickets for entertainment events, as well as coffee and doughnuts and soft drinks furnished to employees. TAX FREE FRINGE BENEFITS can be combined with INCOME SPLITTING and PROFIT UPSTREAMING to reduce taxes as much as 50% or more, saving you thousands.     

"Income Splitting" - For Tax Reduction And Asset Protection About 70% of all small businesses are organized as SOLE PROPRIETORSHIPS AND GENERAL PARTNERSHIPS: These two forms of business basically represent individuals in business for themselves with little or no protection, and high taxes. A sole proprietor or a partnership could run their current business as a limited liability company (popularly known as an L.L.C.) combined with a business trust for better liability protection, more privacy, and tax reduction, or transfer all of the business assets to a business trust (or a trust-limited liability company combination). Such assets could be protected from the lawsuits that sneak up and destroy many unprepared small businesses. "They can't take what you don't own!". Protected assets could include business inventory, business equipment (such as computers, copiers, desks, etc.), a vehicle, and even business contracts (excellent for anyone receiving 1099's as independent contractors, Multi Level Marketers, etc.). Once the L.L.C.- trust combination is set up, several family members or several different companies can be made shareholders (of the business trust) or member/partners (of the limited liability company). Instead of all of the profits being realized by one person or company in a very high tax bracket, the income is split between several family members or companies in low or even zero tax brackets. Income splitting can be done with children of all ages. The professional with taxable income of around $90,000 may normally have a federal state, and self employment tax burden of $34,000 without proper tax

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planning. This same professional can instead split this same income between himself, his wife, his children and even a family corporation using the L.L.C.-trust combination so that the combined tax burden is reduced to only $19,500. Business income taxes can sometimes be cut by as much as half with this strategy. Self Employment or Social Security Taxes, the largest burden on many small business persons, are also reduced significantly because the income received by you and your family members via the trust is not considered self employment income by the Internal Revenue Service, therefore no self employment taxes are payable on this income. A instant tax savings of 15.3%. Tax savings can be even higher than 50% when utilizing a tax saving strategy known as "Profit Upstreaming". Profit Upstreaming means to shift profits from a high tax state or country to a company in a low or no tax state or country. Profit Upstreaming is most useful when income is high and more significant tax savings is desired, or the business person does not have very many family members to split income between. Profit Upstreaming can also provide better asset protection and privacy advantages. Many professionals such as physicians, dentists, chiropractors, attorneys, CPA's, insurance brokers/agents, etc. run their businesses as Professional Service Corporations. These are usually small to medium sized businesses and are closely held (i.e., no publicly offered shares). We could include in this group many other small to medium size professional corporations such as SubChapter S corporations, that are closely held. In terms of professional liability protection, estate planning, and tax management, this form of business organization offers very limited benefits. How could such corporations benefit by adding one or more business trusts or other structures? The corporation could divest itself of all real estate and business equipment by putting any buildings owned into a separate L.L.C.-trust combination business structure, and then lease the property or business equipment back from the

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L.L.C.. Remember: "They can't take what you don't own!". A physician, dentist, chiropractor or other medical professional, for example might place all professional equipment (x-rays, ultra-sounds, microscopes, lab equipment, examination tables, etc.) into one L.L.C.-trust combination for leasing business equipment. He might then place all other office equipment (desks, typewriters, computers, fax machines, filing cabinets, etc.) into a separate L.L.C.-trust combination for office equipment. As the beneficiaries of the trust or member/partners of the limited liability company the corporation, you, or your family members could receive the profits generated from the leasing operation. Again, Taxes are reduced by splitting income between family members or companies in low tax or no tax brackets, or profits can be upstreamed to a company in a low or no tax jurisdiction. If the property or equipment is owned by a corporation in tax free Nevada, all of the profits generated by the leasing operation can avoid state income taxes. Finally the corporation itself could continue to function, receiving payments, hiring employees, paying bills, etc., but would own few assets (the usual targets of liability proceedings), leasing its necessary property and equipment from the various independent L.L.C.-trust business combinations. Please note that both the business trust and the limited liability company can be utilized to provide some level of protection to assets, but far better protection of assets and tax savings result from using the trust and limited liability company in combination. The numerous asset protection and tax savings advantages of utilizing business structures that combine trusts with L.L.C.'s, or even trusts combined with corporations for that matter, can be clarified in your free initial consultation, which is yours within 30 days of receiving this book. An individual or company might require only a single L.L.C./trust combination. But a dry cleaning business with several locations and a small fleet of vehicles might need to place each location into a separate L.L.C./trust. A hotel, for example, might consider placing the bar, restaurant, pool area, and even its parking lot each into separate L.L.C. (a strategy in liability management that has been very successful) as a means of either protecting an asset or separating and isolating a potential liability. Another popular asset protection strategy among clients is to place real estate into a limited liability company that has a FOREIGN ASSET PROTECTION TRUST as a member/partner. This strategy is tax neutral provides no tax savings), but it allows you to maintain legal control and use of the property, while the majority of legal ownership of the property rests in a foreign country that does not recognize U.S. judgments, making it very frustrating and expensive for anyone who desires to take property from you. Important protection to assets is always added by using a foreign trust or foreign corporation in your strategy since the right foreign country will not recognize U.S. judgments. SHOULD YOU USE A FOREIGN ASSET PROTECTION STRATEGY?: Be aware that many of your fellow U.S. citizens are rapidly moving a portion of their assets to the safety of foreign trusts and/or corporations because of the alarming

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increase in property seizures and forfeitures taking place in the United States. Federal forfeitures alone have taken over $2.5 billion from U.S. citizens since 1985. State and local governments have seized billions more, and it's not just from drug dealers. Thousands of honest, private citizens have been victims. According to the nationwide newspaper USA Today, these billions can be taken without charging or convicting anyone of a crime, which is exactly what happens in 80% of the cases. Maybe you should play it safe, and have an offshore nest egg as well! "Profit Upstreaming System" - Tax Reduction Strategy Description Most are familiar with the common strategy used by many U.S. companies to reduce state income taxes. This strategy, called "upstreaming", is when company (A) in a state with high state income taxes (e.g. California), reduces it's taxable income by allowing most or all of it's profits to flow upstream to company (B) in a state with no state income taxes (e.g. Nevada). Real profit (what you get to use and enjoy) is increased with little effort since state income tax is avoided. The Nevada Business Upstreaming System is a common strategy used to reduce taxes but there are more aggressive strategies that are even more beneficial and profitable. Both state and federal taxes can be legally and safely reduced significantly or deferred indefinitely by using other exciting upstreaming strategies: 1. The Nevada Upstreaming System (Most Common - Avoids State Taxes) 2. The Foreign Business Upstreaming System (Very Common) 3. The L.L.C. - Business Trust - Private Family Foundation Upstreaming System

1.The Nevada Upstreaming System: Already discussed above.

2. The Foreign Business Upstreaming System: In this very common strategy the profits of a U.S. company (A) in any U.S. state, flow directly upstream via 1.R.C. 162 to a foreign company (B) in a low tax

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or tax free country. State and federal taxes are reduced today and can be invested on a tax deferred basis worldwide in this manner (when properly done).

3. The L.L.C. - Business Trust - Private Family Foundation Upstreaming System: In this strategy, the profits of any U.S. company (A) in any U.S. state, flow upstream via I.R.C. 162 to another U.S. company (B) organized as a Business Trust, and from there flow upstream via I.R.C. 642(c) to another U.S. company (C) organized as a Private Family Foundation qualified under I.R.C. 501(c)(3). State and federal taxes are reduced or deferred in this manner.

When properly done, a "Profit Upstreaming System" can shift thousands of dollars in profits to a low or no tax jurisdiction, and defer U.S. taxes until used for personal purposes. The flexible tax laws that apply to Business Trusts are crucial to up streaming strategy #3. There are also variations to these basic strategies that are used, depending on your situation. Every client is unique and requires something slightly or very different than the guy next door. These Profit Upstreaming Systerns allow YOU to have the same advantages enjoyed daily by large multinational corporations. "Choose Your Tax Reduction Strategy" - Income Splitting Or Profit Upstreaming YOU CAN REDUCE YOUR SMALL BUSINESS TAXES UP TO 50% or even more with INCOME SPLITTING OR PROFIT UPSTREAMING! In fact YOU ARE PROBABLY OVER PAYING YOUR TAXES. With taxes rapidly on the rise it is time you took action to protect your family wealth from high taxes and lawsuits?

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Look at the following three typical family businesses (a married couple with two children one under 14 and one over 14) that each worked hard and made a net profit of $50,000. FAMILY 1: Net Profit = $50,000 Self employment income paid to husband and wife. Taxes Paid:

$7,064 in self employment taxes $4,489 in federal taxes $1,197 in state taxes $12,750 = Total taxes paid in 1996 (they overpaid their taxes)

FAMILY 2: Net Profit = $50,000 (the smarter family - used income splitting) Profit Paid To: income.

$25,000 paid to husband and wife as self employment

$25,000 split between children in family trust. Taxes Paid: $3,532 in self employment taxes $4,076 in federal taxes $1,085 in state taxes -$677 earned income credit $8,016 = Total taxes paid in 1996 (they saved $4, 734 or 37% on taxes) FAMILY 3: Profit = $50,000 (the smartest family - used profit upstreaming) Profits Paid To: income.

$25,000 paid to husband and wife as self employment

$10,000 split between children in family trust. $15,000 upstreamed to a private family foundation or a foreign company to accumulate safe from lawsuits on a taxdeferred basis. Taxes Paid: $3,532 in self employment taxes $2,407 in federal taxes $641 in state taxes -$697 earned income credit $5,883 = Total taxes paid in 1996 (they saved $6, 867 or 54% on taxes)

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Which family were you in 1997? Which family do you want to be in 1998? Common Questions about Tax Reduction Strategies

Why do I need an outside consultant, I have my own accountant? If you feel you are paying too much in taxes, and your accountant tells you there is nothing you can do about it, it is time for a SECOND OPINION. The tax laws are very complex and it is perfectly understandable that your tax professional may not have studied the specific areas of tax law that make these strategies so powerful. He may not recommend these strategies because he does not understand them as of yet. We respect your relationship with your accountant and would be glad to have him involved, or we can refer you to an accountant or tax attorney who can assist you. Outside consultants implement powerful strategies that save thousands of dollars. Income Splitting is very common, but are the Profit Upstreaming strategies legal? Yes! All strategies recommended to clients are 100% legal and safe ways to reduce taxes and have been used by clients to successfully save hundreds of thousands of dollars in taxes for years. We can provide you the name and telephone number of an attorney or accountant who does understand this complex area of law and who will discuss specific laws, I.R.S. codes, and relevant court rulings that make these strategies legal and safe.

Can I really reduce my taxes in half or more? Yes! You may even be able to reduce your business income taxes legally by even more than half depending on your current tax bracket and the strategy that you choose to utilize. Multinational corporations and well known rich and powerful families use many of these strategies daily to reduce their taxes. In fact, these strategies allow many of them to grow more rich and powerful every year, and you can do the same. Will the I.R.S. audit me if l use these strategies? There is always a small chance you will be audited or come under I.R.S. scrutiny regardless of whether you choose to pay higher taxes, or choose to set up your affairs properly and take every deduction you are legally entitled to. The I.R.S. audit rate for trusts is currently the lowest of any form of business (.12% in 1992). When these tax reduction strategies are used, you don't care if the I.R.S. audits you because you have done everything by the book, in perfect accordance with the tax laws, and have kept complete business expense

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records like any good business person. You can even have an expert outside accountant do routine audits of your books and company minutes to insure that you have done everything properly. When you run your affairs properly, the I.R.S. can't touch you. You can save thousands, or hundreds of thousands of dollars in taxes every year. Is that worth the small possibility that you might be audited someday and have to spend a couple of days showing proof of your legal business deductions with an experienced recommended attorney or accountant at your side? You decide.

Can the I.R.S. or a judgment creditor take my assets? When proper asset protection measures are taken, not even the I.R.S. can take a properly protected asset. Proper consultants always include asset protection as part of an aggressive tax reduction strategy so you can have peace of mind and deal with all from a position of strength. The fact is that the I.R.S. assessed 26 million penalties last year, and the Government Accounting Office found almost half of them to be incorrect Many people pay these penalties and thereby over pay their taxes even when these assessments are wrong, because they feel intimidated. With your assets protected, YOUR WEALTH IS I.R.S. PROOF, and you will not be intimidated. In truth, your assets should be protected even if you are not taking any tax reduction measures.

What happens if the tax laws change? These strategies are 100% legal ways to reduce taxes now. Some of these loopholes have been in existence since the tax laws began in 1913. No one can guarantee that the tax laws will not change in the future to close some of these loopholes. The time to take advantage of these strategies is now, while the opportunity exists to get huge tax savings.

it?

What if my current accountant or attorney tells me he doesn't recommend

Attorneys, accountants, and financial consultants do disagree quite frequently on which strategies are best for their clients. Just as you would get a second opinion from a doctor, you should get a SECOND OPINION from a professional experienced in upstreaming strategies. If your current tax advisor is familiar with and comfortable with these strategies, he is among a rare group of elite tax professionals with the expertise needed for these specific areas of tax law. But most advisors have only a vague idea of how our strategies work. After all, the tax laws are complex and constantly changing, and it is impossible to know every tax law and tax saving

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strategy. Even if your current advisor has been practicing for many years he may not have specialized training or knowledge in international upstreaming strategies. He is only human, and may not want to admit his lack of knowledge in order to protect his credibility and reputation. Instead of admitting his lack of experience with L.L.C.'s, trusts, and/or profit up streaming, he may just tell you that it is unsafe or not recommended, without pointing out a specific law that proves his point. Proper strategies have been reviewed by top tax attorneys and respected tax accountants, who are available for consultation and legal opinions that support these strategies. If your advisor cares more about YOU than his future fees and if he is true to his code of ethics, he will admit that he is not familiar with these strategies, or admit that one or more of these strategies could have saved you thousands of dollars year after year on your taxes. Our clients often ask their advisors "Why didn't you tell me this years ago?" Conclusion There is a difference between tax evasion (which we do not recommend) and TAX AVOIDANCE (which we as professionals recommend highly) TAX AVOIDANCE is legal and done daily by every business that takes advantage of it's legal deductions. Tax evasion: Understating or Hiding Income is illegal BUT Tax Avoidance: Setting up your affairs to minimize your taxes, and taking every legal business tax deduction IS 100% LEGAL. Every person has the well documented legal right to structure a transaction so that it satisfies the requirements of the Internal Revenue Code in order to minimize his tax Liablilty: 1) Judge Learned Hand stated in the landmark case of Gregory V. Helvering: "Anyone may arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the treasury; there is not even a patriotic duty to increase one's taxes." 2) Taxpayers are not required to continue that form of organization which results in the maximum tax. [Raymond Pearson Motor Company v. Commissioner, 246 F 2d 509 (1957)] 3) "U.S. taxpayers may also use tax havens for tax planning reasons. Some transactions conducted through tax havens have a beneficial tax result for U.S. taxpayers that is completely within the letter of the U.S. tax laws." [Federal Tax Guide Reports in official I.R.S. Agents Manual Exercising this right within the "letter of the law" is "Tax avoidance" and is 100% legal. PAY YOUR TAXES, BUT DO NOT PAY MORE THAN YOU ARE LEGALLY REQUIRED TO PAY!

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GATEWAY TO FINANCIAL FREEDOM By Keith Anderson The road to Financial Freedom is not difficult nor can it be easy, but I must say that it is fun. There are simple yet important steps necessary to retain one's freedom: 1. Financial Freedom: To be free means that you own your labor, that you receive your full pay and you decide how it is spent. It means that you do not report all of your personal financial information to governmental employee hireling servants who reserve the right to give your personal financial information to foreign governments if they choose to do so. The rule of law to follow, is that you owe nothing to the government as long as you receive nothing therefrom. Just having a Social Security number is a benefit making you eligible for benefits from your employee hireling servants and subjects you to their will. A disgusting thought isn't it? So, if you wish to be free you must be totally and absolutely free from all privileges offered by the government. That means you absolutely must close down everything associated with the Social Security Number, cancel it, and send it back to the source you received it from and never use the number again for anything. Trusts are great transitional tools to assist you with this transition. 2. Ownership of property: Whoever owns the gold makes the rules. In order to be free from licensing and other regulatory privileges you must learn how to own property and that means learning how to control property. It is not ownership when someone else is telling you how you can and cannot use the property and you are required to pay them a fee to use it. Registration of property paces that property in the government employee hirelings' trusteeship. You have a right to revoke that trusteeship if you are free and not a slave. In Washington there is a statute providing for the termination of trusteeships and power of appointment (ROW 11.95). This statute will be found in the "revised" codes of each state, patterned from the federal Uniform Commercial code of Washington (ROW's). Your state will be something different. You will find that statute in your state's version of the Uniform Commercial Code by doing a word search of: "Powers of Appointment," or "Releases." Use this power to terminate all powers asserted by another to control property in your use. To be totally free you must own your body and your property, not just think you own it. The following information is provided to assist those who wish to move toward the direction of freedom.

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The Free Enterprise Trust A FREE ENTERPRISE TRUST, hereinafter called F.E.T., is an offshore organization formed by contractual indenture to function in its own right as an independent legal entity, managed by its trustee(s) and/or officers. The purpose of this paper is to show the advantages of the F.E.T. and of its lawful existence. The basis for our terminology, "Free Enterprise Trust" in this instance is not that such organizations are the creatures of the common law, as distinguished from equity, but that they are created under the common law of contracts and do not depend on any statute, for their existence. Schumann-Heink V Fosorn 328 III 321, 159 N.E.250. The Supreme Court in Hecht V Malley 265 U.S. 144 described common law trusts as follows: "These Trusts; whether pure trusts or partnerships, are unincorporated. They are not organized under any statute, they derive no power, and benefit or privilege from any statute." The power of the F.E.T. is derived from common law and the law of contracts. We'll call these "contractual common law entities," and they are often referred to as 'pure' trusts. An explanation of their function under the common law of England, can be found in Smith V. Anderson, 15 Chancery Division 247 (1880). This Smith decision establishes the validity and viability of these contractual companies in England common law jurisdiction beginning in 1880 and up to, and including, the present date. The Smith decision has never been reversed nor has its import been nullified through passing of negating statutes. Definitions of Law Laws are rules of conduct which are prescribed or formally recognized as blinding, and are enforced by the governing power interesting enough, we each have a choice of the governing power we allow. We either follow God's law or man's law. Common Law and Statutory Law Defined: (a) Common law comprises the body of principles and rules of action relating to government and security of persons and property which derive their authority solely from usages and customs, or from judgments and decrees of courts recognizing, affirming and enforcing such usage and customs. It largely follows the principles often referred to as God's law. It may be noted in passing, that under common law we look into the law to see what we may do, for we may do everything we are not forbidden to do. (b) Statutory law refers to law enacted and established by a legislative body in the form of written laws, or acts, whose exact words have been drafted and approved by federal, state or local legislatures. We could refer to statutory law as Legislative Law Admiralty/Maritime Law, Law of the Law Merchant, and even Martial Law under the Executive Branch of government of the corporate United States. Statutory law utilizes the Uniform Commercial Code, revised Codes of the states, and local ordinances derived from the Revised Codes of the states. This law is intricately written and rewritten in the attempt to control the masses and property, crease countless taxes, and generally cause concern as to what violation we'll be punished for next. The unalienable Rights of the individual are

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often ignored. To sum it up, statutory law regulates those things government creates or benefits -- all else is under common law. Contract Law "Liberty," as protected by due process in the Fifth Amendment to the Constitution for the United States of America, has been held to denote not merely freedom from bodily restraint, but also the right of the individual to CONTRACT. Article One, Section 10 of the constitution also supports this right. This protects our God-given Rights to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship according to the dictates of one's own conscience, and generally to enjoy those privileges long recognized at common law as being essential to the orderly pursuit of happiness of free and natural individuals moreover, one can rely upon the body of the Constitution for the United States of America, Article One Section 10, which gives one an unalienable right to enter into a contract when it states, "No State shall pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts." Conversely, the Right of contract also allows us the Right not to contract. All of the various States of the United States, save and except for the state of Louisiana, have founded their legal system from the common law of England, and have adopted its rule of "stare decisis," under which unwritten law is made through case law decisions. Because the F.E.T. evolved from contract law and common law, there then must be an unalienable right to use them freely. This trust does not engage in interstate commerce per the commerce clause, Article 1, Section 8, Clause 3, United States Code. Advantages of the Free Enterprise Trust The F.E.T. does not act as agent or bailee, for hire, for owners of property but owns and controls its assets through its trustees, who keeps controlling minutes of their actions. These written minutes become part of the trust indenture. The trust is not, in any sense of the word, under an agency or bailment agreement, such as those used by banks. An entity can transfer or sell property, real, personal or mixed, to a F.E.T. Such property after transfer, is thereby protected from personal liabilities, probate, and death taxes, if the F.E.T. is properly established, and properly administered. A F.E.T. owns its assets in "fee simple," Bouchard v First Peoples trust 148 NE 895, meaning that the whole title, both legal and equitable to all the Trust Estate shall be vested in the Trustees. Creation and Application of the Free Enterprise Trust This type of trust may be established as a foreign, Common Law Trust or Foreign, Offshore Common Law Trust. The participants of the Free Enterprise trust typically include a Trustor, Beneficiaries, Trustee(s), and oftentimes additional officers, treasure/Accountant and Secretary, etc. The Trustor initially grants or exchanges the Trustor's property (real, personal, or both) for F.E.T. Certificates. After the initial exchange, the Trustee is under no obligation to the Trustor. It is agreed by the parties that the Trust transaction is neither a gift or a sale. The Trustees and their successors as the Board of trustees, are

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empowered to act as Fiduciary on behalf of the Beneficiaries, and to hold ownership as the absolute owner of the trust property, for the trust. The Supreme Court has ruled that trustees act as such, and so do as though they are totally different entities, and no liable personally (296U.S.48). The Trustees shall appoint officers to serve as Treasurer/Accountant and Secretary or designation of their choosing, whose duties shall include accounting, checking account duties, and protecting the Beneficial Interest Holders of the trust. These officers may be assigned exclusive rights to open and operate banking, brokerage, or other accounts on behalf of the trust. These officers, however, are forbidden under contract to divulge any information regarding the trust, to anyone. The F.E.T. is an organization based upon a contract which is called DEED of Settlement. The trust may own property, real and/or personal, and operate as a Free Enterprise in any state or Country under the course of the Common Law. The Assets of a F.E.T. are not subject to federal income tax, federal estate taxes or state inheritance taxes because the F.E.T. is forbidden to enter into any contractual relationship with the U.S. District of Columbia (U.S.D.C.) jurisdiction . In other words, the trust will not be under any contractual obligation with the corporate United States. The death of a trustee or certificate holder does not affect the trust or its assets in any manner whatsoever. The trust cannot die as the result of the death of any individual. This feature is excellent when used in estate planning.

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ASSET PROTECTION PLANNING UTILIZING THE FOREIGN ASSET PROTECTION TRUST 1. Introduction The use of domestic asset protection techniques, such as the family limited partnership and the domestic corporation, may he sufficient for some clients, however, the additional use or the laws of foreign jurisdictions is by far the most advanced form of asset protection. In particular, the foreign asset protection trust (FAPT), used alone or in conjunction with the family limited partnership or the offshore or domestic corporation, can be an extremely effective asset protection structure. The foreign asset protection trust is similar to a common law trust in which there is a trustor, trustee and beneficiaries. With the foreign asset protection trust, the trust is settled in a jurisdiction which has favorable asset protection legislation, such as the Cook Islands and the Republic of Mauritius. The foreign asset protection trust provides an effective fortress around one's assets since the title holder of the assets is an independent (independent of the trustor/client) foreign trustee and a lawsuit must be commenced against this trustee in order o begin obtaining the assets of the client. 2. Characteristics of a Foreign Asset Protection Trust Following are some of the more important characteristics of the foreign asset protection trust. The property of the trust should be moved outside the jurisdiction of the residence or the settlor. This feature limits the creditors ability to get access to the property through proceedings and the courts within the jurisdiction of the residence of the settlor. However, this movement of assets is not always necessary if a family limited partnership structure is used or an underlying corporation. Thus, the family limited partnership or underlying corporation would enable the client to retain the assets, e.g., securities portfolio, in the U.S. The foreign asset protection trust will contain anti-duress provisions which give the foreign trustee the power to refuse orders from a U.S. Court. There could be trust shifting provisions which provide that in the event litigation is started, the trustee will have the power to move the trust to another foreign jurisdiction. It is critically important with this section that the trustee have the ability to transfer assets off shore to another trustee. Often times it is desirable in planning a foreign asset protection trust to distinguish the trusts situs for administration purposes (also where the trust will likely be treated as residing for U.S. income tax purposes) and another situs for interpretation of questions of law or the Proper Law of the trust. For example, Portugal's a civil law country which governs the tax haven of Madeira. Under

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Portuguese civil law a trust may be settled with administrative and trustee duties maintained in Madeira, while the trusts Proper Law is under the common law of the Cook Islands. Only assets that are not necessary to everyday living should be transferred to a Foreign asset protection trust. For example, cars, checking accounts and personal items are not proper for a Foreign asset protection trust. However, a Securities Portfolio Account worth $1.5 million can be transferred to the Foreign asset protection trust. It is very important to maintain a certain distance between the trustee and the settlor, otherwise the settlor may be seen as having to much control over the trustee. Thus, it may be necessary to insert a protector between the trustees and the settlor. The protector is a person, other than the settlor, or a committee of protectors, who is an independent person looking after the interests of the beneficiaries of the Foreign asset protection trust. The protector does not have the fiduciary duties, powers and liabilities of the trustee. The foreign asset protection trust should be irrevocable, otherwise the court could force the settlor to revoke the trust, thus undoing the trust for the purposes of asset protection. The Foreign asset protection trust can be irrevocable for a period of time, for example, 10 years. If the settlor survives the period of irrevocability, the trust would terminate and all accumulated income and principal will be returned to the settlor. The trustees may elect to extend the trust. The foreign asset protection trust is a discretionary trust. A discretionary trust is one that is settled by the settlor which gives complete discretion to the trustees as to whom amongst a class of beneficiaries is to receive the income and/or principal of the trust. A discretionary trust cannot have any restrictions on the trustee in the exercise of their discretion. The settlor of a discretionary trust does not have a definable interest. Thus the beneficiaries of a discretionary trust do not have the right to compel the trustee to make a distribution, since the beneficiaries, which may include the settlor, have no vested rights. With a discretionary trust, the settlor does not have a vested interest or definable interest. if the settlor has no definable interest in the trust, the creditors has no vested interest either. The Foreign asset protection trust must provide that the trustee should distribute income and principal of the trust at the full discretion or the trustee. The issue of discretion of the trustee has always been a concern to the client, since the result is that the client looses control over the trust corpus. This issue can be resolved by the use of a "Letter of Wishes" in which the settlor writes down certain instructions that the trustee may follow in their discretion. If the client is a beneficiary as to income and principal, then that client may be subject to creditors claims. Preferably, the client should only be an income beneficiary and not a principal beneficiary. if a creditor attacks the clients income interest in the trust, the trust deed provides for a power of the trust to cease paying income to the client beneficiary. The role of the Committee of Protectors is to provide the settlor with a mechanism to supervise the trustees and to remove the trustees. The client can

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be on the board of the Committee of Protectors which would act as an advisory committee to the trustees. If a creditor begins to attack the client as a protector, he can resign as protector. The Committee is not allowed to function as trustees but may exercise vast control over the trustee. The U.S. courts have not yet ruled on the issue of the Committee of Protectors as a "super-trustee". The Committee of Trust Protectors is an advisory board to the foreign trustee. The trustee will elect the chairman of the committee, who is typically the settlor or his or her spouse. The settlor is appointed for life. The Committee can provide advice as to trust administration to the trust, but it is never binding On the trustee. The Committee should never be seen as to acting trustee. The Committee can discharge and replace the trustee but never assume the fiduciary duties of the trustee. In order for the U.S. client to retain control of the asset without a court ruling that he is acting as a defacto trustee, an alternative approach to the protector technique is to appoint a U.S. co-trustee along with the foreign trustee. In times of non-duress, the foreign trustee allows the U.S. co-trustee to act as the fiduciary of the trust assets. However, in times of duress, that is, when a creditor is or has filed a claim, the U.S. co-trustee would file a deed of retirement and allow the foreign trustee to act alone. A typical and practical choice for the U.S. co-trustee would be the clients attorney since there already exists attorney client privilege. 3. Particular Foreign Asset Protection Structures There are various structures utilizing a Foreign Asset Protection Trust depending upon the particular circumstances of the client and the asset(s) being protected. Following is an illustration of three different structures utilizing the foreign asset protection trust (FAPT): A. Foreign Asset Protection Trust (See Diagram 1) A client may wish to utilize a FAPT alone. The client settles the FAPT in a jurisdiction that has favorable asset protection legislation, for example, the Republic of Mauritius. The client then appoints a foreign independent trustee to hold and manage the underlying assets of the trust. Since the FAPT is irrevocable and the settlor cannot exercise control of the underlying assets, be may wish to appoint either a U.S. co-trustee, Protector or Advisory Committee of Protectors. B. FAPT with Underlying Corporation (See Diagram 2) In order for a client to obtain further control of the assets transferred to the FAYr, the foreign trustee, who holds title to the trust assets, can establish an underlying corporation. The foreign trustee will capitalize the underlying corporation with the assets transferred to the FAPT by the client in exchange for 100% of the stock in the underlying corporation. This underlying corporation can either be a domestic corporation, established in the state in which the client resides, or it can be an offshore

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(foreign) corporation. If the client holds title to U.S. real estate, the underlying corporation would be domestic rather than offshore. The foreign trustee, as the 100% shareholder of the underlying corporation, holds a shareholder meeting in which it appoints the board of director(s). The shareholder appoints the client as the sole shareholder who is responsible to operate the corporation on a day-to-day basis. Another option is for the client to enter into a consultancy agreement with the underlying corporation instead of as a director or perhaps have a power of attorney over the underlying corporation. Directors fees, management fees or consultancy fees can be arranged between the client and the underlying corporation. This structure results in the client regaining control of the assets that are being protected. C. The Foreign Asset Protection Trust as Limited Partner in a Family Limited Partnership (See Diagram 3) One particular structure that has proven useful is the Foreign Asset Protection Trust and Limited Partnership. If a client is reluctant to transfer assets offshore to a foreign jurisdiction which is held by a foreign trustee, that client could establish a Family Limited Partnership, in which the client is a one percent general partner with complete management control over the assets. The 99 percent limited partnership interest would then be transferred to a foreign trust. Under partnership law, a limited partner does not have any right to management control partnership assets. Therefore, the foreign trustee has a substituted limited partner is free from any management control over the underlying asset. This particular structure is excellent for real estate, which, of course, is a nonmovable asset, even though liquid assets such as cash and securities can be utilized in this particular structure. In fact, what the client has created is a structure in which he controls and manages the assets to be protected by where title is held by foreign trustee in a foreign jurisdiction and the assets remain in the United States. This provides the ultimate control to a client legally the assets are held by the partnership and not the foreign trustee. All that the foreign trustee owns is a limited partnership interest in the Family Limited Partnership. This particular structure is an excellent technique to avoid possible claims by judgment creditor to foreclose upon the debtor partner's interest in the partnership. The only client's interest in the partnership, the one percent general partnership interest.

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IRS NOTES ON TAX HAVENS FROM THE INTERNAL REVENUE MANUAL [551 (3-11-85)] Background (1) Since the inception of taxes, taxpayers have searched for ways to minimize their tax burden. Creative tax planning in the tax haven area is one of those ways and, as such, frequently straddles the fine line between tax avoidance and illegal tax evasion. Following close behind, Congress and the tax administration have been trying to close tax loopholes and to discourage tax gimmicks, which violate the spirit of the law and sometimes the tax law itself. (2) In order to more fully understand the role of tax havens, tax administrators requested a report on tax havens be prepared, and in January 1981, a comprehensive report titled "Tax Havens and Their Use by United States Taxpayers--An Overview" was submitted by Richard Gordon. Publication 11 50 (4-81). This report studies various methods of tax abuse in tax havens countries. A reading of this report will give the examiner greater understanding of tax havens and the methods used by taxpayers to avoid taxation. (3) There exists no statutory definition of a tax haven, but certain characteristics make their identification obvious. A tax haven will have one or more of the following characteristics: (a) imposes little or no tax on certain transactions when compared to developed countries, (b) provides confidentiality of financial and commercial information, (c) has modern communications facilities, and (d) has a treaty network which offers reduced tax rates on income taxable by its treaty partners. (4) The use of tax havens knows no boundaries. All types of taxpayers participate including individuals, trusts, partnerships, small corporations, and, of course, multinationals. The use of these havens has grown dramatically since 1970. This growth is the result of taxpayers in high tax countries trying to minimize the taxes paid and to increase their cash flow. (5) The tax haven countries are seeking to have their economies flourish with new jobs in areas such as banking, communications, and related services. In addition, certain other countries, such as Ireland and Singapore, have offered tax holidays to corporations which set up manufacturing operations using local labor and exporting the manufactured goods. Most frequently, the marketing aspect of the operations take place nearer to where the manufactured goods are consumed or in the United States. (6) The international examiner should be alert to the many potential issues which may exist:

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(a) is the manufacturer wholly autonomous whereby all income from manufacturing, intangibles, and marketing is appropriately lodged in the tax havens, or should the manufacturer be considered a contract manufacturer and be allowed to earn a profit commensurate with the functions performed and the risks assumed; (b) has there been an outbound transfer of intangibles, i.e., trademarks, customer lists, going concern, etc., where a Section 367 ruling should have been requested; and (c) has a license agreement been entered into, and if so, is the royalty rate an arm's length rate. For further discussion on the aspects of IRC 482, see Text 520 of this chapter--Development of IRC 482 Cases. (7) Some tax haven entities are easier to detect than others. If the tax haven entity is a Controlled Foreign Corporation, the shareholder must file Form 5471, Information Return with Respect to a Foreign Corporation, (Form 957, 958, 2952, and 3646 have been consolidated into Form 5471 for tax years ending after 11/30/83), the attached balance sheet, profit and loss statement, and intercompany transactions schedules which will serve as a red flag for identifying tax haven entities. (See Exhibit 500-8 for a list of Principal Tax Haven Countries.) In addition, Document 6743, Sources of Information from Abroad, provides information on 28 tax haven countries and can be a valuable audit tool when trying to determine which foreign records are readily available for I.R.S. inspection. (8) If the tax haven entity is a foreign trust, the provisions of IRC 679 might apply. Under this section, any U.S. person who transfers property to a foreign trust which has a U.S. beneficiary is treated as the owner and is taxed on any income generated by the property transferred. When a foreign trust is created, Form 3520 (Creation of or Transfer to Certain Foreign Trusts) is required to be filed. Also, Form 3250A (Annual Return of a Foreign Trust with U.S. Beneficiaries) is required to be filed annually. 552 (3-71-85) Primarv Audit Tools (1) The primary audit tools are the ingenuity of the examiner and the antiabuse sections of the Code. An examiner's awareness that a potential issue exists is the most important audit function to be used. Although there are many non-tax reasons for taxpayers to locate in foreign countries, including tax havens, the examiner must always raise the question of what are the tax benefits derived. Resolving this question will alert the examiner to where any potential tax abuse may exist. The anti-abuse provisions include: (a) IRC 482, which provides for the allocation of income and deductions among related members of a controlled group. (b) IRC 951 through 964, which tax currently the earnings and profits of a controlled foreign corporation.

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(c) IRC 1 62, which allows a deduction for ordinary and necessary expenses incurred in carrying on a trade or business. (d) IRC 269, which provides for the disallowance of a deduction, credit, or other allowance, if the principal purpose for the acquisition or control of a corporation or of property of another corporation is the evasion or avoidance of income taxes. (e) IRC 269A, which provides for the allocation of income, deductions, etc., between a personal service corporation and its employee-owners to clearly reflect the income of the corporation and its employee-owners. (f) IRC 367, which is used to prevent the use of recognition provisions of the Code to transfer appreciated inventories from the U.S. prior to their sale. (g) IRC 1491, which is used to prevent taxpayers from transferring appreciated property to foreign entities in order to avoid income taxes in those cases where IRC 367 does not apply. (h) IRC 1 248, which taxes the gain recognized on the sale of stock in a CFC by a U.S. shareholder as ordinary income to the extent of the earnings and profits of the CFC accumulated after December31, 1962. (i) IRC 1 249, which treats as ordinary income of a U.S. person, the gain on the sale or exchange or an intangible asset to a foreign corporation which is controlled by such person. (j) IRC 551 through 558 (Foreign Personal Holding Companies), which includes in gross income of the U.S. shareholder the undistributed foreign personal holding company income. (k) IRC 679, which taxes a U.S. person on the income generated by the transfer of property to a foreign trust which has a U.S. beneficiary. (I) IRC 897, which provides for taxing the gain recognized by non-resident foreign individuals and foreign corporations on the dispositions of their United States Real Property Interest (USRPI). 553 (3-11-85)

Audit Guidelines (1) As soon as the examiner becomes aware that a U.S. taxpayer has transactions with a foreign entity located in a tax haven area, he/she must look through the transaction and examine the business and tax motives. The tax motive might not be obvious, and the examiner's ingenuity must be used. (2) If the examiner determines that U.S. real property was purchased from a foreign entity, the following questions may arise: (a) is the foreign entity related either directly or through some scheme whereby the basis of the property may have been artificially increased? Reviewing the terms of sale, i.e. interest rates charged, payments on principal, and how funds are transferred, may indicate that further audit techniques need to be applied, if the above items seem to be out of norm.

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(b) if U.S. real property was sold by the foreign entity, the examiner should be aware of the provisions under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) This act added IRC 897 and 6039C to the Code. Prior to FIRPTA, foreign investors were able to dispose of real property located in the United States with little or no tax liability. FIRPTA was enacted to override the tax provisions that enable foreign investors to effectively avoid U.S. tax in real estate and related transactions. Refer to Text 231.(11) of this handbook for discussion and guidelines on this area. (3) The tax haven entity may have large salary, rent, and other type expenses on the profit and loss statement. If so, it must be determined: (a) if the expetises were allocated from a related U.S. entity, or (b) if the expenses were charged to the tax haven by some unrelated bank, insurance company, law firm, or other service company. The above situation may indicate that the tax haven is not a viable entity. (4) If a foreign bank is used, try to determine that it is a viable bank and not just a bank in name only which shares desk space with other banks. Transactions with these banks should be scrutinized. (5) Certain tax haven schemes involve the use of multiple trusts. A taxpayer with a going business has a trust (first trust) created by a resident in a tax haven. The creator of the trust appoints the taxpayer as the trustee of the trust. The first trust then forms two or more trusts in another tax haven with secrecy laws and is designated as the trustee of these two trusts. The second trust acts as a management consultant to the U.S. taxpayer. The consulting fee virtually eliminates the profit of the U.S. business. Because this fee is considered U.S. source income, trust number two files a Form 1040 NR. However, its income is reduced or eliminated by the payment of a "contingent royalty fee" to the third trust. Foreign trust number three winds up with the profits originated by the going business. The profits are then returned to the taxpayer by the trust number three either in the form of gifts or loans. The foreign trust problem is essentially an auditing problem.

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GENERAL OFFSHORE AND ASSET PROTECTION NOTES The legal process, because of its unbridled growth, has become a cancer which threatens the vitality of our forms of capitalism and democracy. Lawrence Silberman, U.S. Attorney General ... The harsh truth is that ... We may well be on our way to a society overrun by hordes of lawyers, hungry as locusts, and brigades of judges in Numbers never before contemplated. - Chief Justice Of The United States Warren Burger The legal trade is nothing but a high class racket. - Professor Fred Rodell I do not wish to speak ill of any man behind his back, but the fact is that He is an attorney. - Samuel Johnson People say law, but they mean wealth. - Ralph Waldo Emerson All sorts of substitute for wisdom are used by the world. When the court doesn't know, they use precedent. The court that made the precedent guessed At it. Yesterday's guess, grown gray and wearing a big wig becomes today's justice. - Dr. Frank Crane A lawyer is a learned gentleman who rescues your estate from your enemies and keeps it for himself. - Lord Brougham It is the trade of lawyers to question everything, yield nothing, and to talk by the hour. - Thomas Jefferson He saw a lawyer killing a viper on a dunghill hard by his own stable; and the devil smiled, for it put him in mind of Cain and his brother Able.

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- Coleridge

Lawyers are the only persons in whom ignorance of the law is not punished. - Jeremy Bentham The first thing we do, let's kill all the lawyers. - Shakespeare, King Henry VI The virtuous need but few laws; for it is not the law which determines their actions, but their actions which determine the law. - Theophrastus

Where you find the laws most numerous, there you will find also the greatest injustice. Arcesilaus The more corrupt the state, the more numerous the laws. - Tacitus "The law, sir, is a ass." - Charles Dickens "...Ours is a sick profession marked by incompetence, lack of training, misconduct and bad manners. Ineptness, bungling, malpractice, and bad ethics can be observed in court houses all over this country every day. (...these incompetents have) a seeming unawareness of the fundamental ethics of the profession. - Chief Justice Of The United States, Warren Burger "Most lawyers are as crooked as a dog's hind leg." - Grampa Province

Why a trust? Why create a living trust? Isn't that something that's only done by rich People? Can the average citizen create his/her own living trust without the Help of a lawyer? Why not just pay a lawyer to write a simple will? There are a number of reasons and answers to these simple questions.

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First, you should know that you have every legal right to create your own Living trust by yourself, without the help of a lawyer. In the second place, when you hire a lawyer to write a will, they don't do It anyway. Their legal secretary does the job and you end up paying an exorbitant legal fee. Further, these secretaries really won't do anything more than fill in some Blank spaces on a pre-designed word processing form and print it doubleSpaced with numbered lines. This type of printed output looks profession, impressive, and expensive -- that's really what you are paying for. They follow the same process for divorces, annulments, legal separations, Bankruptcies, creditor plans, simple contracts, real estate deals, and so on, ad nauseam. Most of the work done by legal secretaries or paralegals is nothing more that filling in the blanks. What the majority of the legal profession doesn't Want you to know is that anyone, yes!, Anyone!, Can do what they do. It is my honest opinion that the legal profession is in a sad state of Affairs. Any document drawn up by one lawyer will be challenged by another Lawyer if he is paid to do so. No matter how correct or exact it is, some Other lawyer will find fault with it if there is a fee to be made. It is The business of lawyers to make things so complicated that they cannot be understood. Lawyers are not paid to fix things or fight for justice, they Are paid to argue, confuse, obfuscate, and prolong. They get paid for keeping things from happening. This is only one of the many reasons why simple trials that should only take hours to decide normally take weeks, months, and sometimes years. That, in a nutshell, is the reason for this package of shareware software. You don't need a high priced (and perhaps incompetent) lawyer to do something That you can do yourself. anyone with a computer and a word processor or Text editor can use these pre-designed trust forms to create their own living revocable trust. Reasons For Creating A Living Trust That brings us to the answers to the questions of why a person should form a trust instead of writing a will. The reasons are numerous and important. Before starting, you should have a firm understanding of what a will is and What a trust is. The differences between them are vast. Wills A will is a legal instrument executed by any competent person according to The prescribed statutes of the state. Using this instrument the person States their desired disposition of their property which will take effect on And after their death. The existence of a will automatically means that there will be lawyers, Judges, and the court system involved when a person dies. Because wills must

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be "probated", there will be legal fees, the court may interpret the will as It sees fit, and the wishes of the deceased are not necessarily followed. When a will goes to probate court, not only does it get bogged down in the mire of the ineffective, inefficient, cumbersome, and expensive probate system, it also becomes a matter of public record. Additionally, it could conceivably be challenged by a lawsuit. Trusts A trust is a legal relationship in which one person transfers property of a Second person for the benefit of a third person. The person creating the Trust is the grantor. The person having legal title to the trust property Is the trustee. The person for whose benefit the trust is created is the Beneficiary. The nifty, magical part of this arrangement is that one person Can be a grantor, trustee, and beneficiary all at the same time. Using a trust, an individual can transfer property from their personal name To themselves as a trustee of a trust. As the trustee, they can hold the Property for themselves or for someone else. Under the instructions of a Revocable living trust, the trustee (or co-trustees) can see to it that when The grantor dies all trust property is transferred to the beneficiary or Beneficiaries. When the grantor dies, the trust property automatically is held by any co-trustee or successor trustee for the benefit of the beneficiary. All of this is accomplished without any probate process or any other type of court proceedings. You don't need to be wealthy to take advantage of this either. If you only own your home or automobiles, you can use a trust to make sure that when you die everything automatically transfers to anyone you wish. A revocable living trust is the answer to almost all of the horrible problems that can be encountered by probate court. It can be entered easily at little Cost and it can be revoked by the stroke of a pen. Advantages Of A Trust The most obvious advantages of a revocable living trust are:  Avoidance of probate and probate administration fees and expenses.  Avoidance of excessive probate legal fees.  Avoidance of unnecessary delays.  Avoiding publicity concerning probate matters.  Avoiding ancillary (secondary) administration.  Avoiding statutory restrictions on bequests of property.  Avoiding inheritance taxes.  Avoiding will contests.  Property management.  Management uninterrupted by the incapacity of the grantor.

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 

Uninterrupted income and access to principal for family beneficiaries. Avoiding the emotional trauma, aggravation, and frustration of dealing with a complicated probate process and overpaid lawyers.

Things You Should Know A Trust Takes Precedence Over A Will! It is imperative that you carefully read and understand the following Sentence. A trust takes precedence over a will. Even if you have a will Leaving specific property to a person and later create a trust transferring The same property to a different person, the trust takes precedence and the Property will go to the person named in the trust. Community Property If community property is to be placed into a trust, it is important that both Spouses join in the creation of the trust as both grantors and co-trustees.

Exhibit A - (an easy way to alter the trust) Property may be transferred using a trust by means of an "exhibit a". This Is a separate page attached to the trust, but referred to in the trust agreement. If you decide to change anything in the trust property at a later Time, you only need to change "exhibit a". You don't need to alter the trust agreement. All property transferred to the trust must be listed in exhibit a. You Should be aware of some special information concerning the property Transferred to the trust and the methods involved:  real estate can be transferred to a trust.  bank accounts and saving & loan accounts can be transferred to a trust.  stocks, bonds, and mutual funds can be transferred to a trust.  insurance policies can be transferred to a trust.  automobiles, motorcycles, trailers, motor homes, and similar types of vehicles can be transferred to a trust. Real Property Real property included in a trust should be recorded with the names of the Trustees of the trust. Normally, this means filing a "quit claim" deed on The property changing the name of the owners of the property. This usually Is done at the county recorder's office. The new deed should be similar to: john doe and jane doe, as trustees under revocable living trust agreement dated january 1, 1990

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You should contact your county recorder's office for specific information. Quit claim deeds may be obtained at stationary stores or at local real estate Offices. Bank Accounts Bank accounts and saving & loan accounts should be changed using the same type of trust language. It is suggested that you contact your bank, saving & loan, or other financial institution to find out how they prefer it to be done. Some institutions require a copy of the trust agreement on file. Different businesses have different methods. Vehicles Automobiles, motorcycles, and any other similar types of vehicles should be Registered using the same trust language. It is a good idea to check with Local, county, and state offices regarding their specific requirements Regarding transfer of vehicles to a trust. Choice of a Trustee You cannot be too careful when choosing a trustee, co-trustee, or successor Trustee. It is suggested that an adult family member be selected. Do not consider a lawyer, trust officer, bank, or trust company for a trustee. This defeats the entire purpose and objective of the revocable living trust. It Is imperative that a trustee be chosen who will expressly avoid the needless expenses, delays, and inconvenience of court appointments.

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WHAT THE IRS AND OTHER TAX AUTHORITIES DON'T WANT YOU TO KNOW... THE TRUTH! BY DAVID JOHNSON The following article is one of the most informative we have seen on the subject, particularly when one looks at the enormous amount of mis-information that has been published by main stream media recently. David Johnson is an American aiming this piece at US taxpayers. This certainly does not detract from the value of the article for other nationals. The majority of points discussed apply equally to most countries and you can be sure that the few that don't, will in the near future. Big Brother has the nasty habit of spreading bad news as rapidly as possible... When you have something to hide, the simple rule of thumb is-do it offshore. After all, if you are reading this your goal is to keep your financial business to yourself. The purpose of this article is to give an introductory inside look at banking and investing overseas, using fiscal tax shelters (havens) to reduce or eliminate taxes, and foremost, to provide confidentiality in personal and business matters. Period. For various reasons, offshore banking has been tagged as "unsafe", "risky", "illegal" or "for the wealthy", let's separate the facts from the bull! First off, one must understand that it is normal for those that know little or nothing about something (besides what they hear from other even less knowledgeable people) to be afraid and suspicious about it. Misinformed financial planners, attorneys and accountants may know economics and the law in the United States or their country of residence, but few know a bout handling business outside their domicile. Let's tackle these misconceptions one at a time. Legality There isn't and will never be a law restricting the sending of funds outside the USA. How do I know? Simple. As a country dependent on International trade (billions of dollars a year and counting) the American economy would be destroyed. How? Since all US global trade is transacted in US dollars, there would be no exports or imports, due to the fact that the United States would not be able to buy and sell goods. Make sense? If you wanted to, you could move or transfer some or all of your money out of your bank or credit union to anywhere in the world, Legally. US banks and the IRS disseminate negative propaganda dealing with offshore banking, making it seem unsafe or some type of criminal act. Why? Banks just want to keep your money in their institutions to use for their own profitable purposes. Did you know that most US banks themselves accept

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deposits from people overseas and often invest in foreign stocks and hold accounts with foreign banks? It's true! As far as the IRS is concerned, they obviously want your money in US banks where they can tax every dollar you earn in interest, and keep track of how many liquid assets you have and where they are. The confusion with tax legalities is sometimes due to lack of knowledge. In the US tax evasion is a crime, tax avoidance is not. As you know, there are zillions of laws on the books in every country. Without a doubt what is legal in one place may be against the law elsewhere. For example tax evasion is not a crime in jurisdictions where there is no income tax. Thus, in most cases (except those with significant political and/or business weight) countries that are not allies usually don't assist other nation s in enforcing laws that are not laws in their countries. Further, a country has no legal right to conduct an investigation in a foreign country without consent of the respective government. In reality, a country has every right to deny any other nation permission to make examinations in their territory. Therefore, it is difficult if not impossible for authorities in the US or elsewhere to obtain financial transaction records of tax evaders in many foreign-based institutions (outside of those located in areas that have some type of co-operation treaties). Strict banking secrecy laws also contribute to this difficulty. Most tax havens impose lengthy prison terms and/or hefty fines for violations of a client's secrecy. INTER-FIPOL (The International Fiscal Police) is the tax crime equivalent of INTERPOL (The International police Organisation), which is a network of law enforcement authorities in numerous countries which exchange information on criminals. Many evaders are opening accounts in fictitious names and using mail forwarding and pick up drops for privacy. Practicality Movie-makers and recent international scandals, such as BCCI and IranContra, have contributed to negative views about offshore banking. Contrary to popular belief, rich criminals and corrupt government officials make up a small segment of the total number of customers at any given offshore institution. Now more than ever the average American blue collar worker and businessman is using offshore banking as a way to reduce taxes (through legal avoidance). Many accounts may be opened for the same amount required in the US (about $100) or less. In some cases, there is no minimum opening deposit at all. Further, the interest rates are usually substantially higher than in the US (since federal law sets limits on the amount of interest a bank can pay you). But by far, the reason most people turn to offshore banks is their confidentiality. One might ask, "if these banks are so good, why don't they advertise in the US."? The answer is simple...they are prohibited! Federal law restricts off shore banks from advertising their services in US magazines and newspapers, unless they agree to the same restrictions that govern F.D.I.C. institutions. (such as interest limitation). Why? That's simple too...to keep the competition down. Opening an account with these banks is as simple as writing a formal letter to

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the institution and requesting information on about their various services and the appropriate application forms, and returning them to the bank. It really is that easy! Most banks never really have to see you in person. Safety All offshore banks are regulated in one form or another, like their US counterparts, but minus the limiting federal laws. Less restrictive regulations abroad allow foreign banks more freedom in locating the best investments worldwide. Allowing them to pass on and share their profits with their customers. As for insurance, forget the F.D.I.C. or other private insurance companies! They usually only allow a liquidity factor (insurance) of about 10% of public deposits. Many offshore banks are self-insured, meaning they have at least one dollar in cash to cover every dollar on deposit, that translates to 100% plus insurance. Also, the majority of the worlds largest and strongest banks (as far as assets go) are overseas, not in the United States. Call your local library's business and finance or commercial department and ask the librarian to look up these details. Internal Revenue Service (IRS) Treasury form 90. 22-1 (report of Foreign bank and financial accounts must by law, be completed and returned to the IRS by June 30th. each year if you possess a foreign account. Everybody surely files! For a copy of the form, call the IRS at (800) 829-1040, or check your phone directory for the number of your nearest forms distribution centre. U.S. Customs The US Department of Treasury's Currency and Foreign Transactions reporting Act details which monetary instruments (cheques, money orders etc.) must, by law be reported to the federal government. A copy of an illustrated circular which explains the act in full is available for the cost Of $5 from Worldwide Consultants, 242 West Pratt Blvd., Suite 971, Chicago, IL 60645 U.S.A. What you don't have to report Here are two categories of instruments that you are not required to report. If you make out a personal cheque or money order to an offshore bank, you don't have to report it. And if you have a cheque or money order payable to you, you may restrictively endorse it (i.e.. pay to the order of xyz bank), and you do not have to report it either. Tax evasion If you deposit your pay cheque in a US bank, chances are you've already paid income taxes on it (unless it is a personal cheque). So you have no further obligations, since taxes were deducted before the cheque even hit your hand. With a savings or brokerage account, at the end of the year when you get your

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annual statement, you simply add the total amount of interest or profit earned on your income, and pay taxes on the grand total. The same is only true offshore if the country the bank is located in imposes a withholding tax. Since I'm on the subject of taxes, did you know that the United States and the Philippines are the only two nations in the world that tax income earned outside of their countries? Anyway ... back to tax evasion. Below are a few examples of ways some individuals have cheated the taxman. A lawyer received payment by personal cheque from a client and deposited it in his offshore account. Since the deposit didn't appear on his business records, the chances are it would never be found out (even if he was audited). One couple sold a valuable antique and had the buyer send the payment directly to their offshore bank account. Later the couple used the money to tour Europe and the Caribbean. Another example is the Savings and Loan bank customer who enticed his "unscrupulous" banker to electronically transfer a large sum of cash offshore without reporting the transaction to the IRS. The customer then borrowed the money back from the offshore bank. Since loan proceeds are not taxable, no taxes were paid. These types of schemes are no longer used by the rich with extra money to hide, but by average Americans who don't like to pay taxes on every cent they earn. How hidden assets are found Having conducted investigations in the US and abroad, I am familiar with the various techniques which may be used to locate leads to funds being kept offshore. Here are a few:  Checking passports (and travel agents) for evidence of visits to "high profile" destinations such as: Switzerland, Cayman Islands, The Bahamas, Isle of Man, Netherlands Antilles, and other known banking and tax havens. Travel to these type of areas will surely throw up a red flag, giving investigators a place to start looking for your assets.  Examining telephone (home, business and hotel), fax and mobile (cellular) phone records to identify undisclosed business connections and contacts.  Reviewing credit card statements to determine who you do business with, where you travel (domestic & foreign), and what products and services you use. These records leave a paper trail a mile long.  Garbage is often sifted through for information such as statements, invoices, correspondence, and other relevant material useful in tracking your affairs. Use a high quality paper shredder, discard your garbage at another location, or burn and crush it. It sounds drastic, but what you throw away says a lot about you, and many leads can be found there.  Compiling a list of parties that you have a relationship with (business or otherwise) by recording the return addresses on your incoming mail. This technique can disclose friends, associates and partners. If you must receive

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important mail at your residence or business address, be sure to ask your correspondents to stop using a return address.  Looking into banking transactions. All withdrawals of $3000 or more must be reported by your bank to the federal government, whether made by cash, cheque or electronic transfer. Keep your transactions under $3000.  Checking private courier's logs (UPS, DHL, Federal Express, Airborne Express etc.) for delivery of special or important letters and packages.  Examining telex records of your company or business to locate areas of foreign activity. About the Author: David Johnson is a consultant specializing in privacy, security and investigative matters.

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TAXES - HOW TO MINIMIZE FORCED ASSET REDUCTION LET'S TALK TAXATION "Taxation is theft". - Libertarian slogan A frank look at the morality of taxation, some questions answered, plenty of food for thought and maybe a change of direction for you. A slave has nothing, no legal rights, no property and no freedom. He exists purely at the whim of his master, all favours, perks and comforts are given if and when his master decrees. As they are given so can they be summarily taken away. He has no protection, no rights and certainly no recourse. Makes the fine hair at the back of your neck stand up doesn't it? It should. You're in the slave category and your national revenue service is your master. That's right they can take whatever they want from you, your property, your wealth and if necessary your freedom without so much as a by your leave-and guess what, you have no legal recourse. If they don't have legit grounds they'll trump something up and chances are it will stick. You're in for the high jump one way or another. Webster's Dictionary defines theft as the "taking away of another's property without his consent and with the intention of depriving him of it." So what's so different about taxation? It doesn't really matter whether the tax man is working for the dictator of a one-party state or under the auspices of a "democratic" government and its supposed approving electorate, he can and will remove a percentage of your wealth without your consent. Object too strongly or don't comply with his wishes and you could lose all your property, have your bank accounts attached, your passport confiscated and even face imprisonment. In the third world a single despot usually winds up with all the taxation spoils. In more modern, so called democratic countries the booty is spread a little, subsidised industry, subsidised schools, subsidised health services, subsidised parastatals and the like are all in for a piece of the action. These recipients of government largesse combine to create what can only be called subsidised indolence. Let's not forget the bureaucrats, they score heavily whenever it's hand out time. Any additional funds they get will speed the promulgation of more rules, more regulations and more taxes. Bureaucrats don't create wealth, they blow it. Show me a high-taxation country and I'll show you a country where the level of benefits to citizens can never remotely equal the huge permanent losses to the economy caused by discouraged production, depleted capital and confiscated wealth. Which ever way you cut it the way the booty is split doesn't

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change the essential nature of a theft, it is an immoral, anti-social and destructive act. You cannot ever separate taxation from the general control of human action. By placing taxes on some items and not on others human energy and wealth are diverted from those ends that men freely choose to only those of which the state approves. The inevitable result is the frustration of men's freely chosen ends and the disruption of economies. Where taxation is total (e.g. Communist China) there can be no freedom. Without the right to property there are no rights at all: Freedom of speech is meaningless without the right to own printing presses and rent auditoriums. Freedom of association is impossible without the right to own land and houses. Freedom of enterprise cannot exist when everything is owned by the state. Political freedom and economic freedom cannot be separated: The society in which everything is owned by the state is the society in which everyone is controlled by the state. Legalised theft (taxation) is rife in the world today all that varies is the amount that gets taken. This ranges from minuscule (Andorra, Bahamas) to moderate (Brazil, Switzerland) to great (Scandinavia, South Africa) to total (Communist China). It is no coincidence that political freedom is generally greatest in precisely those lands where taxation is lowest. Tax Havens Those countries with the lowest taxes in the world are known as Tax Havens. Every such country is small and relatively under-developed. That is why they are tax havens: The creation of a climate favourable to business is the only real chance most of these countries have of becoming prosperous. (One other way that growth can come to under developed countries is for them to discover that they have vast deposits of natural resources. They then give industrialised nations "eternal mining rights", in exchange for their investment in development and infrastructure. When things are going swimmingly, they then nationalise everything). Unfortunately, it is true to say that given the chance most governments will eventually "kill the goose that lays the golden egg." After a free market has given them a modicum of prosperity they will impose taxes, controls and regulations. This is why new tax havens appear periodically and old ones disappear. There are also marked differences between the theory and practice of tax law in countries around the world. In the more advanced western countries, particularly those with an Anglo-Saxon heritage, the tax laws are generally severely but fairly enforced to the letter of the law. Bribing the tax collector in developed countries is dangerous. On the other hand, the Latin countries generally lack the efficiency to track down the evaders, and most citizens generally don't consider tax evasion to be a crime, but rather as a game that should be played to win. Taxes are negotiated in a friendly atmosphere; the tax collector is more often than not treated to a couple of drinks and an envelope stuffed with small, unmarked bills.

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A country which presents a very favourable tax situation, however, may prove no bargain when everything is considered. Is it better to pay a 40% tax on earnings of $100,000 or a 10% tax on earnings of $50,000? A successful manufacturer's representative, or physician, or stockbroker may find that even if he builds his business up to maximum sustainable levels in a foreign locale, his new before-tax income still doesn't compare with his old after-tax-net. Also living expenses abroad may prove greater than those in his home country especially if the exchange rate is unfavourable. In countries like the Bahamas and the Caymans, a high portion of their food and other staples are imported and subject to customs duty; the same is true of fuel, clothing, building materials and most other necessities, all of which cost more than in producing countries. When you combine increased travel and communication expenses, you may easily find your standard of living has declined substantially in spite of lower taxes. Other Taxes Income taxes are the obvious taxes, but they are far from the whole story. Many countries have import duties of over 100% for many products-effectively doubling their cost to residents, and reducing their standard of living by a proportionate amount. These tariffs are justified by many plausible economic arguments, and their justification also takes advantage of feelings of nationalism. You are extolled to "Buy American" or "Buy British or whatever" because it's patriotic, even though it may be to your personal advantage to buy imports. Can you see why you should limit yourself to buying particular products anymore than you should limit yourself to buying from companies in your particular area of residence? I'm sure you can't. The only beneficiaries of this type of stupid arbitrary discrimination is the local government and local firms. Why is it bad to discriminate against poor black Americans who make $3,000 a year, but good to discriminate against far poorer Latin Americans who make $200 a year? Why should 250 million Americans be forced to pay twice the market price for Italian shoes so that a few thousand workers at American shoe plants can be kept in business? Import taxes and other trade barriers only benefit protected industries at the cost of higher prices for millions and the maintenance of the illusion that such protected firms are providing an efficient product. Even then the illusory "benefits" will last only until other governments respond with equally stupid and arbitrary counter-laws. The net effect is that relatively inefficient firms continue in their wasteful production of goods that other countries can produce more cheaply. A form of tax that has gained great favour with governments the world over is the Value Added Tax -- or V.A.T. It is favoured because, as a sales tax added on at each step of the manufacturing process, it is both invisible (i.e. cost rises are ascribed to producers, not to tax authorities) and very hard to evade, unlike the income tax. In Europe where it originated, V.A.T. continues to escalate way beyond what was originally envisioned.

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Avoiding Taxes The best thing to do about taxes is simply not to pay them. The authorities don't look with favour upon those who evade taxes, but expatriates are in an ideal position to avoid them legally. As a general rule you can stay for up to 6 months in most countries before becoming liable for any taxation. Although many countries tax residents on world-wide income, they do so only if you live there for over six months a year (calendar or tax, depending on the country). This means you can have a summer home where it is cool, a winter home where it is warm, travel a good bit in between, and pay off your mortgage with your tax savings. It's quite possible to pay no tax at all legally. This is often what some of the world's richest people do. The US government definitely presents a problem for Americans, however, since it's unique in taxing all your income wherever you go regardless of how long you stay out of the US. Most countries will consider you liable if you are simply physically present for more than 183 days per year, but others consider you liable if you are domiciled within them, or own property therein, or have a place of residence. Note that although most tax residents are on world-wide income, non residents are only liable for local income; some countries tax only local income, regardless of residence. The biggest problem for Americans is not avoiding foreign taxes, but rather avoiding US tax while retaining the freedom to return to the US. Nonetheless, the old adage "out of sight, out of mind" applies here. If you don't have any US income it's probably possible to write "deceased" on your tax form and be stricken from the records. But God help you if The American Secret Police (the IRS) find out. If you can solve the problems presented by the US government, you're nearly home free. Even if the worst happens, very few governments handle nonpayment of taxes in the brutal way the American authorities do. In most countries, tax evasion is only a civil, not a criminal, offence. On the whole, however, one should be scrupulous in one's observance of national tax laws. The wisest course for an expatriate is to keep a low profile. There's no reason to take a chance on jeopardizing your status when you can avoid taxes completely by hiring a competent tax advisor, not staying longer than allowed each year in a given country, and taking advantage of tax loopholes.

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TYPES OF TAX HAVENS Simply stated, a tax haven is any country whose laws, regulations, traditions, and, in some cases, treaty arrangements make it possible for one to reduce his overall tax burden. This general definition, however, covers many types of tax havens, and it is important that you understand their differences. 

No-Tax Havens - Countries that have no income, capital gains, or wealth (capital) taxes, and in which you can incorporate and/or form a trust. The governments of these countries do earn some revenue from corporations; "no-tax" means that what you pay is independent of income derived through a company. These states may impose small fees on documents of incorporation, a small charge on the value of corporate shares, annual registration fees, etc. Primary examples are Bermuda, Bahamas, and the Cayman Islands.

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No-Tax-on-Foreign-Income Havens - Countries that impose income taxes, both on individuals and corporations, but only on locally derived income. They exempt from tax any income earned from foreign sources that involve no local business activities apart from simple "housekeeping" matters. For example, in such a haven there is often no tax on income derived from export of local manufactured goods.

The no-tax-on-foreign-income havens break down into two groups. There are those that allow a corporation to do business both internally and externally, taxing only the income coming from internal sources, and those that require a company to decide at the time of incorporation whether it will be one allowed to do local business, with the consequent tax liabilities, or one permitted to do only foreign business and thus be exempt from taxation. Primary examples in these two sub-categories are Panama, Liberia, Jersey, Guernsey, Isle of Man and Gibraltar. 

Low-Tax Havens - Countries that impose some taxes on all corporate income, wherever earned. However, most have double-taxation agreements many the high-tax countries that may reduce the withholding tax imposed on income derived from the high-tax countries by local corporations. Cyprus is a primary example. The British Virgin Islands is another, but no longer has a tax treaty with the U.S.

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Special Tax Havens - Countries that impose all or most of the usual taxes, but either allow special concessions to special types of companies (such as a total exemption from tax on shipping companies, or movie production companies) or allow very special types of corporate organization, such as the very flexible corporate arrangements offered by Liechtenstein. The Netherlands and Austria are particularly

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good examples of this. To understand the precise role of tax havens, it is important for you to distinguish two basic sorts of income: (1) return on labor and (2) return on capital. The first kind of return is what you get from your work: salary, wages, fees for professional services, and the like. The second kind of return relates, basically, to the return from your investments: dividends on shares of stock; interest on bank deposits, loans and bonds; rental income; royalties on patents. It is the second kind of income, income from an investment portfolio, which tax havens are useful for. Forming a corporation or trust in a tax haven can make the second form of income totally tax free, or taxed so low that you will hardly notice. Certain types of businesses can be effectively based in a tax haven. If you publish a newsletter, for example, you might be able to set up the entire operation in a totally tax free country such as the Bahamas or the Cayman Islands. If your income comes from copyright royalties, perhaps on the computer program you invented, the Netherlands is famed as a base for sheltering royalty income.

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THE STRATEGIC USE OF THE PRIVATE TRUST THE MULTIPLE TRUST SYSTEM BY DANNY HASHIMOTO The multiple trust system contains a minimum of three trusts. The Domestic Trust (DT) generates income in the United States (domestically) and normally would have a tax liability if it did not distribute its net income. However, DT does distribute its net income to its beneficiary, the first Foreign Trust (F-1), thereby leaving no net income to be taxed. Under l.R.C. section 651, this is a legal deduction against income. Therefore, when DT files its tax return, it has no income tax liability. The physical assets (homes, vehicles, etc.) remain in the Domestic Trust. Only liquid cash (distributable income) moves from one trust bank account to. another. The Foreign Trust, F-1 distributes its income, in this case the income it received from DT, to its beneficiary, the second Foreign Trust (F-2). Once this distribution is made, F-1 incurs no income tax liability, having disbursed all of its net income (as DT did). F-2, the second Foreign Trust, has now received income from another 'foreign" trust income is not taxable as it is not directly connected income from a United States source. It is analogous, for example, to Russia and China doing business with no right or authority of the States to intervene. Essentially, the United States has no taxable authority over the distribution. Both foreign trusts, F-1 and F-2, are located in what is known as a "tax haven" country, foreign, of course. A tax haven country is a country that imposes no tax on those who come to do business by way of the formation of trusts and various business activities. These tax haven countries have advantageous laws for financial privacy and have no exchange treaties. Therefore no information of any kind is given to the United States government about these foreign trust banking or otherwise. The tax haven country that is chosen for this purpose is politically stable. Banking is among the finest and safest in the world. F-2 is not required to file any tax return - not with the United States and not with the foreign country. Flexibility for the client is now achieved as all the income in F-2 is now fully utilizable. This foreign trust may now invest in foreign countries, make non-taxable gifts, make loans and make income distributions. If it makes income distributions to its beneficiary, a tax liability will result. Usually, during the lifetime of the client, income distributions from the F-2 are not necessary as there is enough income being paid out of the trust(s) to the client who serves as Manager.

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The Trustee (of each trust) receives a nominal annual trustee fee. The Protector, whom you appoint, has the power to remove the Trustee for any reason. The day-to-day business affairs of the trusts are managed by you, the Client, and the Trustee supports your activities as they are in harmony with the mission of the trust (to preserve, protect and enhance) the assets you placed in the trust at the outset. No inheritance taxes or probate fees are incurred at anytime because title to the assets does not convey when you pass away. Title remains in the trust and only the identity of the Manager changes along with the beneficiaries as you have directed. The trusts are irrevocable, giving you the strongest asset protection capability as well. There are many benefits that accrue with this trust system -- among them being the capacity to have your trust estate grow much faster due to the compounding effect of tax dollars saved and your own astute management, of course!

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MAKING A TRUST WORK FOR YOU BY THE CARIBBEAN CONNECTION The use of a Trust for asset protection and estate planning dates back several centuries. Trusts were common in England early in the 11th century. In some form the trust was an instrument for holding property in Roman times. Developed over time, Trusts have become a seriously effective means of minimizing taxes, protecting assets and passing wealth along to heirs in privacy and without devastating tax consequences. The very wealthy have used the trust approach for many years. Recent development in the offshore world where more and more jurisdictions adopt effective laws, the trust has become an instrument available to people of lesser means. For nominal costs, minimal formalities and on short notice, a trust can come into being. We invite you to consider the trust a part of your personal and corporate financial planning, either alone or in conjunction with a IBC (International Business Company). Some Information About A Trust In general, a trust involves: I. A Settlor or Grantor: The person, company or other entity placing property into a trust. II. A Trustee: The individual, company, another trust or other entity who receives the property to be managed for the benefit of those individuals, companies, trusts, or other entities named as Beneficiaries. III. The Beneficiary or Beneficiaries: The individual, individuals, company or companies, trust or trusts or other entities named to benefit from the trust property. IV. The Trust Document: The Deed or Declaration of Trust is the written instrument which details the duties of the Trustee, Names the Beneficiaries and Lists the Property in the Trust Corpus or body of assets. Types of Trusts While we will assist in the establishment of a trust wherein the settlor or grantor retain absolute direct control of the trust assets by becoming the Trustee or by some other means, we are reluctant to do so. If the property is not within the absolute and discretionary control of the Trustee who is not the grantor or settlor, and the grantor or settlor retains overt control, little is accomplished as relates to asset protection especially, and to tax avoidance or minimization, typically.* Laws in high tax countries specify that if the tax payer controls the property, then he must pay the taxes on the assets or earnings on the trust property.

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The Discretionary Trust provides for a party to serve as the Settlor, being himself beyond the jurisdiction of the beneficiaries. The actual property can come from any place and be any thing. With a Discretionary Trust, the Trustee can add to the list of beneficiaries or remove beneficiaries. Certainly, in a Discretionary Trust, the Trustee has control over the property. This type of Trust is almost exclusively used for asset protection and tax and estate planning. As already referred to, under current tax laws and regulations in the high tax or "sophisticated" countries where the Common Law trust is known, if the beneficiaries are know, there might be a decision to claim taxes due, even though there has been no distribution. The confidentiality laws of most offshore jurisdictions take this into account. With the confidentiality feature, there is not chance that anyone can get information as to who beneficiaries are. To fill in the gaps where beneficiaries are not named in the Trust Deed or Trust Instrument, a Letter of Wishes filed with the Trustee to specify the Beneficiaries and their interest trust property will suffice. Also, where the Trust Deed does not specify details relative to distributions, a letter of wishes may be filed at any time by the beneficiary. Laws in most jurisdictions allow for this while not revoking the irrevocability feature of the trust. A Letter of Wishes may be filed at the time of initiating the Trust or at any time thereafter. For Asset Protection In litigious countries such as the United States, it has become common practice for individuals to seek offshore trusts for protection against:  Malpractice claims in the case of Medical Doctors and other professionals  Products liability  Creditors, either Business or Personal  Judgments  Problematic divorces The Trust Must be Irrevocable to qualify in many cases as a true asset protection device. If the Beneficiary or Settlor have ready access to trust property, claimants or tax authorities can "demand" compliance with local laws and tax regulations of the beneficiaries or settlor. A trust cannot be all things to all people in all situations. Multiple trusts might be called for: One for tax reduction, another for minimizing liability by holding physical assets. Speed Where Speed Is Important A trust can be established in minutes, literally. While it might take longer to have property transferred into a trust, time can be a factor as to the dating of the Deed. Generally, a Trust Deed is not registered with any tax jurisdiction. A trust is a private arrangement. Normally, there is no requirement for accounting reports

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to any agency. On the contrary, there is no access provided to the activities of the trustee except as arranged by the parties or through the courts, and that is not easy. Please Note It is always advisable to seek the advice of experts when making decisions about your finances. We regret that many of the experts do not know enough about the use of offshore jurisdictions to be of use. Just the same, prudence must be taken. We are not tax or legal professionals no not provide investment advice, tax advice or legal opinions. We tell you what is available and will answer your questions as relate to the jurisdictions in which we work or the service in which you have an interest. We provide support and administrative services and in doing so we use properly licensed and trained professionals. *If clients are uncomfortable with having a trust company in the picture, an IBC can be formed for the purpose of acting as trustee. Practical Profitable Use Of An International Business Company Portfolio Management Holding equity shares in an offshore company in a jurisdiction where there are no taxes on the company, no reporting, where shareholders may be nominees and management can be provided through Power of Attorney offers many advantages. With communication facilities being what they are today and the existence of the ability to trade immediately from just about any point on the Globe, the IBC has become a major tool where efforts to minimize taxes and to maintain confidentiality are important. Trading Companies Depending upon the jurisdictions involved in a trade or in trading, a jurisdiction can be selected where taxes can be minimized or completely eliminated. The existence of the VAT, the intrusion of the EU, withholding provisions, reporting requirements, licensing demands, etc., will dictate the jurisdictions. Generally, however, trade between the United States and just about any jurisdiction can be conducted through a Belize IBC with great advantage. The country's status provides access to European, Asian and other countries with great facility and potential to maximize profits and avoid taxation. Intellectual Property The simple holding of Intellectual Property in an IBC can account for significant profit increase, tax savings and minimization of reporting and regulatory compliance. Holding Title to Land, Improved Property, and Other Physical Assets Precious Metals, Land, Improved Property, Valuable Collections, Shares of Beneficial Interest can be held by an offshore company. This will facilitate transfer of ownership and translation of ownership to heirs if the trust is not in use. Look at the Features of An IBC and see how they apply to you and your financial planning approach. It is always good to consult with professionals in your home jurisdictions. Unfortunately, the so called professionals are limited in

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their scope of understanding of business or the need to look offshore for solutions. For Domestic Companies we suggest a close look at the BTO or Business Trust Organization as a planning and operating approach. Inter-Company Finances Borrowing and Lending Leasing An offshore company holding title to machinery and equipment can lease the same to a company in your jurisdiction where profits for the operation are maintained offshore, unreported and untaxed. A loan and interest from an offshore company can be collected from a company in your jurisdiction. The earnings can remain offshore. Ship/Boat Owning and Shipping Company Operation Register your ship or boat abroad for minimum tax and liability. Operation costs are minimized when using personnel from developing countries. There are other benefits that accrue. Such benefits become obvious as you review the laws and regulations related to vessel registration in Belize and other jurisdictions and the Companies Act and its ramifications for offshore operations. Consultancies and Personal Service Companies Setting up your consultant service in an offshore jurisdiction will enhance your visibility and increase your earning potential by minimizing taxes and operating expenses. Personnel Companies/Personnel Management If you are operating offshore, or have set up offshore you can provide services worldwide allowing income to be reported from an offshore company. Ease of operation, minimal accounting and retention of earnings can all work toward maximizing income. The individual is in actuality an employee of the offshore company. Employment for Offshore Contracts If you or your company have an offshore contract and must hire people to fulfill the details of the agreement, then it might pay to retain the employees or consultants where there is minimal or no need for payroll taxes, insurance, etc. The employee might benefit also from earning offshore. The IBC Can Be Of Measurable Value We have suggest before that a good and proper use of an IBC is to serve as trustee for an offshore trust. Properly structured and careful use of Power to act for the company, clients can remain in virtual control of the assets while confidentiality, asset protection and tax benefits remain in place.

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Selecting A Jurisdiction For Your Company And Your Trust Is Important The jurisdiction you select and the company you retain to provide offshore services to establish and manage your offshore financial activities are important. Assuming that an offshore account is part of a well thought out part of your estate planning, we are happy to make some suggestions. We ask that you keep in mind that we do not provide advice on tax planning and investment advisory services. We are specifically a service company which works with other professionals to administer offshore investments and provide assistance in establishing trusts and International Business Companies in various jurisdictions around the World. We have provided services to thousands who seek a high degree of confidentiality in their affairs, look for an opportunity to accumulate wealth without the immediate imposition of taxes and want to protect assets against confiscation of judgments or other unfortunate events in their lives. Making The Most of the Offshore World More and more businessmen and professionals are coming to realize the value of operating at least part of their investment activity offshore. We are specialists in establishing and providing management services for International Business Companies (IBC's) in tax free environments where maximum confidentiality can be maintained. Through offices of associates in Mexico we deal in currencies worldwide. We have established thousands of trusts to provide asset protection, confidentiality and the ability to accumulate wealth free from taxation. An “offshore” or foreign environment where no taxes are imposed and confidentiality is maintained is especially suited for providing consulting services and the holding of intellectual property. A quick look at Belize first choice offshore jurisdiction Enter The Offshore World With Confidence Belize has become a leading competitive center for the establishment of International Business Companies which offer unmatched advantages in terms of confidentiality, tax and investment planning, business management, maximum ease of transferring title to property and economic opportunities. Why an IBC? An Offshore Tax Exempt Company has many advantages when used in  Managing an Offshore Portfolio  Property or Ship Ownership  Leasing  Insurance  International Trade

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   

Consulting Services Holding Intellectual Property Financial Planning Holding Assets Confidentially

Why Belize? Belize offers many attractive advantages among which are:  Political Stability  Modern Democratic Legislative Body  Professional Support For Establishing A Company And Providing Management  Totally Tax Exempt Income  Easily Accessible By Land, Sea And Air  Prompt Service  Excellent Communications  Friendly English-speaking Population  Vast Untapped Resources The IBC In Belize  Key features of the Belize IBC are:  Having Only One Shareholder/Subscriber Permitted  Share May Be Held By Corporations Or Trusts  A Single Director Allowed Which May Be A Corporation Or Trust  Non-Disclosure Of Beneficial Owners  Bearer Shares Permitted  Low Fees For Setup And Renewal  No Statutory Accounting Or Auditing Records Need Be Filed In Belize  No Minimum Capital Requirements  Minimal Restrictions  Cannot Carry On Business With Residents Of Belize  Cannot Own Real Estate In Belize  Cannot Operate As A Bank Or An Insurance Company  Cannot Provide Registered Office Or Serve As Registered Agent An IBC must maintain a Registered Agent and a Registered Office in Belize.

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WHY YOU NEED FINANCIAL PRIVACY The "War On Drugs" has become a "War On People". In fact, by definition you cannot have a war on anything but people, and Government is bringing that fact to life. It doesn't matter whether you are pro-drug or anti-drug, and that is not a discussion for this site, but one thing is certain: the government has been fighting a losing battle, at higher and higher costs, from day one. The 'war' has cost billions and billions of dollars without putting so much as a dent into the world drug trade. There has however been quite a dent put into the lives of private tax-paying citizens as a result. To help track money-launderers, the U.S. Government instituted the Financial Crimes Enforcement Network (FinCEN), an amazing computer system that has access to all bank, credit, insurance, medical, driving and criminal records as well as census data and other personal information on most of the U.S. population. This information is available for most of the developed countries all over the globe as FinCEN not only acts as a database for the I.R.S., F.B.I., C.I.A., D.E.A. etc., but also Revenue Canada, R.C.M.P., Inland Revenue and InterPol, among others. It is the most effective financial investigation unit in the world. By collating and analyzing public databases on a day-to-day basis and by performing a real-time analysis of all electronic currency movements into and out of the United States, FinCEN has caught over 40,000 'criminals' to date. The sad truth is that less than 10% of those individuals were true criminals, the others were private citizens who were not even aware that they had committed a crime. A couple of true stories: A 61 year old man was gunned down in his own home by 27 armed undercover police agents in California who raided his house on suspicions of drug activity on the basis that his wife always paid for her groceries in cash (read: was laundering money). After he was dead the police discovered that he was a multi-millionaire (legitimately) thus explaining why his wife could afford to spend lots of cash. (Nevertheless, after a six month investigation a Judge decided that the officers' actions were justified because they had suspicions of illegal drug activity). Under the U.S. Money Laundering Control Act, it is a crime to structure financial transactions to avoid the US$10,000 reporting threshold i.e. if you transfer $10,000 or more offshore you must report it to Customs and it is illegal to transfer $5000 twice to avoid the reporting requirement. Well one man was sending sums of money less than $10,000 to his son's bank account to pay for schooling and was unaware of any reporting requirements. The result? The government accused him of 'structuring' and he was arrested. He eventually lost his home, car, bank account and other assets which were sold before he could defend himself in a federal court. It gets worse.

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As if FinCEN on its own was not enough, it will soon have access to a new computer system called AI/MPP (Artificial Intelligence, Massive Parallel Processing). AI/MPP will link all federal and state government databases with the entire US banking system. This system will be able to monitor all banking transactions in real time, cross-reference current transactions with past transactions and use artificial intelligence to detect suspicious activity as it is carried out. Perpetrators of financial crimes, whether intentionally committed or not, will be caught within an hour of the illegal transaction. As shown above, the government doesn't particularly care if you're innocent or not. This does not even touch on the need for privacy to deter litigants of frivilous lawsuits or to avoid creditors. With money hungry, out-of-control government, North Americans have got their hands full enough already. The solution to the problem of course is to go offshore and some (like us) would say that with today's technology it is foolish to keep more money than is necessary onshore and in plain site of any snoops.

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WHO SHOULD CONSIDER GOING OFFSHORE? Aside from the very rich (who all should) and the very poor (who all have no reason to), tax havens can be beneficial to people who fall into one or more of the following categories: 1. People with excess money to invest - if you are already maxing out your RRSP contributions annually, and have some extra money to invest you can generate much better returns offshore than onshore. 2. People who value financial privacy - Contrary to popular belief, your financial records are an open book and government snooping is only going to increase as time and technology marches on. Our forefathers believed in financial privacy, our modern governments have eroded it in the name of confiscatory taxes. 3. People who are in danger of being sued - In America, the number of frivolous lawsuits filed each year is enormous. If you're American, you have a 10% chance of being sued in any given year and a 33% chance of being sued in your lifetime. Worse, the litigants are winning! Imagine a burglar breaking into your house, injuring himself in the process and then suing you. Believe it or not, courts award judgements to those plaintiffs. Creditors and ex-spouses can also take away most, if not all, of what you own. The best line of defence is to protect your assets before someone else decides they deserve a slice of your pie. If you try to hide your assets after someone has won a judgement against you, you'll be guilty of fraudulent conveyance (trying to fraud your creditors) and will end up in even bigger trouble. 4. People who want to invest in funds and securities not available in their home country. Some of the best investments are located offshore, but North American governments prevent them from advertising on our shores. Why? Because government knows that people would avoid domestic investments if they had a choice to do better elsewhere. Being in the offshore arena will gain you access to these investments. 5. People who are self-employed part-time or full-time in a home business If you receive income in the form of cash or cheques paid directly to you, you can really beef up your privacy by doing your banking offshore. It may even allow for tax avoidance possibilities - talk to your financial planner about this. 6. People who just want to put money aside for a rainy day - Just in case. 7. People who do a lot of travelling - Many offshore banks offer multicurrency accounts (single accounts that can be operated in two or more major currencies). These accounts alleviate the inconveniences and commission fees of always exchanging money. 8. People who anticipate substantial sums of money - Whether it be through inheritance, royalties, or the rewards of hard work, the time to set up an offshore financial plan is before you acquire your wealth, not after.

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9. People who, through technology, are able to work from anywhere in the world e.g. certain network marketers, 900# operators, freelance writers, mail order salespeople etc. Refer to our PT Page. 10. People who are just fed up and want to expatriate. In the end of course, the decision is personal. Certainly, offshore banking is not for everyone. We invite you to go through our site, learn as much as you can, and make an informed decision as to whether you can benefit from using tax havens or not.

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OFFSHORE BANKING Tax benefits Liabilities to income tax may be avoided, reduced or deferred. With a offshore bank account you may pass your wealth along to heirs and avoid devastating tax consequences. There are no taxes on the account interest and no filings are made to any government authorities. Asset Protection A offshore bank account can help you protect assets from creditors, divorce settlement and law suits. By opening a joint account you are also able to choose freely how to divide your assets in case of death. Many countries have laws that dictates who receives the assets in case of death. Secrecy It is not possible for any third party to obtain information about your account, not even government authorities. High interest rates Banks in offshore financial centers are able to pay higher interest rates since there are no taxes on banks income or accounts.

Frequently Asked Questions How can I access my money? There are several ways. You can apply for a credit card which can be used worldwide for purchases or for withdrawals in ATM:s. This will give you instant access to your funds 24 hours a day. You may also choose to have a checkbook. For larger amounts you can instruct the bank to transfer funds to any other bank in the world. Instructions can be sent by mail, fax or over the phone. Who will qualify? With our program everyone can have their offshore bank account even without an initial deposit and without a bank reference. We can not guarantee that everyone is accepted for a credit card, however no credit checks are ever made. We do guarantee though that everyone that follows our instructions will have their own offshore bank account opened! How do I make deposits? You can transfer money to your offshore account from any bank in the world. Your clients can pay directly to your offshore account. If you have any income from overseas, the funds never need to arrive in your country of

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residence, yet you can access your funds whenever you want. You can also send checks to the bank for deposit.

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OFFSHORE TAX HAVEN BANKING AND TRUSTS "It is well enough that the people of the nation do not understand our banking and monetary systems, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford Sr. Introduction Did you ever read the fine print on the 'signature card' your bank gets you to sign when you open an account? It reads: "The undersigned hereby agrees to abide by all the rules of the bank." Did you ever ask to see those rules?? What you have actually done is agree to abide by all the administrative rules of the Secretary of the Treasury (i.e. the Government). You have in fact signed a contract with the government, voluntarily waived your right to privacy, and agreed to be accountable to the State. Is that what you really want? A partnership with the Government?? While it may not be practical for most people to get out of the banking system altogether, through the use of a TRUST you can minimize this problem, or even eliminate it entirely by establishing an affordable International Business Corporation with a private OFFSHORE BANK ACCOUNT. The government then knows nothing of your banking business and will have no way to find out. Now, doesn't that sound like a better arrangement? It is time to move out from under "Big Brother's umbrella", the umbrella that is costing us all our freedom, our privacy, our financial independence, not to mention how much it is costing us in terms of real hard cash. The Government, Tax Collectors, and Bankers know that money held outside your country of residence is money they cannot control. That is why they are adamant in their defamation and condemnation - they know it takes money out of their hands. They would much rather you keep your money in domestic banks, paying you less and taxing what little you do earn. Offshore Banking Defined Before we go any further, let's define Offshore Banking. The term Offshore Banking has two different and very distinct definitions, one MECHANICAL, the other FUNCTIONAL. We will concern ourselves here with the Functional Definition, but for those of you who are interested in the nitty gritty, here is the Mechanical Definition. To the "depositor public" at large, an Offshore Bank is: ANY BANK OUTSIDE THE COUNTRY IN WHICH THE DEPOSITOR LIVES. That means: Any bank outside the United States is an offshore bank, if you are a resident of the United States.

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An Example: If a U. S. resident maintains an account of any kind in a bank in Canada, that bank is an offshore bank for that account-holder/depositor. And, the same holds true for a Canadian having an account in a U. S. Bank. Any time you have money deposited in, or invested with, a bank in a country outside of the country in which you live and work, you are "Banking Offshore", even if thatbank is just across the imaginary borderline between the U. S. and Canada. No matter how a bank is structured, where it is licensed and chartered, or where it does business, ALL BANKS use the same channels (exchanges, clearing houses, etc.) to facilitate the movement of funds internationally and/or domestically. Therefore, since all of the banks in the world are indirectly connected through their correspondent and inter-bank relationships, there is no real confusion arising from the transacting of banking business. The Confusion Over Offshore Banking The confusion regarding Offshore Banking is only a matter of "legal jurisdictions", arising from the fact that no country may impose its laws in another country without that country's consent and cooperation, i.e., a treaty. Because of the wide variety of laws around the world, what is illegal in one country may be entirely legal in another country. Any country can, through its various policing agencies, investigate any person residing in their country for a violation of their laws. That same country cannot investigate beyond its borders without first obtaining the consent and cooperation of the country in which the investigation is to be conducted. Even then, the investigation must be conducted under the law of the country in which the investigation is to take place; not under the laws of the country conducting the investigation. As an example: The U. S. can not investigate anything in Canada, without the consent and cooperation of the Canadian Government, and the Canadian Government is totally within its international rights to refuse to consent or cooperate in the investigation. Further, countries will not (usually) without a special treaty or agreement, assist another country in enforcing or investigating a crime that is not a crime in their country. As an example: Income Tax Evasion is a crime in the U. S., however, in countries that do not impose an income tax (referred to as a tax haven), income tax evasion is not a crime. Therefore, those countries are not obligated (and usually don't) assist the U. S., or any other country, in enforcing or investigating a tax law which does not exist in their own jurisdiction. THEREIN lies the confusion. -- Offshore Banks located in countries that do not have income tax laws do not (usually) assist the Internal Revenue Service in the U.S. in enforcing, or investigating violations of U. S. tax laws. Therefore, without the consent and cooperation of those countries, the I. R. S. cannot (in most cases) get information regarding financial transactions conducted in those countries by Tax Evaders in the U.S.

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Since the I. R. S. is the tax-collecting arm of the Federal Reserve, upon which it depends to collect money for its self-serving purposes, the Government readily and willingly supports the I. R. S. in its condemnation of Offshore Banking. But, why do the Bankers join in the condemnation? (other than the fact that all U.S. banks are members of the Federal Reserve). The reason is simple. -- If you take your savings account out of a bank in your country and place it offshore in a bank in another country, the bank in your country doesn't have your money to use any more (or monetary control over your accounts and record of your transactions). To keep you from doing that, the Bankers jump on the bandwagon to condemn Offshore Banking, even though a good many of them have deposits in other countries and benefit from Offshore Banking themselves. As long as they can keep YOU confused, fearful and suspicious about Offshore Banking, they have YOUR MONEY in their banks to use for their purposes. Why Have You Been Duped? The answer was best stated in the first paragraph of an article entitled, "Offshore Tax Havens Lure Main Street Money," which appeared in U. S. News and World Report (August 1, 1983). "Ordinary Americans by the thousands are cutting their taxes on the sly by secreting part of their incomes in foreign banks, safe from the prying eyes of the Internal Revenue Service." Because more and more Americans are becoming fed-up with the U. S. Income Tax that penalizes the wage earners and businesses while rewarding the do-nothing elements of our society, the U. S. Government is scared-to-death. If the majority of Americans ever found out that they could put their legally earned money outside the U. S. legally, where the I. R. S. couldn't find it, the U. S. Government would find it very, very difficult to keep supporting the nonproductive causes that eat your tax dollars. The U. S. Government knows that if it publicizes the fact that it cannot control money outside the U.S., more and more Americans will seek offshore opportunities. So the U. S. Government sponsors "propaganda" (which the controlled media gives maximum exposure) stating that their purpose in investigating, and attempting to control Offshore Banking activities is to protect you from the "criminal" elements of our society. They imply that anyone dealing with an Offshore Bank is in cahoots with, assisting, aiding, and abetting the gangsters, dope dealers, and other criminals. The U. S. Government knows it cannot forbid you from having an Offshore Bank account but they figure they can intimidate most Americans into not banking offshore, by linking it (however indirectly) to criminal activities. Regardless of the stated purposes employed by the U.S. Government in this scare-tactics propaganda, their ONLY REAL PURPOSE is to protect their self-serving ability to squeeze every dollar possible out of the U. S. Taxpayer.

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Using An Offshore Account Legally Anyone who holds a Checking or Savings Account in a United States Bank may, legally, move that account to any other bank, anywhere in the world (offshore). If you have a Savings Account in a United States Bank, the odds are that you have already paid your income tax on that money, before putting it in your Savings Account. Therefore, your only further tax obligation on that money is to pay the income tax on the interest you earn. As an example: If you are a tax-paying, law-abiding person, and have saved $100 from your paycheck, you have already paid the taxes on your income. The $100 is your after-tax money, therefore you don't pay taxes on it again. At the end of the year, when the bank sends you your Savings Account statement, you learn that you have earned a whole $5.25 interest (without compounding). So you add $5.25 interest earnings to your income tax statement and pay your taxes on that earned interest. The same thing holds true if you have your Savings Account in an Offshore Bank. At the end of the year, when you get your statement, you simply add the amount of interest earned to your income and pay the taxes on that earned interest. So. . . Where's The Advantage? BETTER RETURN ON INVESTMENTS Using the same example as before, let's assume that you are in the highest possible tax bracket; pay 50% of your net income in taxes. Your $5.25 in interest earnings would cost you $2.13 in taxes, leaving you with $2.12 in real after-tax earnings. Now, let's suppose that you had that same Savings Account, made up of after tax dollars, in an Offshore Account. Your actual earnings could more than double. Because banks in other countries are not restricted by the U. S. Federal Reserve Board as to the amount of interest they can pay on deposits, the interest you can earn from your Offshore Accounts will almost always be higher than the interest you could earn on your accounts in U. S. Banks. This will be the case even after deregulation of the U. S. Bank (if it ever comes), owing to the fact that your Offshore Accounts will have less activity, thereby, less cost to the Offshore Bank -- a feature of Offshore Accounts most often overlooked by the U.S. Banks. Don't believe that Offshore Banks can't really pay the high interest rates they offer because, if banks could really pay those rates, U.S. Banks would try to meet the competition and do the same. Take a closer look at the financial statements of any U.S. Bank. You will find that their "gross" profits against public deposits can range from 25% to 40% but they have written laws to limit the amount of interest they can pay you on your deposit. The U.S. Banks put their earnings into unnecessary and non-productive

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accoutrements, while Offshore Banks do without the fancy buildings and unnecessary frills and share their profits with their customers. If you ask any banker in the U.S. about the low, low interest he pays you on your money, he will tell you there is nothing he can do about it - "It's the law. I would gladly pay you more if the law would allow it." But, what he doesn't tell you is the fact that he, and other bankers wrote the law. Why should they let you share in their profits, when they can write a law that limits your earnings and increases theirs. Don't pass up the exceptional interest earnings available to you simply because you have blindly accepted, without question, the myths regarding Offshore Banking. The fears and suspicions you may have held regarding Offshore Banking are nothing more than the protectionist scare-tactics used by the Government, the I.R.S., and the Bankers to keep your money within their grasp; limiting your earnings, by law (allowing them to keep the lion's share for themselves), while taxing the paltry earnings they do offer. PERSONAL PRIVACY Without a doubt, the greatest violator of the privacy of U. S. residents is the U. S. Government itself. The various and many U. S. Government agencies maintain a staggering total of over 3.5 billion files on American citizens. Considering the country's population of 230 million people, the U. S. Government agencies maintain an average of 15 files on every man, woman, and child in this country. When you consider that children, and other dependents probably don't have separate files of their own, the average number of files on adults rises even higher -- is it any wonder Americans worry about their personal privacy? Files and information maintained outside the U.S. are neither part of, nor subject to, the scrutiny of the U.S. Government Agencies. The U.S. Government can (under normal circumstances) only gain knowledge about your Offshore activities if YOU tell them about it or if you are involved in some form of criminal activity in the U.S., and their investigation in this country reveals to them evidence of your Offshore activities. Beyond the prying eyes of the Government, your nosy neighbors, business competitors, ex-spouses, and other snoopy people who may well attempt to keep track of your financial activities for their own purposes. In this country, even some of the more inept private detectives can easily gain access to your most personal records. However, records and files on your activities outside the U.S. are impossible for these snoops to get their hands (or eyes) on. Banking Offshore and maintaining your financial records and files outside the U.S. allows you the maximum Personal Privacy available. TAX ADVANTAGES (we do not pretend to be your tax advisor) As you are well aware, in the U.S., there are a multitude of totally legitimate, and legal, "tax shelter" opportunities available. The same kinds of "tax shelter" opportunities are also available in almost every country in the free world.

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Since the various I.R.S., Treasury, and Securities Regulations governing "tax shelter" opportunities are constantly changing, we will not attempt to give you specific advice regarding such opportunities. But, by realizing that these "shelters" exist you can better understand that you can legally and legitimately shelter your income from taxes. When you find a "tax shelter" opportunity, have your accountant or other tax professional check it out to see if it conforms with the governing regulations. Those professionals are in a position to keep on top of the governing regulations in effect at that time and advise you as to the legality and tax advantage to be gained. (However, few have accurate expertise in the laws of doing business offshore). Setting up an Offshore Trust is an effective way of furthering potential tax savings. Rules for taxing trusts apply to domestic trusts and those trusts whose incomes are currently taxed under the Internal Revenue Code. If a foreign trust company, organization or business trust is properly set up, the U.S. beneficiaries holding certificates do not currently own any of the trust income. The Trust income is 100% owned by the fiduciary. Under these circumstances the U.S. beneficiaries owe no current tax on the trust accumulation, corpus or income until they receive a distribution. Under current tax laws and regulations in the high tax or "sophisticated" countries where the Common Law trust is known, if the beneficiaries are known, there might be a decision to claim taxes due, even though there has been no distribution. The confidentiality laws of most offshore jurisdictions take this into account. With the confidentiality feature, there is no chance that anyone can get information as to who the beneficiaries are. Other benefits of using an Offshore Trust in your financial stategy are: ASSET PROTECTION An Offshore Trust enables you to change the title on your personal or business possessions, including stocks, real estate, bank accounts, coins, gold, vehicles, boats, etc. You may use and enjoy the Trust property during your lifetime, even though the property is titled in the Trust name. With the assets no longer in your name there is no public record of personal ownership. In litigious countries such as the United States, it has become common practice for individuals to seek offshore trusts for protection against:  Malpractice claims in the case of Medical Doctors and other professionals  Products liability  Creditors, either Business or Personal Judgments  Problematic divorces Having assets owned by an Offshore Trust often discourages would be creditors from taking action against you. Any court action would have to be conducted in the country where the Trust is held and with that country's lawyers. ESTATE PLANNING / AVOIDING PROBATE One major misconception held by most people is that a Will is a means of distribution. A Will is merely a tool used with the three methods of distribution

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most often encountered in Probate. When the estate goes through Probate, fees for attorneys and executors (10 - 50% of the fair market value of the estate) are paid directly from the estate. As a further note, control and confidentiality are lost when an estate goes through Probate, all proceedings are a matter of public record. The courts can also force liquidation of assets to pay outstanding debts and judgements. Heirs are forbidden by law to purchase any assets of the estate sold through forced liquidations. The estate also becomes subject to federal estate taxes. Because assets transferred to a Trust are no longer in your personal estate, you can avoid expensive Probate costs, as well as estate and inheritance taxes. Scoff-Law Applications As the government (any government) writes more and more laws regulating the personal activities of the citizenry (especially if those laws infringe the citizen's earning capacity), more and more of the citizens will violate those laws without compunction, guilt or remorse. As an example: How many people do you know who have driven faster than 55 miles-per-hour on a Federally funded highway? Scoff-laws are, by definition, people who scoff at, or flout, the law. They have no compunction about violating those petty laws, rules or regulations that they feel are unreasonable, unrealistic, or infringe their personal right to life, liberty and the pursuit of happiness. These people know that a government that writes that many laws can't possibly expect to catch the vast majority of people who violate them. Besides, even if they get caught, unless they are a major offender, the penalties aren't that severe or the power-that-be may simply choose to overlook the offense. As an example: Most police officers simply overlook people driving faster than 55 m.p.h., but do stop those people driving recklessly at any speed. Because of the multitude of federal, state, county, city and township tax laws in this country, the vast majority of people in the U.S. have become tax scoff-laws. It is physically impossible for any one person to know (or understand) all of the various and many tax laws, rules and regulations. And, the people all know that it is impossible to be in 100% compliance with all of those laws and, it is just as impossible for the government at its many levels to know who is, or who isn't, paying which taxes under which laws, rules and regulations. So, most people just report the earnings, and pay the taxes, they absolutely have to, and feel no remorse if they don't report some of the income they know they should. Again, we reference the article entitled, "Offshore Tax Havens Lure Main Street Money," which appeared in the August 1, 1983, issue of U.S. NEWS & WORLD REPORT, Robert Mirshberger, an assistant regional commissioner for the I.R.S. in New York was asked about the risk involved in tax cheating. His answer was, "It would be an unfortunate happenstance if you were caught. You would be a very unlucky person." The article continued with some examples of the ways modern-day tax scoff-laws use Offshore Bank Accounts to cheat the I.R.S. tax collectors:

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A doctor received a payment from a patient and deposited the check in his Offshore Bank Account. Since the deposit doesn't appear in his business records, the chances are it would never be found, even if the doctor is audited. One couple sold a piece of art work and had the buyer send the payment direct to their Offshore Bank Account. Later, the couple used that money to enjoy a vacation outside the U.S. Mr. Mirshberger with the I.R.S. said, "There's no way we would ever discover that." Another example told of a bank customer who got his "unscrupulous" banker to transfer large amounts of cash to an Offshore Bank Account without reporting the transaction to the I.R.S. Then, the customer borrowed the money back from the Offshore Bank. Since loan proceeds are not taxable, no taxes were paid. But, these examples are only the tip of the iceberg. It is no longer just the wealthy with art works to sell or the professionals and businessmen with extra income to hide. There are hundreds of thousands (maybe even millions) of blue collar and middle management white collar workers using Offshore Bank Accounts to reduce the unbearable tax load imposed by the federal, state and local governments. Offshore Banking Is Not Evil As you have now learned, Offshore Banking in and of itself, IS NOT evil, illegal, immoral or unethical. The scandalous defamation and condemnations of Offshore Banking is only another ruse foisted upon the gullible public by the Government and the Banking Establishment. Their purposes, not Offshore Banking, are evil in that the intent is to maintain control over YOUR MONEY for their own self-serving uses. No matter what the government and bankers tell you, their purposes are not intended to restrain the criminal element. They know, as well as you do, that criminals will do their evil deeds no matter what laws they have to violate; it is the nature of their endeavors. The true purpose of the government is to keep YOUR MONEY within their jurisdiction. The true purpose of the bankers is to keep YOUR MONEY in their banks. Using an Offshore Bank Account legally, paying your taxes and reporting your transactions, you can legally enjoy passive income 2, 3, or even 4 times greater than what you can earn in your country. If you choose to use your Offshore Bank Account for tax scoff-law purposes, the matter will be between you and your conscience. But, remember, your illegal use of an Offshore Bank Account does not make Offshore Banking illegal. If you get caught, you, not the Offshore Bank will be at fault. For many years, moneyed-people have known about and used Offshore Banking opportunities in order to increase their assets, legally avoid taxation, and gain personal privacy for their financial affairs. Now, most anyone with a good income, or modest savings, can enjoy the same exceptional advantages and free themselves from the negative forces active in your country.

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Conclusion The Offshore Banking Community is available to you for your use. No matter how small your ambitions may be, there is a place for you to earn maximum returns... all you need do, now that you know how Offshore Banking really works, is find the Offshore situation that will work for you.

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OFFSHORE TRUST INFORMATION The use of a Trust for asset protection and estate planning dates back several centuries. Trusts were common in England early in the 11th century. Developed over time, Trusts have become a seriously effective means of minimizing taxes, protecting assets and passing wealth along to heirs in privacy and without devastating tax consequences. The very wealthy have used the trust approach for many years. With recent developments in the offshore world where more and more jurisdictions adopt effective laws, the trust has become an instrument available to people of lesser means. For nominal costs, minimal formalities and on short notice, a trust can come into being. In general, a trust involves:  A Settlor or Grantor: The person, company or other entity placing property into a trust.  A Trustee: The individual, company, another trust or other entity who receives the property to be managed for the benefit of those individuals, companies, trusts, or other entities named as Beneficiaries.  The Beneficiary or Beneficiaries: The individual(s), company or companies, trust(s) or other entities named to benefit from the trust property. The Trust Document, The Deed or Declaration of Trust is the written instrument which details the duties of the Trustee, Names the Beneficiaries and lists the property in the Trust Corpus or body of assets. Irrevocable and Discretionary Trusts A properly structured Trust will be irrevocable and discretionary, meaning that the settlor cannot reclaim any of the assets once they have been placed in the Trust. Note however, that the settlor can use and enjoy the Trust property in his lifetime. If the property is not within the absolute and discretionary control of the Trustee who is not the grantor or settlor, and the grantor or settlor retains overt control, little is accomplished as relates to asset protection especially, and to tax avoidance or minimization, typically. Laws in high tax countries specify that if the tax payer controls the property, then he must pay the taxes on the assets or earnings on the trust property. The Discretionary Trust provides for a party to serve as the Settlor, being himself beyond the jurisdiction of the beneficiaries. The actual property can come from any place and be any thing. With a Discretionary Trust, the Trustee can add to the list of beneficiaries or remove beneficiaries. Certainly, in a Discretionary Trust, the Trustee has control over the property. This type of Trust is almost exclusively used for asset protection and tax and estate planning.

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As already referred to, under current tax laws and regulations in the high tax countries, if the beneficiaries are known, there might be a decision to claim taxes due, even though there has been no distribution. The confidentiality laws of most offshore jurisdictions take this into account. With the confidentiality feature, there is no chance that anyone can get information as to who the beneficiaries are. To fill in the gaps where beneficiaries are not named in the Trust Deed or Trust Instrument, a Letter of Wishes filed with the Trustee to specify the Beneficiaries and their interest trust property will suffice. Also, where the Trust Deed does not specify details relative to distributions, a letter of wishes may be filed at any time by the beneficiary. Laws in most jurisdictions allow for this while not revoking the irrevocability feature of the trust. A Letter of Wishes may be filed at the time of initiating the Trust or at any time thereafter. For Asset Protection In litigious countries such as the United States, it has become common practice for individuals to seek offshore trusts for protection against:  Malpractice claims in the case of Medical Doctors and other professionals  Products liability  Creditors, either Business or Personal  Judgments  Problematic divorces The Trust must be Irrevocable to qualify in many cases as a true asset protection device. If the Beneficiary or Settlor have ready access to trust property, tax authorities can "demand" compliance with local laws and tax regulations of the beneficiaries or settlor. A trust cannot be all things to all people in all situations. Multiple trusts might be called for: One for tax reduction, another for minimizing liability by holding physical assets. Advantages of an Offshore Trust 

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Tax savings, avoidance and deferral: You can save, avoid and defer many taxes in many ways. You don't owe tax until you repatriate your assets, whether they be cash or the very house you're sitting in now. Any asset can be designated Trust Property. And if the Trust is in another jurisdiction, chances are those assets can earn interest, or accrue whatever pertinent value without being subject to domestic taxes. Safety: Keeping assets offshore provides you a financial reserve should disaster strike at home, or in your domestic financial life.

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Protection Against Judgment: In a lawsuit-happy world it's nice to have reserves that can't be "seized", "liened" or "attached" with the stroke of the Court's pen or the phone call of a tax authority. Though not impossible for them to get at, it's much much harder for them to attach your assets, when they're held in Trust, offshore, by a Trustee who isn't beholden to anyone but the wishes and the good of the beneficiaries. Confidentiality: A private contract, a legal agreement, and the business of no one but your's, the trustee's, and whomever else you think needs to know. The offshore Trustee is required to say nothing to external inquisitors. Ease of Transfer of Interest to Heirs or Others: Wills, living trusts, and domestic trusts invariably pay taxes - especially when assets are transferred. An offshore trust does not. Earnings and a Faster Accumulation of Wealth: Trusts can own companies, have bank accounts, own portfolios, hold trading accounts. and not pay taxes.

Conclusion The Common Law Trust has served for centuries as a favorite vehicle in financial planning and asset protection. The Trust is finding even greater life in today's increasingly complex society as we see our privacy constantly being eroded. The Trust is one of the most flexible financial instruments and entities to ever come about and they should be a part of most everyone's financial plan.

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USING OFFSHORE BANK ACCOUNTS Opening an Offshore Bank Account is the easiest and most inexpensive way to start your migration offshore as it does not require any special knowledge to use - the mechanics of banking offshore are no different from those at home. It's the intangibles - the privacy, lack of taxes and lack of regulations - that differ. Offshore Bank Accounts are superb for providing financial privacy, paying higher interest rates than your present bank, and safekeeping spare cash. We urge you to apply for one of these accounts and step into the offshore waters; once you get used to the freedom, mobility and higher returns offered offshore, you will never turn back! It's easy to deposit and withdraw funds to and from your offshore bank account. You can transfer money to your offshore account from any bank in the world. Your clients can pay directly to your offshore account. If you have any income from overseas, the funds never need to arrive in your country of residence, yet you can access your funds whenever you want. You can also send cheques to the bank for deposit. For withdrawals, you can apply for a secured credit card which can be used worldwide for purchases or for cash in ATM's, giving you instant access to your funds 24 hours a day. You may also choose to have a chequebook. For larger amounts you can instruct the bank to transfer funds to any other bank in the world. Instructions can be sent by mail, fax or over the phone.

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PRACTICAL APPLICATIONS OF GOING OFFSHORE This page is intended to demonstrate practical, workable applications of the various offshore entities described previously in an attempt to allow you to make the correct decision as to what you need. Many people find all this stuff quite daunting and confusing, this page should help clear the air. If you are looking for some financial privacy and better interest rates, all you need is an offshore bank account. By getting a credit card from your offshore bank you can have instant access to cash and merchandise anywhere in the world and since all transaction records are kept offshore, it will be kept private. An offshore bank account does not provide any asset protection or allow for tax planning options. A much higher degree of privacy is available, as well as some asset protection, by incorporating offshore and then opening a corporate bank account and getting a corporate credit card. To alleviate confusion, it needs to be stressed that incorporating offshore does not necessarily entail being involved in any enterprise, but is simply a way of creating a distinct, legal entity separate from yourself, to hold assets. In this case, you are doubly protected as not only are the transactions kept offshore in secrecy, but the transactions won't even have your name tied to them. There are no tax advantages to doing this as tax authorities will consider such companies as simply extentions of yourself and tax the company's income as your personal income. Some asset protection is provided by going this route. However, creditors could argue in court that the corporation is nothing more than you operating under a different name and you could be forced to turn over the corporate assets. However, if privacy is your major concern, this is the route to take. If you want it all - privacy, asset protection and tax avoidance possibilities, then an asset protection trust is a must. We especially recommend putting your assets into an offshore corporation first, and then putting the corporation into a trust. This gives you an essentially impenetrable financial fortress. As mentioned above, all transactions will bear the name of the corporation, not your personal name. Moreover, in this situation, not only do you no longer own the assets (the trustee does), you have no way of getting them back (asset protection trusts are irrevocable, meaning, you cannot reclaim assets once they've been put into the trust). Since it is beyond your control to gain access to the assets, you cannot be forced to turn them over to anybody. To top it all off, using an asset protection trust/corporation setup, you may be able to legally avoid taxes. As mentioned elsewhere, if that is a goal of yours, it is best to obtain professional advice before doing so.

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OFFSHORE CORPORATIONS AND IBCS In the past, the primary reason for incorporating was to limit the liability of the investors to the amount of assets held by the corporation. Incorporating offshore can also create certain opportunities for tax avoidance and tax deferral. As well, they provide anonymity by taking advantage of tax haven secrecy laws. Many people set up an offshore corporation simply to create a legal entity that can operate bank accounts, make purchases and invest without having their personal name tied to it. Offshore corporations are used outside of the place of incorporation for a seemingly endless variety of activities including trading, trade financing, holding assets, manufacturing and tax minimization. They are primarily used for holding investments and real estate. Equipment may be purchased and leased by an offshore corporation. They are also used for the ownership and registration of aircraft and vessels, the holding of patents, trademarks and copyrights, management and administration, and the collection of royalties and commissions (assets like these which are difficult or expensive to transfer can be held by a corporation allowing the owner to transfer the shares in the corporation rather than the asset itself). In some cases, an offshore corporation, recognized as a citizen or national of the place of incorporation, may confer a trade advantage or may help avoid a disadvantage. Offshore Corporations are also commonly used as an integral part of a trust structure. Here is a breakdown of potential uses for an offshore corporation:  Investment Holding Company - real estate, stocks, bonds, precious metals and mutual funds can all be held by an offshore company allowing for management under one corporate name.  Holding Intellectual Property - royalties and licensing fees for patents, trademarks and copyrights may he held in a tax-free environment.  Trading Companies - an organization can trade outside its own country and, depending on the jurisdictions involved, can have taxes minimized or completely eliminated.  Consulting Services - setting up a consultant service in an offshore jurisdiction can increase your earning potential by minimizing taxes and operating expenses.  Sales / Re-Invoicing Company - an offshore company may act as a middleman selling goods throughout the world and have the profits accumulate in a tax-free environment.  Advertising Company - an offshore company acting as an advertising agency can retain the 15% ad agency commission in a tax-free environment.

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Shipping - register your ship or boat abroad for minimum tax and liability. Operation costs are minimized when using personnel from developing countries.  Leasing Company - capital equipment may be purchased and leased by an offshore company, taking advantage of deductible tax write-offs on lease payments.  Set up corporate bank accounts and obtain international corporate credit cards, no matter what your current credit rating may be. Spend your money anywhere in the world employing your corporate or anonymized credit cards and leave no personalized paper trails. In summary, every businessman, professional practitioner, entrepreneur and investor should know about and be using offshore corporations. The simple fact and reality is that properly structured offshore entities and transactions can give you benefits and advantages you never probably thought were possible, and probably never knew about. It can all be done very legally and it is no longer necessary to be a multi-millionaire to use and take advantage of these structures.

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TAX HAVENS Tax havens are countries who have designed their laws and banking practices to help you escape taxes, protect your money from creditors, hide your wealth from prying eyes and build wealth faster than you can at home. There is nothing mysterious about tax havens; they are often countries who find themselves with little or sporadic tourist trade, or without strong industry for instance, so they intentionally structure their laws to attract foreign money and in the process create a profitable industry for themselves: international banking. A modern tax haven will possess the following qualities:  no tax or low tax is imposed  a high level of bank and commercial secrecy  banking and similar financial activities are significant to the country's economy  modern transportation and communication facilities  lack of exchange controls on foreign deposits The above attributes allow tax havens to be legally utilized by someone of even modest means to:  Avoid or defer taxes  eliminate the reporting and paying of income tax on earning, interest, dividends and investments  protect against high capital gains taxes and reporting requirements  prevent inheritance taxes, estate taxes, executor's fees and probate fees  earn tax free income through operation of an active business  earn tax free income as a result of intellectual property (patents, royalties etc.)  Asset Protection  protect assets froms creditors, malpracitce claims, judgements, liens and bankruptcy  prevent erosion of assets from divorce or separation  deter the initiation of civil litigation  Financial Privacy  prevent any knowledge of your assets from becoming public  protect the privacy of your involvement with investment houses, brokers and securities markets  protect the privacy of corporate ownership from becoming known

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prevent any person or government agency from gaining access to your hard currency Despite the marked increase in demand for books and seminars on the subject, many people are sadly misinformed about tax havens. There are four persistent myths regarding offshore banking:  Offshore banking is illegal While there is no doubt that money-launderers and tax evaders utilize tax havens, so do many legitimate, law abiding citizens and corporations. Exxon, Sears, Firestone, Boeing, Chase Manhattan, Citibank, Bank of America and hundreds of other firms and banks all actively bank offshore.  Offshore banking is too complicated In today's world, with our high-tech telecommunications systems, banking overseas is about as convenient and easy as banking down the street. Credit and debit cards are readily available giving you instant access to your cash and with both fax and computer communications, it is simple to transfer funds or send other instructions instantly without leaving your home.  Offshore banking is too risky The truth is, your money is much safer offshore than onshore. Almost all offshore banks are self-insured, meaning they must have 100% liquidity. Every $1 on deposit must be backed by $1 in liquid assets. In North America, banks are required to have only 10% liquidity. No other country has had as many bank failures as the United States. Moreover, offshore banks operate with greater flexibility and pay higher interest rates to their depositers than the overregulated North American banks. Unfortunately, most North Americans will never know about how much more money they could be earning overseas because federal laws prevent offshore banks from advertising in the United States and Canada.  Offshore banking is only for the wealthy At today's cost, offshore banking is for everybody who has, or anticipates getting, any excess money. Anyone who works out of their home in a small parttime business for extra income for instance is a perfect candidate for offshore banking. Even small depositers can increase their yield by 50% or more by banking offshore. This added income can be important to the middle-class citizen trying to get by. In conclusion, tax havens are simply countries that believe in "life, liberty and the pursuit of happiness" in a "free enterprise" system which respects the privacy and rights of the individual to pursue their enterprise unrestricted by government regulations and unexposed to the voracious appetites of the money grabbers. You should take advantage of them!

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TAXES AND TAX HAVENS It is commonly believed that money placed in tax havens instantly becomes tax free. This is widely spread on the internet by certain companies offering offshore bank accounts and credit cards. Beware! It is not true. While offshore jurisdictions will not levy any tax on your gains, both Canada and America tax their citizens on world wide income, regardless of where it is earned. Failure to report and pay the appropriate tax on offshore investments is illegal. That said, tax avoidance can be achieved through proper structuring of legal offshore entities (trusts and corporations). If tax avoidance is your primary goal, Offshore Solutions strongly advises against do-it-yourself tax avoidance schemes. It is best to be prudent and obtain professional tax planning advice. Tax laws do not however, have any effect on the use of tax havens for higher investment yields, asset protection or financial privacy.

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THE PT PHILOSOPHY THE COHERENT PLAN FOR A STRESS-FREE, HEALTHY AND PROSPEROUS LIFESTYLE WITHOUT GOVERNMENT CONTROL, TAXES OR INTERFERENCE. SLIGHTLY ALTERED FROM AN ORIGINAL WRITING CREDITED TO ADAM STARCHILD If you want to escape the control over your life and property now held by modern Big Brother Government become a PT and you break free. In a nutshell, a PT arranges his or her "paperwork" in such a way that all governments consider him a tourist - a person who is just "Passing Through". The advantage is that being thought of by government officials as a person who is merely "Parked Temporarily", a PT is not subjected to taxes, military service, lawsuits, or persecution for partaking in innocent but forbidden pursuits or pleasures. Unlike most citizens or subjects, the PT will not be persecuted for his beliefs or lack of them. PT stands for many things: a PT can be a "Previous Taxpayer," "Perpetual Tourist," "Practically Transparent," "Privacy Trained," or a "Permanent Traveller" if he or she wants to be. The individual who is a PT can stay in one place most of the time. Or all of the time. PT is a concept, a way of life, a way of perceiving the universe and your place in it. One can be a full- time PT or a part-time PT. Some may not want to break out all at once, or become a PT at all. They just want to be aware of the possibilities, and be prepared to modify their lifestyle in the event of a crisis. Knowledge will make you sort of a PT - a "Possibility Thinker" who is "Prepared Thoroughly" for the future. PT is elegant, simple, and requires no accountants, lawyers or other complex arrangements. Since the income of most PTs is immediately doubled (no taxes), and most frustrations of life with Big Brother are instantly eliminated, the logical question is only: "Can you afford not to become a PT?" The PT, once properly equipped, operates outside of the usual rules, gaining mobility and a full slate of human rights. The value of these rights cannot even be perceived by people who have never experienced them. Tax havens become an important tool of the PT, because the tax haven corporations and trusts provide an interface to the more permanently settled world, just as a flag of convenience does for a ship. The message of PT is not, however, to encourage greed, lust, irresponsibility, immorality or any ot the other seven deadly sins. The effect of PT being popularized will be to release creative souls from the many burdens of coping with Big Brother. You don't need to find a new country or displace someone else to make yourself a sovereign. The PT need not dominate other people. He or she must

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only be willing to break out of a parochial way of thinking: the PT must be superior only in that small area located between the ears. We speak of the potential PT now in terms of wealth, talent, intelligence and creativity. On an international scale there is a survival lesson here for the civilized world as well. Do you want to escape the control over your life and property now held by modern governments? The PT concept could have been called Individual Sovereignty, because PTs look after themselves. We don't want or need authorities dominating every aspect of our existence from cradle to grave. The PT concept is one way to break free. The 5 Flags of a PT Flag 1: Business Base These are the places where you make your money. They must be different from your personal fiscal domicile, the place where you legally reside. Flag 2: Passport & Citizenship These should be from a country unconcerned about offshore citizens and what they do outside its borders, the passport should have good visa free travel and offer hassle free border crossings. Flag 3: Domicile This should be a tax haven with good communications. A place where wealthy, productive people can be creative, live, relax, prosper and enjoy themselves. Such a place should not be threatened by war or revolution, low crime rate, good medical facilities and preferably should enjoy good levels of banking secrecy. Flag 4: Asset repository This should be a place from which assets, securities and business affairs can be managed anonymously by proxy. Flag 5: Playgrounds These are places where you would actually physically spend your time and enjoying life. The above outlines the basic concepts of the philosophy of PT. Before you react negatively and believe there's no possible way you can attain such a lifestyle, pause for some considered thought. PT starts by taking root in the mind. It becomes a thought process, that never leaves you. Most of the Flags can be attained without you ever having to leave your home turf. It's simply a matter of modifying business strategies and re-arranging some personal paperwork. Get into some serious research to find out whether you qualify for citizenship of another country. You may qualify by marriage, or descendency through your parents or grandparents. If you don't have any luck on this one don't despair. It's possible to buy legitimate and legal citizenship and passports from a variety of countries. With regard to domicile once again there are many

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opportunities to qualify for legal residency in various countries, without spending much time there. "Becoming a PT is not a static thing you can do once, and then, like obtaining a diploma, hang it on the wall. PT is a way of thinking. Something far more than a mere occupation or even a lifestyle. It is a state of being...the variations and possibilities are infinite. A PT has real freedom in an unfree world". Bill Hill

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INFORMATION ON OFFSHORE HAVENS BY DR ARNOLD GOLDSTEIN There are many countries that can be referred to as "tax havens". The primary reason is that they have different tax laws from the United States, which allows wise, experienced financial planners to legally delay income taxes through careful study of the tax laws of various countries. Bahamas The Bahamas is made up of 700 islands and 2,000 cays scattered over 100,000 square miles and is located 50 miles off the Florida coast. New Providence Island, site of the capital city of Nassau, has an area of 83 square miles. The second largest city, Freeport, is on Grand Bahamas island. Its capital is Nassau, and the commercial center is New Providence. The climate is moderate and ranges from 70 degrees to 80 degrees F. The population is 250,000. The majority of the population lives on the island of New Providence and Grand Bahamas. Many of the islands are uninhabited due to the lack of fresh water. The official and spoken language is English. The unit of currency is the Bahamian dollar. The Bahamas has excellent communications. Thirteen airlines fly to the Bahamas and direct flights are available from most international cities. Miami is 30 minutes away by plane and New York is approximately a three-hour journey. Seventeen shipping lines connect the Bahamas with important world markets. Nassau has a major deep-water port and Freeport, on Grand Bahamas Island, has a fine natural harbor. Freeport's owners hope the port, which is as close to Miami as it is to Nassau, can be developed into a major regional hub for container shipments to North and South America, the Caribbean and Europe. The Bahamas has an excellent overseas telephone service which includes direct dialing to the United States and Canada. Economically, the Bahamas thrive on tourism and the tax haven industry. It is a popular vacation spot and gambling, shopping and fishing are enjoyed by tourists and residents alike. Offshore haven activities dominate the financial world of the Bahamas. Financial services include international business companies, insurance companies, banks, personal investment companies, ship registration and trust services. Bahamian law is based on British common law but is augmented by Bahamian statutes. The supreme court is the highest tribunal, the court of

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appeals occupies the middle position and the magistrates court has jurisdiction in minor civil disputes and criminal offenses. The ultimate court of appeals is the privy council of the United Kingdom. The Bahamas were initially settled in 1640 by the Eleutherian Adventurers, a group of Englishmen who sailed from Bermuda. The Bahamas has had a representative form of government since the 17th century. In July 1973, the Bahamas achieved its goal of becoming an independent country within the British Commonwealth. A Governor-General appointed by the British government is responsible for defense, external affairs and internal security. However, the real head of the government is an elected prime minister who consults with a cabinet of nine ministers chosen from the legislature. The bicameral legislature has a 49-member house of assembly and a 16-member senate. One benefit of setting up a tax haven in the Bahamas are Bahamian International Business Companies (IBC's). IBC advantages include:  24-hour formation subject to name approval  Limited liability  No minimum capital requirements  Total tax-exemption for 20 years  Minimal compliance work  Director and shareholder anonymity Companies limited by shares and companies limited by guarantee are the two basic types of corporations operating in the Bahamas. Companies limited by shares have fixed, unmodifiable authorized capital. They cannot buy back their own stock. Companies limited by guarantee can reduce their share capital by buying back their shares and canceling them. Therefor, offshore funds are incorporated in the Bahamas as companies limited by guarantee. The Bahamas do not have any tax treaties to avoid double taxation because it does not have any form of direct taxation. The main source of government revenue comes from customs duties and import taxes. The Bahamas have no personal, corporate, profit, capital gains, estate, death or withholding tax. Hong Kong The country of Hong Kong is on the southeast tip of China and consists of a large number of islands and a part of the Chinese mainland totaling approximately four hundred square miles. The principal areas are the island of Hong, Kowloon and the New Territories. These areas were ceded to Britain in perpetuity in 1842 under the treaty of Nankinu. In 1898, the new territories were leased by Britain from China for period of 99 years and includes all the land north of Boundary Street in Kowloon to the border with China as well as 235 small islands.

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Hong Kong's subtropical and monsoonal climate produces dry, cool winters with an average temperature of 59 F. Summers are hot and rainy with an average temperature of 82 F. Humidity runs high. The population is currently six million. Hong Kong is one of the most densely populated areas in the world. The capital and commercial center is Victoria. The official languages are English and Chinese, with English being used in the commercial and political context and Cantonese Chinese used widely in industry and domestic trade. The unit of currency is the Hong Kong dollar. Hong Kong is a prominent trade and manufacturing center with superb transportation and communication facilities. Major airlines connect Hong King by frequent flights to every major city in the world. The British civil service tradition, coupled with the pressures of demand, makes Hong Kong's airmail, telex and international telephone and cable services highly efficient, regular and reliable. Hong Kong is the leading southeast Asian center for both finance and commerce and ranks as the world's third largest financial center after New York and London. There are more than 160 licenced banks with 128 foreign banks having representative offices in Hong Kong and a further 225 licensed deposittaking finance companies. The judiciary operates independently under the direction of the chief justice. Hong Kong's legal system is based on the principles of England as they existed in equity in 1843. There has been some modification by the United Kingdom parliament and the Hong Kong legislature. Hong Kong has been a British crown colony since 1842. The governor, appointed by the Queen, presides over the Hong Kong government. In 1984, an agreement was made on the future of Hong Kong between the British and Chinese governments. On July 1, 1997, all of Hong Kong will become a special administrative region of China. For fifty years thereafter, the following will remain unaltered:  A local government will continue with full authority in executive, legislative and judicial matters.  The legal, social and economic systems will remain in force.  All forms of property, including inheritance and ownership by nonresidents, will be respected.  The current economic position, including the financial markets and the Hong Kong dollar, will continue.  The financial system will remain independent, and China will not seek to raise any taxes in Hong Kong.  Hong Kong will remain independent for customs purposes.  Crown land leases may be granted for up to fifty years after 1997.  The freeport will remain. Company formation in Hong Kong follows the usual British pattern. A memorandum and articles of association are required, and they must include the

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standard information. All these requirements are purely formalities, because nominees can be used for everything. Annual maintenance of a corporation involves annual auditing signed by a chartered accountant and submitted to all shareholders with a copy to the government. The government charges and annual maintenance fees are low. The initial expenses of incorporation, articles of association and stock certificates are approximately US$4,000, and annual maintenance is about US$500. Incorporation takes up to a month to accomplish. It can be done with complete privacy through nominee shareholders. There is no legal requirement that ultimate beneficiary owners be disclosed. Hong Kong income tax is taken from income that has its source in Hong Kong rather than a tax based on residence. Hong Kong does not, therefore, impose tax on non-Hong Kong source income even when remitted to Hong Kong. Consequently, if a Hong Kong company's trading or business activities are based outside Hong Kong, no tax will be levied. Hong Kong companies with Hong Kong source income currently pay a 16.5 percent tax on profits. For individuals, the maximum rate of taxation on income is 15 percent. Isle of Man The Isle of Man is located on the Irish Sea, and is close to England, Scotland and Ireland. The island has a temperate climate and, due to the influence of the sea, rarely experiences extremes of either heat or cold. The population is approximately 70,000, with Douglas being the capital and main commercial center. The official and spoken language is English. However, owing to the island's Celtic origins, it also has its own Gaelic language. The monetary units are the British pound, Scottish currency and the Isle of Man pound note. The Isle of Man is served by Ronaldsway Airport in the south of the island some eight miles from Douglas. There are regular services on at least a daily basis to most major cities in Great Britain. The island has some five hundred miles of roads connecting all the major centers of population. Telephone, telefax and telex services are excellent. The postal services work in very close liaison with those in the United Kingdom. International courier services are available with connections via Heathrow. The Isle of Man, confronted with a decline in its two principal sources of income, agriculture and tourism, now places greater reliance upon industrial investment and its financial center activities which now contribute more than thirty percent to the gross national product. The government wants 10,000 new residents before the end of the century. The Isle of Man is the only low-tax financial center in Europe that actively encourages new residents.

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More than fifty licensed banks, including many international banks, are present on the island. Their services are comprehensive, discreet and confidential, comparing favorably with the banking sectors of Switzerland and Liechtenstein. Isle of Man law is based on British common law and much of the civil-law legislation is modeled on United Kingdom acts of parliament. The island has its own courts and the heads of the judicial system are known as "deemsters." Advocates of the Manx Bar have the combined role of both solicitors and barristers and are able to appear in both the lower and higher courts. The ultimate court of appeals is the English privy council. The Isle of Man is a dependency of the British crown. However, it has never been part of the United Kingdom or its colonies. The government dates back to Viking times, and its own independent parliament, Tynwalk, has existed for more than one thousand years. While the Isle of Man is tied closely to the United Kingdom, which insures the island's defense and presides over international affairs, Tynwald is responsible for all aspects of domestic legislation, including taxation. To support the government's decision to become a leading European tax haven for offshore funds, the Isle of Man subsequently adopted an industrial aid and incentive package which is considered to be one of the most attractive in the western world. Isle of Man resident and non-resident companies can engage in any activity worldwide, but exempt companies can only be used for insurance, shipping, property investment, investment holding, commodity dealing or the holding of patents, royalties, copyrights, licences and trademarks. The Isle of Man offers several investment vehicles, each providing its own advantages: Exempt companies -- If granted exempt status, a company's offshore income and dividends will be exempt from island income tax. Non-resident companies -- A company may be incorporated on the island but remain non-resident. As such, it will be exempt from income tax, although it will have to pay an annual non-resident duty. A non-resident company could be used for protecting assets owned by an individual resident in another country. Trading companies -- Various companies in the manufacturing and service sectors enjoy advantages because of the island's relationship with the EC, existence of a freeport, low costs, tax structure and a generous range of grants and incentives offered by the island's government. Banks -- As the island's government continues to encourage foreign investment, it is likely that the growth of the financial sector will continue, adding many opportunities for banks. Apart from the limited treaty with the United Kingdom, the Isle of Man is not party to any double-taxation treaties. Isle of Man residents pay income tax only on their worldwide income at a rate of fifteen percent for the first chargeable amount and twenty percent thereafter.

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Along with these many advantages, the Isle of Man offers an attractive tax structure. The major features are well worth noting:  No capital gains tax  No estate or inheritance taxes  Tax free holidays for industry  Exempt Offshore  Value added at fifteen percent Liechtenstein The financial condition of Liechtenstein is excellent -- no national debt, stable political conditions and an absence of political tensions. Liechtenstein is located between Switzerland and Austria. The capital and commercial center is Vaduz. The population of 29,000 enjoy a climate similar to that of the northeastern United States, and speak German and Alemanni. The unit of currency is the Swiss Franc. Communications are excellent. Tax legislation is extremely favorable for holding companies. It is a highly industrialized nation with a healthy economy and a firm belief in the principles of free enterprise. Its banks provide secrecy regarding foreign accounts, and all tax matters are treated with a high degree of confidentiality. This is not to say, however, that Liechtenstein provides an atmosphere of "wheeling and dealing" for individuals and families seeking tax avoidance. On civil law, Liechtenstein conforms in part to both the Austrian ans Swiss systems. Liechtenstein codified a company law in 1926 that is highly regarded as one of the most modern in Europe. Many regulations on legal procedure guarantee the impartiality and fairness of the law. The government of Liechtenstein is a constitutional monarchy based on democratic and parliamentary procedures that encompass all the principles and practices of a modern government. Liechtenstein governs on the principle of separation of powers where legislation, administration and court actions are concerned. Liechtenstein recognizes a variety of enterprises and company forms. The most suitable forms to be used as holding companies are the anstalt (establishment,) the akteigesellschift (company limited by shares,) and the registered trust. Liechtenstein has designed legislation that is particularly favorable to the protection and administration of financial structures. Liechtenstein tax legislation defines holding companies as enterprises that exclusively administer capital or assets such as shares or bonds of other enterprises. If a holding or domiciled company is formed as a legal personality and is entered into the public registry, it will have special tax privileges:  Tax exemptions on all assets and income  Reduction of the capital tax

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  

Exemption from all taxes on profits and earnings Reduction of the formation stamp duty A further reduction of the capital tax for the foundation with high capital  Absolute secrecy regarding tax matters Liechtenstein levies no income taxes against any company that is domiciled there if the company does not receive Liechtenstein source income. There are low registration and annual capital taxes on such companies. Bearer shares are permitted but foreign banks and mutual funds are not. The top rate for personal income taxes in Liechtenstein is 7.5 percent. The taxes on company profits vary from five to twelve percent, in accordance with a ratio of profit to net worth. People who are considered residents of Liechtenstein for tax purposes must pay taxes on all income from gainful activity that is derived from a partnership, membership or proprietorship of any enterprise that has an office registered in Liechtenstein. Foreigners and Liechtenstein nationals who have their permanent residence in a foreign country are not required to pay taxes on income derived this way. Such persons are exempt from property taxes on the share of an enterprise that they might hold. Liechtenstein has a double taxation agreement with Austria but with no other country. Nevis Nevis is located in the Leeward Islands, approximately twelve hundred miles southeast of Miami. The climate is nearly perfect, with tropical vegetation prominent. The capital and Commercial Center is Basseterre. The population is 8,000. The official language is English. The unit of currency is the Eastern Caribbean dollar. Nevis was a British colony from 1628 until 1983 when it became independent and joined the federation of St. Kitts - Nevis. The federation is an active member of the British commonwealth. Nevis is a democracy based on the British parliamentary system, and has an elected local assembly. Nevis offers excellent communication facilities which include direct dialing to the U.S., Canada and Europe as well as worldwide telex, facsimile and telegraph services. Direct airline service is available to most major cities in North America and Europe. The 1983 constitution provides for a federal parliament headed officially by the governor-general. A cabinet in Nevis is lead by the premier as leader of the majority party in the house of assembly. The legal system in the island is based on English common law, served by a high court of justice and a court of appeal. Nevis companies are exempt from Nevis taxes on all income, dividends or distributions not earned on the island.

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There are two kinds of companies that can be set up on the island but it is the exempt company that is set up to handle offshore investment. The exempt company has some very attractive advantages:  There is no minimum authorized capital.  A business license is not required.  Officers, directors and members do not have to be identified.  Incorporations take three days.  There are no requirements that capital be in a certain currency.  Par value is not required for a company purchasing its own shares and can be set at any sum.  The corporation laws of Nevis simplify stockholding. Registered stock may be held by just one person who may hold the position of both director and secretary. Bearer shares are also allowed to be issued. Double-taxation treaties are held with Denmark, New Zealand, Norway, Sweden, Switzerland and the United Kingdom. Offshore companies are exempt from all forms of Nevis taxation. Recent changes in the statutes governing trust administration have added two important provisions: Any plaintiff bringing a civil suit action against a defendant must post a $25,000 (US) bond before the case may proceed. The statute of limitations governing civil suit filings is one year. Turks & Caicos Thanks to the New Company Act of 1982, the Turks and Caicos enjoy a burgeoning foreign investment. Until new legislation is drafted, the Turks and Caicos may be closed to all but branches or subsidiaries of reputable international banks. Investment Profile -- There are two kinds of companies that can be set up in the islands but it is the exempt company that I set up to handle offshore investment. The exempt company has some very attractive advantages: there is no minimum authorized capital...  A business license is not required.  Officers, directors and members do not have to be identified.  Incorporation takes three days.  There are no requirements that capital be in a certain currency.  Par value is not required for a company purchasing its own shares and can be set at any sum.

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The Turks and Caicos simplifies stockholding. Registered stock may be held by just one person who my hold the position of both director and secretary. Bearer shares are also allowed to be issued. Taxation... No double-taxation treaties are held with any other country. Inheritance, income, sales, capital gains, gift, succession, property and dividend taxes do not apply in the Turks and Caicos.

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OFFSHORE BANKING Welcome to one of the most prestigious and important financial estate planning tools available today. No other vehicle can offer you a comparable degree of privacy, asset protection and opportunity for profit and flexibility. Yet, misinformation, myths and a lack of reliable published information has often clouded the picture. The advantages to conducting business offshore have become apparent to numerous companies typically with American Business. Merrill Lynch, American Express, Firestone, Dow Chemical and Bank of America are just a few of the well known names with substantial offshore interests. In addition, virtually every domestically based financial institution, maintains interests offshore either through private banking or mutual fund securities. The reason is clear. Offshore business is sound, profitable and can substantially reduce costs. In most jurisdictions, the following are direct benefits that are available to a Private International Bank owner:  No income tax  No estate tax  No capital gains tax  Strict privacy laws  Low paid-in capital requirements Please keep in mind, that there are approximately fifty jurisdictions around the world, which in one form or another, can be classified as tax-havens or international financial centers. These governments reflect the different cultures and ideals of their citizens. As a result, there are numerous variations to private banking. One jurisdiction does not work for all ! ! ! Your specific goals and qualifications would need to be discussed prior to concluding which strategy to implement. To suggest otherwise, is to do you a disservice. Private International Bank Ownership What is Offshore Banking? All countries maintain legislation and establish standards for the purpose of regulating banking activities or bank ownership within their respective jurisdictions. One of the lessor known facts is that most nations (including the United States) set standards for international banking entities that are incorporated in their country but conduct all business "offshore". This provides the nation with another source of capital or commerce while enabling much more flexible ownership requirements. In the United States these entities are called "International Banking Facilities: (IBFS)" while other nations entitle these entities as "Class B Banks", "Trust Companies" or "Banking Corporations".

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Broadly defined, "Private International Banks" (PIBs) or "Offshore Banks" are simple, banking entities established outside of the United States or the country in which the depositor resides. Thus in most cases, these enities are not subject to State or Federal rules or regulations. The advantage of avoiding costly regulations such as reserve and insurance requirements results in a path of profits contributing directly to the bottom line. All solicitations need to be carefully monitored and should be conducted outside the borders of the host country. Advertisements are restricted to the appropriate international periodicals. Private International Banks tend to have higher profit margins and lower capital outlays. An "Offshore Bank" or "Private International Bank" (PIB) enables international financial matters to be transacted in complete privacy, free from host country taxation, without exchange controls, without the need to ever leave your country of residence. Only minimal presence need be established within the borders of the host nation. Class "A" and "B" Banks Class "A" Banks: A "Class A Bank" is recognizable as a storefront business operation, often accompanied by a marquee. This is usually a combination banking entity accepting public deposits for both private and business accounts. In the United States, we are most familiar with the "Class A Bank." This type of banking license is held by all the "majors" and frequently has the customary vault, tellers and ATM machines. Examples of international "Class A Banks" would include Credit Swiss, Barclays Bank & the Royal Bank of Canada. Class "B" Banks: The Class "B" Bank or "Private International Bank" is restricted from doing business with the citizens of the host country and no presence is maintained on "the street". A representative (usually an attorney) will post a brass plate on their office building exterior and all business is conducted via fax, telephone and mail. Class "B" banks are able to issue virtually all of the same financial instruments as that of a Class "A" Bank. Components of a PIB Bank Charter & License: Legal framework the bank establishes for the bank's authority and distinguishes the difference between a financial institution and a corporation. Registered Office: Representative office in host country. Resident Agent: Local liaison Board of Directors: Usually from one to ten people that hold meetings and direct bank business. Shareholders: PIB owners Clearing Account: An account with a major bank or brokerage house where physical deposits are held. Offshore banking centers attract numerous companies because of the many benefits and planning strategies to be obtained. A few are listed below:

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    

Potential tax benefits Low capitalization requirements Unrestricted lending activities Non-disclosure of client activities Cash management without minimum liquidity rules

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THE WORLD'S ONLY UNTRACEABLE BANK ACCOUNT It may have been possible in the days of swashbuckling pirates for the individual with a few extra bucks to hide his stash in a chest in the ground beneath a secret palm tree and be reasonably sure that his money was sagely hidden from other pirates like tax collectors, ex-spouses, blackmailing mistresses, suing lawyers and others whose life ambition is to make the rich poor and themselves rich. In today's world with Switzerland down-grading its secrecy laws and making numbered accounts history and more and more tax havens being infiltrated by foreign governments and their tax departments snoopers, a man's (or woman's) hard earned money is no longer his personal business. Every government's tax-robber-barons want to know all the details so that they can extort in many cases more than 50% of your assets into their tax coffers. Everybody today from tax authorities to lawyers has his proverbial nose up your financial ass." They work with the belief that they can extort gross amounts of your hard earned money because they have the power to make the rules. And after all, the golden rule states that those who have the gold, rule. Authorities today look upon anyone who deals in cash, rather than "paper" checks, money orders and electronic transfers, etc., as a tax evader straight and simple. Walk into most any bank today with a suitcase full of cash and immediately you are presumed a drug dealer, pimp or tax evader. Even trying to set up a bank account with a relatively small amount of cash can be a tricky situation. Cash, because it leaves no paper trail is looked upon the in the banking industry with the same scorn as a virgin at an orgy as is trying to open an account without producing high-powered ID, supplying an address for the record and filling in a detailed questionnaire of employer, marital status, etc. You can get around some "local" regulations by opening an account by mail in almost any tax haven in the world without an ID. Sound peachy-cream in that you can use any name you want but you still usually have to furnish an address. This requirement isn't a problem to most "worldly, PT type individuals for they will usually set up a series of "resident" addresses or confidential mailing addresses through maildrops spread throughout the world. Still the risk of detection by some tax collecting vermin, judicial or government authority having records of your account down the line is more than slight unless you are very clever. How you ask, do they find you? INTERFIPOL! Most people have heard of Interpol, the international police agency supported by many governments, but few have heard of Interfipol, "the International Fiscal Police." This organization is quietly starting to come into its own. If you happen to have, or someday create, a tax problem in any OECD country, you can rest assured that you and your money will be hunted prey. It may take some time, but your money will be taken out of circulation.

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Even keeping your money is a variety of European, Asian and/or offshore banks (forget American banks for the IRS and others can "freeze" or impound your account faster than a vindictive spouse can spend it" doesn't preclude the fact that you still show up on the bank's computers as a "foreign account". With today's almost total lack of true banking secrecy, banking authorities can be persuaded to do a little computer search and give the records to snoops from other countries who are under the laughable impression that the account holder would like to "donate" some of this money to help the tax coffers overflow. As Expat World has said in the past, "the biggest crime of all governments is government itself." Governments, at least on this planet earth, have all the prosecutors, police forces and jails. With all these perverse institutions on their side, the person who sticks out his nose too far or voices his opinion too loudly to "tease" a government will find himself, in the real world, at the mercy of Big Brother and his agents. Governments will lie, cheat and steal to feed the vast and evil bureaucracy with the money it needs to propagate itself or provide financing that is "needed" by "society" to do good things for the "needy". Unless you bury your stash as the pirates of old or use the ONE UNTRACEABLE BANK ACCOUNT WE ARE GOING TO TELL YOU ABOUT, your stash is ultimately available to Big Brother and his henchmen. Today, many in all societies have chosen drugs as the recreation of choice. Governments have taken advantage of the massive amount of drug use to create a "red herring". In using the red herring of hunting down big-time drug sellers, they have been able to convince governmental authorities around the world to open their bank accounts to Big Brother, when in reality, what they really want is to find all the money that they suspect is being hidden away by the small to large account holder from their tax bite. Armed with the bank's records they can then hunt down your money and confiscate it under some pretence, either real or imaginary. If you can be identified as owning an account, your money isn't safe in countries with so called "bank secrecy" laws. (The trick is to have an account in a good bank-secrecy-law country in which no one but you has any idea who the owner of the account is - more on that later.) If a government agency want bad enough to know your financial position in a bank, secrecy laws in place or not, otherwise unattainable records are provided in record time. History bears this out! Drug money or related activities are the smoke screens that seem to be the key to opening secret bank accounts - no matter that the closest you've got to the drug scene is watching a Cheech and Chong movie. The prevailing theme everywhere among "Big Brothers" is that the end justifies the means. Using drug charges is quicker than trying to go a legal route by court orders and such since what the authorities are actually seeking to prevent is your try at robbery-evasion, known to them as tax evasion. Banking As A Contrived-Earthling To open a bank account you need ID. In your own country usually a drivers license or national identity card will do. Walk into a bank abroad to open an account and it usually can be done but you must produce your passport for ID as well as an address. The bank photocopies the passport, records and your

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address before opening the account. In some countries, and in most offshore banking centers, it is possible to open an account by mail without any photocopy of your passport of other ID buy you still must provide an address for bank communications. The address is the weak link if you're seeking secure financial privacy. Some offshore centers like the Isle of Man require a reference from another bank or two references form professional people who will swear you are who you say you are. With any of the above options you are luring yourself into a false sense of security or have broken more laws than one wants to in trying to preserve your right to financial privacy. All PT's are aware of owning a second passport to use for banking purposes (banking passport). This passport is almost always issued in your "pen name" and probably has a maildrop address associated with the paperwork needed to issue the passport. If you use a legally issued 2nd passport, not a forged or stolen blank, and you use it low profile and remain yourself low profile, you only have a very slight risk of future ramifications. If you are going to stash away a considerable amount of your assets, this may be the recommended way to go. You may obtain legally issued 2nd foreign passports form a broker or directly from some governments who provide second travel documents because of some "aid" you have provided to their pet government projects. Be careful with brokers for 90% of them are crooks - use only recommended or successful brokers who personally escrow the associated costs until the documents are delivered. This passport can be used for banking purposes and used in conjunction with a daisy-chain of banks through "Transit Accounts" to make your money and you almost untraceable. (Transit Account - Special Report available at US $20 from Expat World. Airmailed!) The ins and outs of secret banking can lead to a vicious circle which eventually leads to YOU unless you are meticulous and careful - - except for "the world's only untraceable bank account". This untraceable account makes it possible for people with as little as US $50 or more than US $50 million who want to keep it secret from EVERYBODY - government snoopers, lawyers, money-grabbing ex-spouses, etc. - to need not have the cunning of James Bond in avoiding bankruptcy or capture by Big Brother's of this world. The "Sparbuch" Account Surprisingly, the safest way to have a secret untraceable bank account is also the easiest IF you have the one connection necessary. Anyone can open a "Sparbuch" account with the right connection without showing any sort of ID whatsoever, without giving any references or any address and without having to go through a lot of circumvent moves. One of the least known and best guarded secrets in the International Banking community is the Austrian "Sparbuch" account. In privacy terms it beats any back or financial account on the planet earth. With the "Sparbuch" there is no need to create a single individual or a string of "creative references". No need to worry about ID or obtaining addresses in other countries. There's no toilet paper trail for any poop-smelling G-man to follow.

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The "Sparbuch" account is as old, almost, as banking itself. All German speakers will realize it literally means "Saving Book" or more generally "Passbook". In appearance it is not very impressive - just a folded piece of cardboard with the name of the bank and a computer printout of the most recent transaction pertaining to the account. Opening An Account Tremendous Advantages, Few Disadvantages ADVANTAGES: First of all, if you're Austrian you will not need Expat World's services because any Austrian can simply walk into any bank in Austria, deposit any amount (by today's practices about US $50) and five minutes later walk out with a "Sparbuch". The "Sparbuch" account does not carry a name BUT A CHOICE may be either in the name of an individual, a corporation, including offshore corporations or as we have stressed, it may be in no name at all; a so called "Euberbringer" account or "bearer-passbook". As the names implies, he who brings the books presumed to be the legal owner. An "Euberbringer-Sparbuch" is the bank equivalent to company bearer shares. In addition to the secrecy protection built into this no name, no nothing account, Austrian general bank secrecy laws make Switzerland and the rest of Europe look like they are partners with the IRS, Inland Revenue and the rest of the money stealers. With the "Sparbuch" account, additional security is provided in keeping the wolves from you door by having them not know what door to look for. No account statements are EVER mailed to account owners for the bank doesn't require an address to open the account. It may sound odd, but think of the individuals who have had their lives upset because tax authorities, ex-spouses, police or other privacy invaders have intercepted their mail. Instead of statements being sent to "Sparbuch" account holders, the "Sparbuch" is updated automatically and any interest accrued added whenever the "Sparbuch" is presented at any branch of the issuing bank. It is unquestionable impossible to establish just who opened the "Sparbuch" account (and who owns it) by means of checking available records - - since no record has been created except the physical "Starbuch" itself and the account number in the bank computer system. No forms to fill out, no ID to show, no nothing! To make a deposit in "Sparbuch" cash in any currency can be hand carried to the bank and plunk down, no questions asked. It will be converted to Austrian shillings before being credited to your account. One can mail money orders or checks to any branch of the relevant bank with a note to credit the "Sparbuch", account number such and such. SWIFT electronic transfers may be made to "Sparbuch" by registered mail or courier with and enclosed note stating that you wish to make a withdrawal and include the "Logungswort" (the code). The bank will do so provided you pay the applicable charges to have a check made out and mailed to you along with the "Sparbuch". It is entirely legal to transfer a "Sparbuch" from one person to another without giving the bank or anyone else notice about this. In certain countries it

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has been made a crime by Big Brother to sell or even give away a passbook. See, Big Brother want to collect as much data about bank account holders worldwide as possible. A "Sparbuch" can be sent to someone through the mail to pay back a debt or left in a sealed envelope with a will as a loophole to beating immoral probate taxes. You can even donate the "Sparbuch" to the Save the Whales Foundation if you are so inclined. Furthermore, the "Sparbuch" is completely safe. Even though it's not strictly necessary a "Sparbuch" will usually be issued with a code which is needed whenever withdrawals are made. The code is chosen by the customer himself (no 007, please!) - the way it should be for the customer knows best what is easiest for him to remember. If the "Sparbuch" is lost, one quite simply applies to the bank, gives the name (if any) of the account, the account number and the code - the so called "Losungswort) - and a new "Sparbuch" is issued, usually with no charge. When you do have an Austrian "Sparbuch" account, you have created that very important first step towards opening bank accounts in other countries in whatever name you wish. If for example, you want to open an account in some tax haven where you wish to stash some of the "mother mode", quite simply write to open an account in a name suitably different from your own and give the Austrian bank as a reference. In due course you will have little difficulty getting international credit cards from our tax haven bank with references from an Austrian bank where you never showed an ID at all. An enterprising PT friend of mine let me have a peek at his Gold American Express card made out to "Scrooge McDuckle". Needless to say, it's not advisable to use this card in English speaking locations. If you wish to keep a good chunk of liquid funds available that you may stash just about anywhere, or even bring with you on your travels, the "Sparbuch" account is the perfect solution. Another nice feature of the "Sparbuch" account is that you don't have to fear the local authorities when crossing the border of countries that put a restriction on the amount of money you may bring in or out with declaration or confiscation. The "Sparbuch" is not considered cash or any other "monetary instrument". Many big-moneyed clients travel throughout Europe on business and pleasure with one or two, five-figure "Sparbuchs" in their possession, fully protected by "Logungswort", to meet any type of deal that may come up. It's only a quick trip to Austria for instant untraceable cash. A Few Disadvantages: Being a truly secret bearer passbook account, a "Sparbuch" usually doesn't offer high interest rates - generally in the 3-5% range with slightly higher rates for opening an account with a 12 month notice of withdrawal. A "Sparbuch" account may only be opened in Austrian shillings which is not in the EMS (the European Monetary Scam). This may be a blessing in disguise rather than a slight drawback since the Austrian shilling for the past few years has been tied to the Deutsche mark. The Austrian shilling has been almost the most stable and reliable currency in Europe over the last two decades. In the

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real world, the Austrian shilling offers a greater degree of stability than the Swiss franc. The Key To Your "Sparbuch" Since the point of the exercise is to open and ensure a completely unquestionable, secret bank account without leaving a paper trail for snoops of any persuasion to follow, one has to take special care about exactly how a "Sparbuch" account is opened. It is impossible to open a "Sparbuch" by mail; so someone has to physically appear in Austria in order to open the account. Needless to say, this someone should be a person with no link or connection to the person wanting to open the account. In fact, the less known about the prospective "Sparbuch" owner the better for even under torture the Austrian opening up the account for the client would have nothing to tell! So do you have to go to Austria? Yes - and no. First off, the "Sparbuch" account is open to everyone, but there is a slight catch. You need not be a resident of Austria to open a "Sparbuch" account UNLESS, THAT IS, you are willing to go through the revealing and exhausting process of producing a passport, providing an address and so forth. Obviously this would destroy the advantage most "Sparbuch" owners are seeking. The "Sparbuch" account is the ultimate in banking secrecy but for some reason the Austrian authorities have kept the ultra low-profile for Austrians only. They haven't extended this service to foreigners BUT it is possible to circumvent the "resident" bit. It can be done the easy way with Expat World or it can be done the hard way with a lot of cunning and a good portion of luck, having a fair knowledge of German, and the ability to "prove" that you reside in Austria. At EW we decided that we would try to get a "Sparbuch" the "hard way". We thought we could finesse our way around the Austrian residency routine, us being PT's and knowledgeable in loophole maneuvering. So we set out to do what is impossible in any country known to us: Open a bank account in a fast, clean, efficient manner, with no fuss and no one asking to see our passport. In bank after bank, we were spotted as obvious foreigners and no amount of carefully rehearsed lines in German could convince the bank tellers that there was no reason why we should produce a passport just to open an account. To a man, almost, they insisted that, yes, we had to do just that. The first day and most of the second, we went to over 40 banks located on just about every street corner in Vienna before we managed to open one measly "Sparbuch" without having to hand over our passport. Whether we finessed the clerk with our haggard looks after a full day of hassling with previous bank clerks, or the clerk was half asleep, we don't really know, but we did open the account without our travel documents but we did have to fill out a form to open the account and leave our fingerprints all over the original. Needless to say, even if one is moderately conversive in German, if there is any hint that he is not a resident of Austria, i.e., a foreigner, the road to opening an account on your own

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is filled with frustration and complications. Although we did finally succeed winning the battle, we were one tiny bit short of winning the war. The Easiest, Safest Way - The EW Way To Open A "Sparbuch" Even if you could endure the time, frustration and expense, master enough German and convince a bank clerk to do what he's really not supposed to do THINK ABOUT IT, if the purpose of having a "Sparbuch" is to fully and completely avoid leaving clues that may eventually lead to yourself, including your fingerprints, why show up at the bank in person. Bank employees have, on occasion, been known to have frightfully good memories. SO WHY NOT CONSIDER LETTING SOMEONE ELSE DO THE JOB - it does not have to be expensive. Time is money. Letting someone else go through the bothersome motions makes sense in more ways than one. Expat World has connections with a lawyer who has offered to open a "Sparbuch" account for EW clients with no hassles whatsoever. You do not need to show any ID, no photocopies of your passport or drivers license are needed. These "Sparbuchs" are delivered "off the shelf" as anonymous ("Euberbringer") accounts, complete with an easy to remember code )"Logungswort"). They come, as standard, with an opening balance of 1,000 Austrian shillings, roughþly about US $100. A small service charge is incurred for this service. There is absolutely nothing more to it than merely writing a short note and enclosing a check, money order or cash. You will not even be asked to fill out any forms or sign anything whatsoever - not even the modest and unthreatening form which even Austrian residents are required to fill out! You should feel free to order your "Sparbuch" account in any name different from your own (after all, that's what this whole game is about) or no name at all. Now for some really good news! The total price, including both the opening balance (the money actually already in the account when you receive the "Sparbuch") and all the postage and handling, plus the service of our lawyer/agent is only US $550. Since this amount buys you an account with a balance of US $100 already in it, the "real" charge is US $450. No can you come close to opening the account on your own for less money. After EW receives your funds, allow 2-4 weeks for the delivery of the "Sparbuch" which will be air mailed to you anywhere in the world. Maildrop addresses or hotel addresses are fine places to have your new secret "bearerpassbook" received. As an extra service, worldwide DHL courier delivery is available at an additional charge of US $50. Consider the alternatives. Whether or not you do it yourself or leave the job to competent professionals, as we recommend, how often are you presented with such a clear-cut, easy-to-use and ready-to-roll solution to true privacy in banking? If you wish to get an Austrian "Sparbuch", please send the necessary remittance to Expat World, Box 1341, Raffles City, Singapore 9117. Don't forget to include the address where you want the "Sparbuch" sent. We'll do the rest. Remember we take no prisoners and take no records!

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WILLS OR TRUSTS? THE CASE FOR LIVING TRUSTS HOW TO ELIMINATE THE HASSLES OF: PROBATE, LAWYERS, DELAYS, LEGAL SYSTEM Introduction To Living Trusts Simply put, living trusts are an expedient way to transfer property at your death. A living trust is a legal document that controls the transfer of property in the trust when you die. Generally, living trusts are established during an individual's lifetime and can be modified or changed while that person is still alive. Circumstances do change and the option to make alterations in the trust is important. For this reason, a living trust is set up on a "revocable" basis. Revocable means you can modify or change the trust's provisions. Your other option would be to create an irrevocable trust. Once put in place, you are unable to change the terms of the trust regardless of the circumstances. As you will see, living trusts speed up the process by which your property moves to your designated beneficiaries after you die. Today, and into the foreseeable future, this is vitally important as the United States is experiencing an unprecedented wealth transfer. It is estimated, according to "Fortune" magazine, that some $6.8 trillion worth of assets will soon pass from parents to children, grandchildren, friends, charities and others. The questions remains: how will this wealth be transferred? Will it be the traditional methods of wills and probate or the new revolution of estate planning that has incorporated living trusts? Many legal experts believe that living trusts are the future of wealth transfers. The concept of living trusts has created controversy simply because the legal profession seems evenly split on the issue. Estate planners seem to favor living trusts but there are enough opposed to the concept to avoid a clear majority decision. Living trusts are also called "inter vivos" trusts, a Latin term preferred by attorneys. The Internal Revenue Service calls them "grantor" trusts. All mean the same thing. The Internal Revenue Service, however, recognizes the living trust as a valid estate planning tool and exhibits no prejudice against it. There are specific provisions in the tax laws that deal with living or grantor trusts. The revocable provision means that while you live, you still effectively own all of the property that has been transferred into the trust. You can sell it, spend it, give it away; in short, do anything you wish since the property is still yours. The trust itself is merely a document in your lifetime that truly doesn't begin to

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function until you die. Then, the trust operates to transfer your property privately, outside of the reach of probate, to the specific individuals or organizations to whom you wish to leave your worldly possessions. What is probate? Why do people try to avoid it? Technically speaking, probate is the process by which one proves the validity of a will in court. If there is no one contesting the will, this should not take long. If there are complications, probate can take years. For those of you familiar with the works of Charles Dickens, recall "Bleak House" and the neverending probate case of Jarndyce vs. Jarndyce. Probate has come to mean not just proving the validity of the will but the entire administrative sequence involving the passing of an owner's title to property after the owner's death. The deceased's property is inventoried and creditors are identified and paid after the payment is made to the estate's attorney, executor and tax entities. The term "probate" also identifies the court which has jurisdiction over the estate probate and administration. Probate court also has jurisdiction over the guardianship of minors and mentally incompetent adults. All wills go through probate. The average length of the probate process is twelve to eighteen months. Any estate transactions in that time must be approved by the probate court. This can create havoc for beneficiaries. Since a living trust replaces a will and doesn't need validation from the probate court, considerable time and hassle can be saved. This, then, is the purpose behind living trusts. The trust is simple to establish and, when carried out, makes it easy to transfer property. The trust is a matter of explicit instructions as to who gets what property after the owner dies. Like a will, the trust should cover all expected and unexpected events that might occur. The details tell the designated trustee how to use the money and property in the trust. A living trust is a capable substitute for a will and a document that more and more people, disillusioned with the probate system, are turning to in their estate planning. Terms You Should Know Before proceeding further, it might be helpful to define a few terms for you. These terms will occur often during this text and in the actual living trust process, so it's important to familiarize yourself with their definitions. A/B TRUST: Common term for a "marital life estate trust", generally used by couples whose estates are valued at more than $600,000. ACCUMULATION TRUST: A trust that does not pay out all of its income until certain circumstances occur. ADMINISTRATION: Court supervised distribution of the probate estate of the deceased. The person who manages this distribution is called the EXECUTOR if there is a will or an ADMINISTRATOR if there is not.

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BENEFICIARY: The person or organization legally entitled to receive gifts made under the provisions of a legal document such as a will or trust. CODICIL: An amendment to a will. It is a separate legal document, properly witnessed and executed. CORPUS: Property owned by the trust, commonly referred to as "corpus of the trust". DEATH TAXES: Amounts levied on the property of the deceased called estate taxes (federal) and inheritance (state) taxes. DURABLE POWER OF ATTORNEY: A general power of attorney that will continue to be valid after its maker becomes incapacitated or incompetent. DURABLE HEALTH CARE POWER OF ATTORNEY: A special power of attorney in which the maker gives another person authority to make health care decisions when the maker is unable to do so, due to injury or sickness. ESTATE: In general, all of the property you own when you die. ESTATE PLANNING: The legal maneuvering by which one dies with the smallest taxable and probate estate possible, with the ability of passing on your property to your beneficiaries with the least amount of hassle and expense. INTESTATE: To die without a will or other valid estate transfer device. Estate will go through probate and be passed to heirs who are specified in the applicable state's laws. IRREVOCABLE TRUST: A trust that cannot be changed, once established, except by court action in a proceeding referred to as REFORMATION. JOINT TENANCY: A form of property ownership by two or more people where the death of one owner causes the transfer of that individual's share to go directly to the remaining owner(s). A will has no power to change the joint tenant's right of survivorship. This is another common tool used to avoid probate, although there may be gift tax consequences. LIVING TRUST: Trust established while the maker is alive and which becomes immediately effective. It remains under the control of the maker until death. It allows property to pass to beneficiaries free of probate. LIVING WILL: A document that provides instructions to physicians, health care providers, family and courts as to what life-prolonging procedures are desired if a person should become terminally ill or be in a persistent vegetative state and unable to communicate. PERSONAL PROPERTY: All property other than land, buildings attached to the land, and certain oil, gas and mineral interests. PER STIRPES: A legal term meaning that if a person dies, the inheritance will pass to heirs in equal shares. It means "by right of representation". POUR OVER WILL: A will that transfers the decedent's assets that are subject to the will to a trust that was already in effect prior to the decedent's death. POWER OF ATTORNEY: A legal document whereby, a person authorize someone else to act for them.

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PROBATE: Court proceeding in which the authenticity of a will is established, an executor or administrator is appointed, debts and taxes are paid, heirs are identified, and property in the probated estate is distributed according to the dictates of the will. QUALIFIED TERMINABLE INTEREST PROPERTY TRUST: Also referred to as a "QTip" trust, it allows a surviving spouse to postpone, until his or her own death, payment of estate taxes that were assessed upon the death of the first spouse. The surviving spouse is still entitled to all of the income from the property. REVOCABLE TRUST: A trust that can be changed by the trust maker at any time. Living trusts are revocable trusts. SETTLOR: Another name for a maker of the trust, also called "trustor", "grantor" or "creator". TENANCY IN COMMON: A form of joint ownership of property. Each owner is able to sell or give a way his or her share of property, as well as pass it along separately at death. There is no right of survivorship. TESTACY: Dying with a valid will in place. All property controlled by the will passes through probate. TESTAMENTARY TRUST: A trust created by a valid will. TRUST: A legal arrangement under which one person or institution controls property given by another person for the benefit of a third party. TRUSTEE: The person who, or institution which, manages the trust and its property under specific instruction. WILL: A legal document that is used to pass property to heirs following a person's death. A will only becomes effective at the death of its maker. Transfers The purpose of the living trust, as mentioned, is to be able to transfer property to a designated beneficiary(ies) without the usual hassles associated with wills and probates. However, your living trust can't transfer property it doesn't own. Therefore, the first step in making the trust effective is to transfer ownership, or title, of a property to the trust's name. It's safer to transfer the title to the trust's name rather than to the name of the trustee since it is more likely the trust name will continue even if you change trustees. For the purposes of transferring title into a trust's name, there are two classifications of property: that which has an ownership document and that which doesn't. Property without ownership documents include the following:  household possessions and furnishings;  clothing and furs  jewelry

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 tools and most equipment  antiques  art work  electronic and computer equipment  cash  precious metals  bearer bonds These items are transferred to a trust simply by listing them on a trust schedule. That's it! Pretty simple, right? Property that has ownership documents requires a reregistration of ownership into the trust's name. Once the trust document has been established, signed and notarized, this process should begin. The document of the title must clearly show that the trust is the legal owner of the property or the trustee will not be able to legally transfer any of that property. The type of property owned by the trust which requires this reregistration of ownership includes the following:  real estate  bank accounts  stocks and stock accounts  money market accounts  mutual funds  most bonds, including U.S. Government Securities  safety deposit boxes  corporations, partnerships and limited partnerships  cars, boats, motor homes and airplanes If you set up a trust and fail to reregister ownership of a specific property, it will remain outside the trust after you die. If you do not have a will, property will pass through intestacy and your state's succession law. The chances of leaving it to the person you wanted it to go to are reduced, and you will not avoid probate of the property which is the purpose of a living will! Do not fail to reregister property that has a title. You prepare a new title document for each piece of property, transferring ownership into your trust's name. With real estate, for example, you must prepare and sign a deed listing the trust as the new owner. Then have the deed must be notarized and properly recorded. For bank accounts, ask your bank for the proper form. You can usually accomplish this in one trip. Trustees When you establish a living trust, you must name a trustee. In fact, you should name both an initial trustee and a successor trustee in the event the initial trustee becomes incapacitated and cannot serve.

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The trustee is the individual who or institution which actually manages the trust assets that you transfer in, according to the specific instructions you've given. The appointment is important, as this person or entity will have the responsibility of honoring your wishes your after death. The initial trustee is, most often, YOU! That's why it's called a living trust. Since it's revocable, you can change assets in the trust as circumstances dictate. While you're alive, the trust can conform to your specific wishes. It is important to understand this: a living trust does not take the control of your property from you- until you die. You handle it while you're alive. It's merely tucked away in a convenient legal vehicle that takes over immediately after you die and passes the property along to the people you designate without publicity and without the potential lengthy delay and costs of probate. If you've set up a marital living trust, usually both spouses are cotrustees. When one spouse dies, the other spouse continues as the initial trustee. It is possible to name someone else other than you and/or your spouse to be the initial trustee. It is uncommon and unnecessarily complicates your trust arrangements as you must keep separate records of the trust. You should work with your attorney to select a capable trustee if you wish. Because something could happen to the initial trustee, it's vital to name a successor trustee. This is the individual who will be distributing your assets according to your wishes after you die, or if you become unable to manage the trust due to injury or illness. For property not held in the living trust, creation of a durable power of attorney and a health care durable power of attorney can designate someone else to carry on with the non-trust assets. If your trust is a marital one, the successor trustee would not take over until after the second spouse dies. The successor trustee could also die or become incapacitated, so it's imperative that you name an alternative trustee, too, to take over as successor in that circumstance. What does the successor trustee do? If your instructions are explicit as to how you want property transferred at your death, then the job is somewhat easier. However are still things you must do:  Obtain copies of the death certificate of the initial trustee  Present death certificate, copy of the living trust and proof of successor trustee's identity to the various financial institutions or organizations that have the property/assets  Prepare documents of title transfer from the trust to the beneficiary(ies) as appropriate.  Supervise distribution of trust assets where no title is involved.  If necessary, the successor trustee may manage a child's trust if the beneficiary is a child who has not reached the age at which the initial trustee designated the property to be transferred. The successor manages the property for that individual until he or she reaches the specific age outlined in the original living trust. This may

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be the only task the successor trustee is actually paid to do. If required, the successor trustee might also file federal and/or state death tax returns. It is important to name a successor trustee, preferably one whom you feel will diligently carry out your wishes. It may even be someone who is also a beneficiary of the trust assets. If there is any question about whom you should name, consult with an attorney for suggestions. Wills A will is a written document detailing instructions as to how you want your assets divided up after your death. You might also include information as to a child's guardianship, how (or if) you are to be buried and the appointment of an executor of your will. The two main types of wills are:  attested  holographic The attested will is the most common. It is usually prepared by a lawyer in typewritten form and signed in front of several witnesses who have no benefit in the will whatsoever. The holographic will is made without a lawyer, written on plain paper in your own handwriting, dated and signed. If your wishes are clear, this should be as effective as the attested will. It will more likely be disputed than an attested will and be subject to the interpretation of the courts, where anything could happen. Attested wills are safer for carrying out your final instructions. Most people think they should have a will. Many people do, however, do not have a will because estate planning is generally not a high priority to many people nationwide. There are many fine estate planners around the country who work with individuals, but the average person doesn't put much thought, time or effort into addressing this important financial task of preparing for asset distribution after death. Attorneys will be glad to help you do an attested will and may not charge much to do so. They'll get paid later- when the will goes through probate court. The payors will be your beneficiaries, who will see assets drain as a result of legal fees and court costs. Probate can be lengthy, especially if the will and estate is a complex one. Not only does a will diminish the value of the property, it may also slow down the time it takes to actually transfer it to the designated beneficiary. A will does let you choose your heirs, but the advantages stops there. You will not avoid probate, estate taxes (if any), death income taxes, privacy of transfers or incapacitation. These are the primary reasons one should set up a living trust INSTEAD of a will. There is a will that is important when establishing a living trust. It's called the pourover will. This document puts any assets you failed to place in your living trust during your lifetime into the trust after your death. In effect, it "pours over"

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assets from the will to the trust. This document may also name the guardian for minor or incapacitated children. The pourover will is a "failsafe" device to ensure that any property left out of the trust will be placed there. It is also a backup to the living trust in case it's invalidated for any reason. The pourover will can substantiate the trust simply by reaffirming its terms. It would be difficult for one or more heirs to challenge successfully both a living trust and a pourover will if their conditions and instructions are similar. Estates What is an estate? Exactly what are we trying to protect with a living trust? An estate is essentially all the property you own (your assets) minus anything that you owe (liabilities). This calculation, assets minus liabilities, will yield a net worth for you. This is the value of your estate at the time it is calculated. The size of your estate is important. More important is the value of your taxable estate. This will equal, roughly, the value of your estate less property left to your surviving spouse or to charity. The other estate calculation of note is the probate estate. This is the portion of your estate that must go through probate before it can be distributed. Leaving your assets via a will puts them through probate. The difference between the taxable estate and the probate estate should be considerable if you plan your estate properly. For example, let's say your estate calculation is $400,000. By transferring the title of your house, valued at $250,000 and your Chrysler stocks, valued at $75,000, to a living trust, you have reduced your PROBATE estate by $325,000 to $75,000. Your goal should be to try and reduce the probate estate to zero if possible. Living trusts will save probate costs. They do not avoid death income taxes. There are other things you can do, planning wise, to reduce your taxable estate, but a living trust is not one of those. You can and should, however, reduce or even eliminate your probate costs. Proper estate planning, in general, can accomplish all of the following:  select your heirs  choose amount and time of distribution of inheritance to heirs  avoid probate  eliminate or reduce federal estate taxes  eliminate death income taxes  maintain control over your assets  maintain both privacy and flexibility  leave directions and the power to act if you are incapacitated  leave funeral instructions  leave organ transplant instructions

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make the administration of your estate as simple and quick to execute as possible. These are important goals. A living trust is one example of addressing these goals in your estate planning. It is by no means the only thing you should do, but it is a document that can help you and your heirs immensely. Other Types Of Trusts By now, you should understand the meaning and main purpose of a living trust. There are, however, other types of trusts that should be mentioned that assist in estate planning goals. Living trusts are only truly functional when the creator of the trust passes away. It avoids probate costs. Other types of trusts help you to avoid taxes. MARITAL ESTATE LIFE TRUST: Commonly referred to as the AB Trust, this trust is set up for coupl es whose combined estate is in excess of $600,000. $600,000 is the amount of your estate which is exempt from federal estate taxes. The marital life estate trust lets BOTH spouses take full advantage of the $600,000 estate tax exemption. When a spouse dies, property is left for the use of the surviving spouse during the balance of his or her lifetime. However, the survivor never becomes the legal owner of the property. If legal ownership is never bestowed, then the property is not included in the survivor's estate and thus avoids being counted for tax purposes. The trust is complex and has important ramifications for the surviving spouse which should be understood before putting this type of trust into effect. QTIP TRUST: Short for Qualified Terminal Interest Property, it is a type of marital life estate trust that is intended to postpone payment of estate taxes when the first spouse dies. It only postpones them until the death of the second spouse and the taxes could be higher then since the amounts would be calculated on the then-current estate, but it saves the survivor a substantial amount of money while alive. GENERATIONSKIPPING TRUST: You may have heard of this type of trust where the bulk of assets are left to the grandchildren, but the income derived from them is utilized by the trustor's own children. In essence, the estate "skips" the children, going directly to the grandchildren, but the use of the income is still there for the direct heirs; the use of the property is not. Current laws impose a tax on all generation-skipping transfers in excess of $1,000,000. If an estate is worth more than that, the children may want to get this excess property directly since they will have no access other than to income from the property that was transferred to the grandchildren. It all depends on the size and type of estate. These are examples of other trusts. This isn't meant to say you should attempt to set up every conceivable type of trust. The key is what your estate and heirs "picture" looks like-this will govern the estate planning devices you will utilize.

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Taking Inventory To value your estate from both a net worth and living trust planning standpoint, you must inventory your assets and calculate your liabilities first. Assets: This is the first calculation. You should list each item and describe it, indicating whether you own the property outright or the percentage of your ownership if not. Then list the actual value of the portion you own. Begin with your liquid assets:  cash  savings  checking accounts  money market accounts  CDs  precious metals Next, list other personal property:  stocks  mutual funds  bonds  other securities  automobiles  jewelry  furs  art works  antiques  tools  collectibles  life insurance Then, list your real estate holdings including your own home(s), condominiums, mobile homes, land, etc. Finally, list any business personal property including partnership interests, copyrights, patents, trademarks, stock options, etc. Add these up and you will have the total amount of your assets. Then, list your liabilities by name and the amount you owe, including:  personal loans (credit cards, bank)  mortgage loan(s)  taxes due, current or past  life insurance loans  other personal debts

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Add all of these numbers up to arrive at your total liabilities. Subtract your liabilities from your assets to arrive at your net worth. This allows you to place a value on your estate. You can see how close your estate is to $600,000. You can inventory property that has to be itemized for the living trust anyway. You can separate property by titled ownership and nontitled property. Summary Knowing where you are in valuing your estate is an excellent start to your estate planning program. The use of a living trust is a clear example of using estate planning to help you (and your heirs) save money and to avoid the hassles of court and lawyers. Living Trust Basic Form This form creates a revocable living trust. A living trust is a testamentary device, used instead of a will. Popularized by the infamous "How to Avoid Probate" books, Living Trusts are a type of estate planning which have become quite popular for many reasons. Although touted as a substitute for traditional wills, a living trust also requires a pour over will. A pour over will bequeaths any assets which have not been conveyed to the living trust, into the trust estate. Virtually all living trusts are "revocable" which means that the terms can be changed during the lifetime of the settlor. Irrevocable trusts create extensive tax consequences and are not suitable for regular estate planning. The trusts provided is revocable. REVOCABLE TRUST , referred to herein as Settlor, and , referred to herein as Trustee, (the singular term "Trustee" shall refer to multiple Trustees if multiple Trustees are appointed) in consideration of the covenants and undertakings herein agree: ARTICLE I CONVEYANCE OF PROPERTY TO THE TRUSTEE Settlor herewith assigns and conveys to the Trustee, the property described in Exhibit "1" hereto. All of said property, together with any income, accessions and additions herein, shall be held by the Trustee in trust for the purposes set forth in this revocable living trust. ARTICLE II REVOCATION Settlor hereby reserves the right to revoke this trust at any time, by written instrument. Revocation shall be effective upon mailing or delivery to the Trustee of a notice of revocation. Trustee may resign upon 30 days prior written notice to the Settlor. For purposes of this agreement, notices shall be delivered as follows:

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TO SETTLOR [Write in your (the Settlor's) name and address below] _______________________________________________ _______________________________________________ _______________________________________________ TO TRUSTEE [Write in the Trustee's name and address below] _______________________________________________ _______________________________________________ _______________________________________________ ARTICLE III SUCCESSORS TO THE TRUSTEE ADDITIONAL TRUSTEES The Settlor during his lifetime may from time to time add additional Trustees by notice to the then existing Trustees. In the event there are multiple Trustees, the majority shall in any matter in which the Trustees disagree control. In the event that the Trustees are evenly divided in the actions to be taken, the Trustee with the longest tenure of service shall cast an additional vote to determine the matter. In the event that any Trustee resigns or is unwilling or incapable of acting, during the Settlor's lifetime, the Settlor shall name additional or replacement Trustees. After the Settlor's death, shall name the replacements for any Trustees who resign or are unwilling or incapable of acting. If is unwilling or incapable of acting, shall name the same. In the event that _____________ shall be unwilling or incapable of acting, the Court having jurisdiction over states and trusts, located in County, State of shall name the successor Trustees.

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ARTICLE IV WITHDRAWALS BY SETTLOR The Settlor may from time to time withdraw any portion of the corpus of the trust (whether capital or interest) by written notice to the Trustee. The Trustee shall be acquitted of all further responsibility for any assets so delivered upon receipt by the Settlor. ARTICLE V POWERS OF THE TRUSTEE The Trustee shall have the power to do all acts, institute all proceedings and exercise all rights, powers and privileges that an absolute owner of the trust property would have, subject always to the discharge of Trustee's fiduciary responsibilities. I further direct that the Trustee shall act without bond. Further, this Trust shall be administered without the necessity for an administration thereof to be through the court system. No entity dealing with the Trustee shall be required to investigate or to confirm the Trustee's authority to enter into any transaction or to administer the application of the proceeds of any transaction. ARTICLE VI COMPENSATION OF TRUSTEE If the Trustee is an individual, then the Trustee shall serve without compensation, but with reimbursement for reasonable and ordinary expenses. Nevertheless, the Trustee if an attorney shall be entitled to compensation for legal services rendered to the trust, or if an accountant, for accounting services rendered to the trust. If the Trustee is a corporation or banking entity, it shall be entitled to customary, reasonable and ordinary charges and expenses incurred in rendering services to the estate. ARTICLE VI DISPOSITION OF TRUST PROCEEDS After paying the necessary expenses incurred in the management and investment of the trust estate, including compensation as provided for herein, the Trustee shall accumulate the same during the lifetime of the Settlor. After Settlor's death the Trustee shall distribute the net income of the Trust in the following manner: Please see exhibit 2 Should any beneficiary named above die, the Trustee shall distribute the net income to the lineal descendants of the beneficiary. If any beneficiary dies

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and is not survived by lineal descendants, the distributions from the Trust shall be adjusted to pro-rata increase all other shares. ARTICLES VII INVASION OF PRINCIPAL After Settlor's death, the Trustee may apply so much of the principal of the trust for the use of the beneficiaries at such time or times as in Trustee's discretion Trustee may deem advisable for their health, education, support or maintenance. Any amounts so applied to the use of any beneficiary shall be charged against, or deducted from, the principal of any share then or thereafter set apart for said beneficiary. ARTICLE VIII NON-ASSIGNABILITY OF THE TRUST PROCEEDS The interest of the beneficiaries of this trust shall not be assignable, and beneficiaries shall not have the right to pledge, assign, convey, or otherwise transfer, lien or encumber any portion of the income or principal of the trust. All payments provided for by the beneficiaries herein shall be made directly to them or their guardians as is provided herein. ARTICLE VIII DISTRIBUTIONS TO MINOR OR INCOMPETENT BENEFICIARIES The Trustee in his discretion may make payments of income or principal to any minor or incompetent beneficiary by paying the same to the minor or incompetent's guardian, or to the person having control over the minor or incompetent, or by direct expenditure for the benefit of the minor or incompetent. However, the Trustee may also pay an allowance in such amount as he may see fit from time to time to the minor or incompetent. Further, in the discretion of the Trustee the distributions for a minor or incompetent beneficiary may be accumulated and shall thereupon be paid to the minor or incompetent upon their disability being removed. Any payment under this Section shall operate as a full discharge of the Trustee as to such payment. ARTICLE VIII ACCOUNTINGS The Trustee shall, after the death of the Settlor provide a semiannual accounting to all competent, adult beneficiaries detailing the transactions, if any, of the trust. The same shall not be required to be audited, although the Trustee may, in his sole discretion, may cause an audit to be performed from time to time. ARTICLE IX LIQUIDATION OF TRUST

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If at any time the total of the principal and income of the trust is less than $500,000.00, the Trustee, may in his absolute discretion, close out the trust by paying the proportionate shares of each beneficiary to them. The Trustee shall at that time deliver a final accounting to each beneficiary. Upon payment, the Trustee shall be discharged from all further duties. SECTION X PERPETUITIES SAVINGS CLAUSE Notwithstanding anything to the contrary herein contained, the trust created by this agreement shall cease and terminate as is provided in Sections IX, 21 years after the death of the last survivor of trustors and all issue of trustors living at the date of this agreement. SECTION XI DISTRIBUTION OF DIVISION IN KIND On any distribution from the trust, whether it be an ordinary distribution or one of principal, or a final distribution, the Trustee may apportion and allocate the assets of the trust estate in cash and partly in kind, in Trustee's discretion. The valuation, whether based on an appraisal, or not, made by the Trustee shall be binding on the beneficiaries. SECTION XII LITIGATION OR COMPROMISE OF CLAIMS The Trustee may compromise, or abandon, at Trustee's option any claim or claim against the trust, or subject the same to arbitration. Or, the Trustee, in his absolute discretion, may litigate any claim in favor of or against the estate. SECTION XIII NOTICE OF EVENTS Until the Trustee receives notice of any death, birth, marriage, or other event on which the right to receive distributions is based, the Trustee shall incur no liability for any disbursements or distributions made in good faith. This clause shall not prevent the Trustee from seeking restitution of any payments made in error in his discretion. SECTION XIV DEFINITIONS - GOVERNING LAW The words "child", "children", "descendants" and "issue" shall include children legally adopted and the lawful descendants of such adoptees. This trust shall be governed by the laws of _________________ [Put State here.] SECTION XV

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SEVERABILITY If any provision herein is found by a court of competent jurisdiction to be invalid, the remainder shall govern. Dated: ____________________________________ __________________________________________ {Put the Notary Public's name here] STATE OF ___________________ COUNTY OF _________________ [Notary Public's name here], being duly sworn states that they executed this instrument for the purposes stated herein. __________________________________________ Notary Public My Commission Expires: ____________________

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TRUTH AND FICTION ABOUT OPENING A SWISS BANK ACCOUNT BY WILLIAM

G. SCHLAKE

"If you can actually count your money then you are not really a rich man." J. Paul Getty, American business executive 1892-1976." To most people having a Swiss Bank Account is something for the super rich, crooks, dishonest government officials or just a good way of "hiding away one's ill-gotten gains." That's nothing but fiction and a common plot used over and over again in a lot of Hollywood's B movies. There's nothing illegal or "fishy" about wanting, or having a Swiss bank account. The truth is Swiss banks welcome accounts from foreign residents all over the world - especially the "West," and a vast number of average Americans have accounts all over Switzerland. The main reason for wanting a Swiss bank account has to deal with the legendary privacy such an account provides. The Swiss have some of the tightest regulations in the entire world as far as who can gain access to your account. If you're looking for a way to "protect' assets from snoopy investigators, a Swiss account can be the ideal place. The "big five" Swiss banks are listed below. All are familiar with foreign accounts.  The Swiss Credit Bank in Zurich  The Union Bank of Switzerland  The Bank Leu (AG) in Zurich  The Swiss Bank Corporation in Basel  The Swiss Volksbank in Berne To locate the current addresses of these banks and many others, visit a Swiss Consulate located in most major US cities, or visit your local library for further information. Opening a Swiss account is much the same as with any bank. If you're making a truly large deposit most people prefer to do so in person. If you decide to open an account by mail, you'll first have to request the forms needed to open an account; fill them out, then get your signature verified at a Swiss Consulate or any of their affiliated banks in this country. This procedure is much like what one does to open a mutual fund or other securities account and is nothing more than a bit of red tape any financial institution puts you through and not an invasion of your privacy. While we're on the subject, its best to send your deposits by money order which offers the most privacy. Bank drafts are also acceptable, but avoid using bearer bonds or securities when making your deposit or you're required to file a lot of red-tape at tax time. For protection have your lawyer execute a "power of

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attorney" over your Swiss account. Unlike American law the Swiss still consider such legal instruments valid even after a depositor's death. If you're not comfortable leaving a "power of attorney" with the bank, discuss options with your legal counsel in case of your disability, or death. OK, so much for the "how," of opening a Swiss Bank account, now it time for a little information on the "Why." The main reason for having a Swiss bank account for most people has to do with keeping one's financial status a secret, and protecting one's assets from "attack." Swiss banks offer the same range of services of other banks: checking accounts, savings accounts, custodial accounts, etc. They also will hold other valuables like stock certificates, gold, silver, and other property for a fee. Like other Swiss accounts, they are protected under Swiss law from any snooping unless you're engaged in criminal activity. When it's time to make a withdrawal, it can be paid in the currency of your choice. Swiss francs, American dollars, whatever you would like. Unlike American law where law enforcement agencies, the judicial system, and private citizens can gain access to all kinds of financial information under Swiss law, except for extraordinary circumstances neither the bank's officers or the bank's employees are allowed to reveal any information, relative to any account to anyone, including the Swiss government. No private citizen, or their legal representative can ever receive any type of information about any one's Swiss bank account under any set of conditions. That includes all types of legal proceedings that the Swiss classify as "noncriminal behavior." The Swiss consider tax evasion and many other "crimes" under US law as "political offences." Things like divorce, inheritance disputes and bankruptcy cases are examples of "private matters," and as such the secrecy of the account is protected from any legal action to verify the presents of, or attempts to seize any assets. There are some notable exceptions. Three types of activity which the Swiss consider illegal, and are bound by treaty with the United States to "open" the account for possible legal proceedings are: organized crime activities, drug trafficking, and "insider trading" of securities. In instances of this kind, the Swiss authorities have the final say on whether or not to reveal any information. The Swiss currently charge a hefty 35% tax on interest earned in Swiss accounts but Americans get 30% of that tax refunded by showing that they're not Swiss residents. To claim the refund there is a catch 22. You must identify yourself, which of course give up your secrecy. If you maintain the account in Swiss francs, and the franc increases in value relative to the American dollar, you may also be liable for a capital gains tax when you withdraw the money and convert it back to United States dollars. If you sustain losses from any decrease in value they are usually not deductible. There are no US restrictions on having Swiss bank accounts, but current IRS regulations require you tell them what foreign accounts you have when you

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file your annual income tax return. If you answer yes, the Internal Revenue Service requires more paperwork. Interest earned in a foreign account is still taxable under present US Tax laws, but you usually get to offset foreign taxes that you may be required to pay. Consult with a tax expert to learn what present regulations are since they change frequently and are beyond the scope of this report. "Let us all be happy, and live within our means, even if we have to borrow the money to do it with." Artemus Ward 1834-1867

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CAMOUFLAGE PASSPORTS - THE UNCONVENTIONAL PRIVACY TOOL WHAT ARE CAMOUFLAGE PASSPORTS? Camouflage Passports (CPs) are passports of countries no longer in existence, e.g. former British or Dutch colonies such as Rhodesia, Zanzibar, Dutch Guiana, Netherlands East Indies, &c. These states have usually changed their names, typically after gaining independence. Thus, British Honduras is now Belize, while Zanzibar fused with then time Tanganyika to become today's Tansania. Upper Volta became Burkina Faso, and of course, some of the most recent examples include the USSR and Czechoslovakia. When American travelers became prime targets of hijacking and international terrorism on an ever increasing scale, CPs were invented to afford them some additional security. The idea was to present a potential hijacker with a valid looking, non-American document to hide one's identity. Thus, it was supposed, terrorists might pick someone else to harp upon, to take hostage or even to kill. CPs were never intended to be used as actual traveling documents at border controls &c. Even today, we strongly advise against using them in lieu of bona fide passports when crossing from one country to another: not all border officials are as a dumb as they may seem, while you will certainly be inviting no ends of hassle if you give them the impression of willfully hiding something from them. In some countries this may be a felony, but even where it isn't, people caught traveling with "counterfeit documents" are always viewed with strong suspicion. You may even face an espionage charge, depending on the current political situation, and you shouldn't count on your home country's consulate or embassy personnel being particularly happy about having to cater for someone pretending not to be one of their citizens in the first place. Thus, their diligence and eagerness to help could prove to be severely wanting - meaning that you may have to spend weeks and months wasting away in a foreign jail, which is no fun thing at all! Do I really need one? Probably not, unless you're being hijacked! :) At least, that's the common sentiment. Actually, this prejudice is not a bad thing at all as these passports obviously won't be of much use any longer, once every man and his dog knows about them or even has one himself. So, the fewer people actually employ them, the better for all concerned. After all, discretion has always been a critical mainstay of personal security and safety.

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But let's check it out in more detail: if you refrain from traveling; if you are in possession of a valid second citizenship for emergency purposes already and have at least some of your assets stowed away in safety (preferably not in the country where you are living most of the time, nor at the place where you actually work); if you are in no need at all of truly anonymous banking - yes, in that case (and in that case alone!) - it might seem a sheer waste of time and money to obtain a CP, unless you are into collecting that sort of curios. However, that will hardly apply to most of us! Plus: you can never actually know before some nasty streak of events whether you are really in safety or not, can you? What if your country's regime changes over night? If suddenly you are victimized for being a Mormon, a Jew, a WASP, a black, a Muslim, a gay, a communist, a veteran, an environmentalist - or because your spouse holds a grudge and denounces you as a child molester, a porn fiend, a pervert, a drug peddler, a mobster? Think of all the possibilities inherent in a social and political system based on conformist and permanent state controlled brainwashing! And if that's not enough: how about the IRS or your local equivalent to that agency? What, if - just IF! - they find out - or ASSUME! - that you haven't filled in the proper return forms for that kid you hired last year as a baby sitter? Granted that no one can actually guarantee you the efficacy of a CP when it comes to planning your escape or actually fleeing a politically oppressive system. A CP is an emergency document at best. As such, you should keep it for yourself and resist any temptation to brag with it at parties or when on a drinking spree with your buddies. Keep in mind that a CP just might make the difference between life and death when pressed for fast, decisive and - more importantly yet - effective action. However, there are other, more obvious uses for a CP, which is why we highly recommend procuring one or more. What else can I do with a Camouflage Passport? Ah, now comes the really interesting part! Granted that one of the most frequent uses CPs are being employed for these days is "highly unofficial", it is nevertheless of great interest if you want to anonymize your banking assets. This can be quite critical in a world where the purported "Drug War" has led to an increasingly restrictive banking practice the whole world over. While border guards and consular officials are absolute pros when it comes to recognizing false foreign documents, bank employees usually aren't. Thus, if your name is "John Smith" and you have a CP from, say, British Honduras on the name "James Miller" and use it to identify yourself when setting up a new account with a foreign bank (never do it in the place where you are actually living or working!), you can insure total anonymity even if that country's banking laws do not permit of such a thing. Because the bank will not be aware of your true identity, they cannot give you away even if they wanted to. (To make this point very clear: most banks, foreign or domestic, almost never actually want to - they are usually being forced by law or coerced by other means if they actually do tell on you. Nevertheless, this will hardly make any difference to you when caught in the mills of the administrative system. Moreover, you can never be sure when this is going to

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happen - most any time could be right, depending on the winds of change and current political developments - so "watch your ass", as the saying goes!) Please keep in mind, though, that such a procedure is a criminal offense in most countries. Obviously, the document alone is not enough, you have to develop the bearing and behavior to go along with it. On the other hand, a banker's job consists primarily of relieving you of your money, so the risk of actually getting caught is pretty slim unless you botch the whole thing by not adhering to the standard advice of always keeping a low profile. Better to look and behave like an "average Joe" tourist or businessman from New Grenada than trying an amateurish spiel at being a VIP of international renown, unless you need that mask for some very serious reasons! Are CPs legal? Certainly, but a lot depends on how you use them. Possession is quite legal in most countries including the United States and Canada. They are commonly sold as novelty items and as long as you don't abuse them in an illegal manner, you will hardly get into any trouble. However, don't ever try anything illegal like leaving or entering the country with a CP, never try it out in a traffic control, and most certainly don't ever try to honk it off to someone else as a genuine item! Actually, the latter has happened occasionally here and there. We frown upon such a practice as it only makes life difficult for all bona fide people involved in using CPs in a discrete, unobtrusive manner where absolutely necessary, holding it in reserve for hard times i.e. emergencies. May you never actually need it - but may you never go unprepared, either!

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ASSET PROTECTION A.P.O.T. (TM) DEATH OF THE SUCKER PUNCH In today's "sue first and ask questions afterwards" society, everyone is under threat of having their assets wiped out for any reason whatsoever. The good news is, a new nailed down, buttoned up Asset Protection Trust has been designed to give you high calibre, low cost ($150) asset protection. It's called the Asset Protection Offshore Trust (A.P.O.T.(tm) ). Not only does it help to make you financially bullet proof, but it also places your funds into a healthy environment in which they can grow. The first question one is likely to ask, when faced with this tempting proposition is, "What's the catch? How can an offshore asset protection trust cost just $150? That's no more than the price of a good dinner." PT Shamrock and their merry men have been around long enough to know that before you give the nod to anything, you've got to turn it belly up and examine the intimate details. Naturally you have to do this with a basic knowledge of trusts and the environment in which they are sold. The only reason you might think that the $150 price tag for such an agreement is ridiculously low is if you are unaware that many professionals who provide trusts link costs to the opportunity of the moment, and not to the basic item which is in fact a simple agreement that, once activated, generates a sequence of events that are designed to give you certain levels of financial immunity from the many parties who would like to separate your ass from your assets. In the widely publicised 1996 case of O.J. Simpson, although a losing defendant in a lawsuit, he still got to keep $25,000 a month in spending money. Despite the fact that he lost all assets held in his own name, he was able to keep all income from money he had placed in trust years before the lawsuits were filed.

SIMPLE SIMON Creating a trust is simplicity itself. A lawyer usually goes to a "form book" or these days, to a computer service. His secretary types in the name of his client and indicates the type of trust document desired. The resulting "hard copy" is printed out. This trust agreement form costs the lawyer little or nothing; maybe $10. Which is indication enough that his charges are based, not on real costs, but on the wealth of the client and the assets involved. That is, he is doing what most lawyers do, charges his clients for whatever the traffic will bear. During the period 1980 to 1995, thousands of wealthy people, on average, spent US$50,000 each on lawyer's fees to accomplish the same results that you

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can have by taking out a $99 A.P.O.T.(tm). Why is there such a vast price difference, or should we call it an apparent discrepancy? In most cases its a matter of perspective and where your head is. On the other hand if you look for answers, soon enough you will find them. Which explains why people who are generally hands-off, and therefore easy targets, will pay $10 for a certain brand of Aspirin, when the identical product, turned out by the same manufacturer, can be purchased, possibly with a little effort and inconvenience, and the right contact, for $1. In the case of the A.P.O.T. (tm), the effort and inconvenience are marginal, and your contact is PT Shamrock who is an authorized facilitator of this "no bullshit" agreement.

ROLLING WITH THE PUNCHES A trust involves at least one person and at least some property or assets. Let's say you have to deal with your irresponsible fourteen year old kid, who even has trouble managing his lunch money. As a consequence you decide that since your fourteen year old is going to squander any money placed under his control, you will place a million dollar gift to the kid in trust. You open a bank account styled, "Papa In Trust For Irresponsible Kid." You then hand the kid a piece of paper that says you (Papa) will invest and manage the trust assets, collect the interest and gains, pay the kid's school fees, and also give him a weekly allowance for the next 21 years. When the kid reaches maturity at a certain age, say 35, Papa, the trustee, will turn everything in the trust over to him. Until he, the kid, reaches the specified age of maturity, he is powerless to touch the principal, which is why this kind of trust is often referred to as a spendthrift trust. For the next 21 years the money is also protected against any creditors who would like to deprive the kid of his rightful finances to be, which would also include Papa's creditors. A trust agreement in fact can make provisions for all kinds of eventualities. For instance, if Papa dies before the kid reaches 35, a successor trustee (a lawyer, a bank, or the kid's Mom) is appointed to take Papa's place as trustee.

BULLET PROOFING Due to the proliferation of lawsuits, government confiscation's, and new laws enacted to "protect us" from ourselves, many if not all wealthy people, especially in the United States, have set up Asset Protection Trusts. By having title to assets like stock or real property held by foreign corporations or trustees, these assets can be hidden and protected from creditors. At the same time ownership benefits (like income) can still be enjoyed as before.

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UNSHACKLED American citizens are forbidden by law from investing their money in at least 99% of the opportunities of the world. Before most securities can be purchased by a US citizen, they must be "approved" by the Securities and Exchange Commission. Gaining such approval is an expensive bureaucratic procedure. It's much like winning an okay from the Food and Drug Administration for a life- saving new drug. Most companies never bother. As a result, most of the world's best performing mutual funds can't be legally sold in the USA or to US citizens. The way out of this dilemma is a comparatively simple one, which entails establishing an offshore trust to hold these forbidden investments. From this point of advantage you can often do considerably better than you can with the very limited, legally approved deals for US citizens. Succinctly put, with an A.P.O.T.(tm) you have the right to choose.

INVISIBILITY If you are in dispute with a Federal Regulatory Agency, it is very easy for a low grade bureaucrat to press a button on his PC. He enters your social security number, and is able to quickly identify your bank accounts, securities, and real estate. Another few buttons are pressed ... just like that your property is "frozen," and your bank and brokerage accounts are transferred to the government. With your assets held abroad in an A.P.O.T. (tm), it is not possible for a creditor to locate them with any precision. In fact it is virtually impossible to confiscate trust assets. Why? The lawyers of bureaucrats and plaintiffs don't like difficult investigations and long, drawn out court procedures. Especially if lawsuits must be filed and pursued abroad. As a result, in most foreign jurisdictions (unless the local governments are collaborating), not even Big Brother can get at your assets. While Americans cannot expect any protection in Canada or vice-versa, cooperation in seizing the assets of Americans in most countries only comes into play when the issue is involved with serious crime, such as drug dealers, child porno rings, or bank robbers. Conversely, with an A.P.O.T. (tm) it becomes possible for you to personally access your funds, instantly, in cash, twenty-four hours a day, anywhere in the world. It is also likely that if your A.P.O.T.(tm) assets are earning excellent returns, you won't simply pull funds out for consumer spending. It is more likely that when you need cash you will borrow against these offshore assets. In view of this probability a credit line can be arranged in advance.

SHARK REPELLENT It is well known that ambulance-chasing lawyers are constantly sniffing out potential defendants by identifying high net worth individuals. By keeping some

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of your assets in an A.P.O.T.(tm) you can lower your visible level of wealth. This makes you a far less attractive victim. Before a contingent fee lawyer will file suit, he always gets a full report on his target's assets. Since funds and properties held in an A.P.O.T.(tm) are invisible (or at least less discoverable) much litigation can be avoided or favourably settled. The same reasoning, reducing your visible net worth, goes for repelling other blood sucking pests and predators who seek an unwarranted share of your wealth. The list includes burglars, kidnappers, extortionists, ex-spouses, taxcollectors, disgruntled business associates, crooked cops, insurance sales people, and bent bureaucrats seeking bribes. The less well heeled you seem, the more of a repellent you become.

YOUR WORD Particularly where your heirs are likely to squabble over their inheritance, it is likely that most of your estate could be eaten up in legal fees. Also, in some jurisdictions, the "forced heirship" law provides that you must leave all or a certain percentage of your property to a forgotten separated spouse, or to a child who detests you (and vice versa). Assets in an A.P.O.T.(tm) can, upon your demise, be given to any person or be used for any purpose you designate. Once again you have the right to choose who gets the benefit of your estate. You don't have to let the State make those choices for you.

MOBILITY Many countries have controls on foreign remittances that make it impossible to move money to where it is needed. Many Chinese-Americans were criminally charged years ago for simply sending subsistence money to aged parents on the mainland. Expat Cubans face similar risks today. Wealth taxes and other taxes eat away at your savings and profits. An A.P.O.T.(tm) can help you save on taxes, and allow you to spend or invest your own money as you please. Certain "roll-up" investment funds convert taxable income into non-taxable, unrealised capital gains.

WHAT IF? What recourse do you have if a trustee doesn't do his job right? The most important asset of any money manager or trust administrator is his reputation. This is why it is important to deal with an established firm that has a good reputation, in depth management, client references, real offices, real employees, and good communications with customers. In taking out an A.P.O.T.(tm) you will have such a trust administrator working in your interests. Besides all the usual court remedies (which take too long and are too expensive), your biggest element of control is that you can complain.

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Letters to the local regulatory bureaucrats will cause a legitimate operator a great deal of trouble. You can also make your grievances public by writing to journalists and editors. Such complaints made in financial publications and on the Internet will cost a trustee dearly. Receiving bad publicity for not providing the services you bargained for, will cost much more than he could gain from mismanaging or stealing your account. In the final analysis, dealings with a trustee, or any bank, is mainly dependent on trust. If you start modestly and build up assets, trust and confidence over the years with your trust manager, you should do very well.

FROM THE HORSE'S MOUTH To give you more insight into the nuts and bolts of the A.P.O.T.(tm), Marc Harris provides answers to the most common questions relating to the operation of an A.P.O.T.(tm) Q: Do I have to give up control over my assets with an A.P.O.T.(tm)? A: Look at it this way: Do you give up control when you let a pilot or good cab driver take you where you want to go in a strange country? Not really. The professional will probably get you to your destination faster and safer than you could do it yourself. If you are unhappy you can change drivers (trustees) at any time. An A.P.O.T.(tm) which you can call "The Your name Trust" is run by you. You call the shots. Only legal title is in the name of "Your name Trust." There is a foreign person who is in nominal control (your pilot), but he does exactly what you want. Q: Are the assets physically in the country where the trust is established? A: Normally not. You can have a Panama trustee with a bank account in Switzerland or Singapore. You can have access to that bank account anywhere in the world with an ATM (automatic teller machine) card. Securities or mutual funds may have assets all over the world and be quoted in daily papers. Q: How can I find out my net worth and check on the performance of my assets? A: You can do this by fax or telephone. Conventional regular statements can be mailed or faxed, but if you are on the Internet, The Firm of Marc Harris, s able to provide encrypted, strictly private instant statements, upon demand. Q: If there are political problems (i.e. wars, revolutions) in the country of the trust, does this affect me? A: Not at all. The Swiss moved all their gold holdings and bearer securities to New York City when there was a Nazi invasion threat. The Firm of Marc Harris and the bulk of their 250 employees are currently in Panama. Most investment securities are now held as book entries in clearing houses. These are at major business centres like London, Zurich, Singapore. At the first sign of problems in Panama, all functions of M. Harris could be easily transferred to existing facilities in a dozen other countries. The customer would never be affected by such changes as e-mail facilities and telephone lines would be electronically adjusted. However, insofar as investment banking and shop-registry functions, Panama

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has a hundred year history of stability as a leading offshore banking centre. In spite of the USA invasion a few years ago, normal business functions continued and most local property damage was reimbursed by the Americans. Q: Can I invest in any stocks, property or other assets that I choose? A: Yes, but it is best for you to start with a small discretionary account owned by your A.P.O.T.(tm) Once you get the hang of using your A.P.O.T.(tm), you should have a personal meeting with your account executive to go over your objectives. You can visit us at the office abroad that is most convenient for you, or communications can be handled in many other ways. Q: Is everything you do legal? A: Yes. We have a large staff of lawyers who keep us in compliance with all laws of all the jurisdictions where we operate. We can also put you in touch with our own in-house lawyers and certified public accountants who are licensed in your home country for tax planning and other advice. We can also prepare and certify your financial statements, income tax and other returns. Naturally, these services are billed to you at a cost which will usually be considerably less than the cost of similar services stateside. Q: Do you offer other services? A: Yes. Discount stock brokerage, no load mutual funds, tax and estate planning, corporate, trust, foundation establishment and management, foreign exchange trading, offshore captive insurance companies newsletter and Internet publishing and a full range of financial services at competitive prices. We also offer expatriation and new citizenship services. Q: Do I have to use your people for any or all of the services you offer. A: No. You have the right to choose what services, if any, you use in connection with your A.P.O.T.(tm). Q: What are my reporting requirements in my home country with regard to an A.P.O.T.(tm)? A: Certain forms need to be filled out and filed. We provide you with these filled out forms. It is your sole responsibility to file them if you choose to do so. Our firm, unless requested by you to do so in writing, reports nothing about your account to anyone. Q: How much money do I need to have to get started? A: With as little as ten thousand dollars, we manage to help clients. If you want to give up being sucker punched, for your unique Offshore Trust (A.P.O.T. (tm)) and referral reference, or further information, please contact: E-mail: mailto:[email protected] Web site: http://www.offshore-manual.com North America: CARLTON PRESS INC. Empire State Building, Suite 3304, 350 Fifth Avenue,

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New York, NY 10118-0069, USA Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438 ICQ# 19921677 Europe: CARLTON PRESS LTD. St. Georges House, 31A St. Georges Road Leyton, London E10 5RH, GREAT BRITAIN Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168 ICQ# 16070169

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GETTING A SECOND CITIZENSHIP BY ADAM STARCHILD Consideration should be given to the acquisition of more than one passport. The acquisition of multiple passports of course presupposes that you are willing to accept multiple citizenship-and this is not at all a bad idea for many people. With terrorism on the rise, international travel can be particularly hazardous to citizens of certain countries. Hostage-takers and kidnappers who have commandeered planes and boats have often looked at passports in deciding who shall live and who shall die. A second passport may also give you access to travel in countries where your own passport might not be used because temporary or permanent travel restrictions. If you think this can't happen to you, consider all the Canadians who were refused permission to land in Spain a few years ago during a SpanishCanadian fishing rights dispute. For others, the benefits of a second passport may not be quite as pressing, but dual citizenship does nonetheless convey several advantages. Many nations have laws which restrict the purchase of real estate properties. Typically, coastal properties and those in large desirable metropolitan areas are off-limits to foreigners. Such practices have been widespread throughout Europe, Asia, South America-even in Mexico. Paradoxically, some of the available properties have remained unsold for long periods of time, not because they are outrageously priced but rather because locals could not afford to purchase them. The acquisition of a second nationality could be your key to living like a king or queen in one of the world's most desirable cities. Financial advantages of dual citizenship include the ability to purchase otherwise restricted shares in emerging foreign companies. Many foreign stocks and mutual funds are only available to local citizens. Issuers will require affidavits from potential buyers. Present the appropriate second passport as proof of citizenship and you are home free. GET YOUR MONEY OUT OF THE COUNTRY BEFORE YOUR COUNTRY GETS THE MONEY OUT OF YOU. It's legal. It's easy. It's Invisible. Its Offshore. Many years ago I was in a minor dispute with a government agency. They were wrong. I was right. No question about it. They thought I owed them a few thousand dollars in taxes. I knew they owed me considerably more in rebates and refunds. We figured the case might be heard some years down the line. Maybe in some administrative supervisor's office; maybe in court. But more likely, the odds were, that my high priced Certified Public Accountants would settle the claim. Probably in my favor. That's what I paid them for.

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It was no worry for me at the start. If the accountants couldn't work out something, it would go to the lawyers. "My team" would insulate me. I was well insured, and well protected against every contingency. So I thought! Similar differences of opinion had been resolved by negotiation and compromise a hundred times before. In those days, I had a sizable business to run: hoards of employees, rents to pay and a big payroll to meet. There were projects to complete. I was busy! Couldn't be bothered with giving a lot of personal attention to a piddling small tax claim amounting to less than a day's rent for my firm. So maybe I refused to take a call and had staff refer some squeaky voiced government guy to my accountants. I didn't even remember the incident. The disputed matter seemed a vary little thing, like a baby leech on your butt when you're up to your eyeballs in alligators. DOODOO HITS THE FAN While at my desk, 9AM one foggy Monday morning, a good, reliable supplier, "Mrs. Zanadu," burst into my inner office unexpectedly: "How could you do this to me?" She was waiving my bounced check for $75,000. Her people had done a good job and I'd authorized full payment for her on the prior Friday. I told her, "Calm down- let's have a look?" I knew our check was written against a good account. We had more than enough on deposit to cover this check several times over. There was a credit line too. "There's been a mistake," I exclaimed. "You take this downstairs to our good friend, the Bank Manager, Mr. Moneypenny, He'll set things right!" I was writing a humorous memo to Moneypenny, my bank manager about not smoking any more grass. Told him to cash this attached $75,000 check immediately for Mrs. Zanadu, and to kiss her fine fanny seven times. That was when my ex-wife the former Morgana De Medici (actually La Fey) burst in screaming: MORGANA [FIRE BREATHING LADY DRAGON] ENTERS HISSING "You dirty, low down %$#@#$*. It's enough that you $#@$ me in our divorce, but how could you do this to your own kid?" Her scenes were nothing new. "My dear, sweet lady love of my life, what was this itsy bitsy anger all about?" I asked. Sent Mrs. Zanadu on her way, and gently but firmly told Morgana the Terrible, "Calm down darling sweetness, have a seat. Have this cuppa soothing Tizana Tea I made for myself. Tell me what's on your mind. Please dear. Don't be upset." "$$#@# you + your ^#@$#@!!% your tea" She blurted, angrily, as my peace offering hit the wall breaking the cup into an irretrievable archeological artifact. "The G-Men just seized your daughter's Christmas and birthday money: Two Thousand six hundred thirty six dollars. And if you, you %$$$#@#$, don't hand it over in cash in the next thirty seconds, my lawyers, Stabbim Grabit & Ballsqueezer, will make you wish you were never born." I knew better than to argue with Morgana, so I went into my petty cash drawer and pulled out $3,000 cash. "No need to threaten me. You know I love you still, and I love our wee baby. I don't know how this happened. But I will take your word for it. Here, this three grand is for our little Snookums. You keep the change and get your pretty hair done up in a Beehive

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or whatever you like. You always look so beautiful when you're mad." I said it (about her looking beautiful when she was mad) even though it wasn't

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INTERNATIONAL DRIVING PERMIT International Driver Permit is issued under International Law and valid for five (4) years. International Driver Permit CANNOT be assessed points, revoked or suspended. Photo Scan! Your photo and signature are scanned and printed on each card at Super High Resolution. Includes holographic security seal (not shown) at no extra cost. Quality is guaranteed or your money back. IDP's are printed in brilliant colours at high resolution. IMPORTANT! State issued licenses supersede an international driver license in the state or country they are being used. Also, an IDP is not valid in the country of issue. If you do not understand this, DO NOT order the IDP. PLEASE NOTE: All orders are processed and sent within 24-48 hours from receipt of you're application forms (normal delivery time is less than one week.) All personal checks may be held for up to three weeks, in addition to processing time. Orders paid by cash or money order are sent immediately. Important! Make all checks and Money Orders payable to Carlton Press. ONLY US$200. Forfurther information, visit our web page at http://www.offshoremanual.com/cp16.html Mail, fax or e-mail your orders to: E-mail: mailto:[email protected] Web site: http://www.offshore-manual.com North America: CARLTON PRESS INC. Empire State Building, Suite 3304, 350 Fifth Avenue, New York, NY 10118-0069, USA Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438 ICQ# 19921677 Europe: CARLTON PRESS LTD. St. Georges House, 31A St. Georges Road Leyton, London E10 5RH, GREAT BRITAIN Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168 ICQ# 16070169

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CITIZENSHIP - INSIDER'S GUIDE TO INSTANT CITIZENSHIP'S AND SECOND PASSPORTS How to legally obtain a second foreign passport or driver's license. Argentina, Guatemala, Panama, Venezuela, Brazil, Dominican Republic, St.Kitts/Nevis, The Bahamas and the Republic of Ireland all have acquisition programmes. Citizenship acquisition programmes are available through an extremely reputable, well established, recommended Immigration Consultant who represents countries whose passports offer visa-free travel to numerous destinations. Citizenship of these countries can be attained by naturalization in a few months, waiving the normal three to five year residency period. For a comprehensive analysis of each country, see havens. Consultant controlled programme Guatemala, Peru, Panama, Venezuela and Brazil offer programmes that are controlled by our recommended consultant. These can be processed in 60 to 90 working days. (In cases of emergency, for a priority rush fee of US$5000 per application with a minimum of five orders, documents can be processed in 18 to 24 days.) Everything is included in the processing fee specified in the section allocated to each country. There are no additional costs and no further investments necessary. Since your money is placed in an escrow account controlled by you, your funds are never at risk. If delivery is not made within the specified period of time your funds are released to you in full. You will not have to make a visit to your chosen country in connection with your application, nor will you incur any tax or other obligations by virtue of your having become a citizen of another country. It is not necessary for you to renounce your present citizenship and no one will be notified of your new nationality. Should you require another identity and/or name other than your own, official, legal, name change documents must be filed. Your name change will be recorded by the issuing country, but nowhere else. There is an additional fee for this procedure. All passports come complete with exit stamps. SOME COMMON QUESTIONS AND ANSWERS These are questions that have been posed to our consultant on many occasions, and his replies. Question. What can I gain from second citizenship? Answer. Many people see a very ominous trend developing in the "free countries of the world". Every year, more and more of our freedoms are being shaved away. Already, many Western Governments have removed their citizens

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right to obtain a second passport (and therefore to travel) if the hapless citizen is having any of a number of civil disputes with government, including tax disputes. Even if the citizen is completely in the right he cannot leave. This would have been inconceivable just ten, fifteen years ago. Unfortunately, things seem to be getting worse rather than better and many thoughtful observers are becoming quite concerned for the future of freedom. For the moment our firm is holding open a window of opportunity that allows one to obtain what many forward thinking individuals now consider an essential element of insurance against further loss of freedoms. How long we will be able to keep this window open is uncertain at this time, but many feel that this is a very appropriate moment to obtain supplementary citizenship, against some future "rainy day". Question. Which countries can I visit without visas? Answer. For St. Kitts/Nevis, a Commonwealth country, the major visa-freetravel countries are limited to: Bahamas, Bermuda, Denmark, Finland, Hong Kong, Korea, Norway, Sweden, Thailand, United Kingdom and Venezuela. Visas are required for all other countries. We do not recommend St. Kitts/Nevis passports at this time. Regarding the Bahamas, another Commonwealth country, the major-visa-free-travel countries are more extensive than Belize and St. Kitts/Nevice. Bahamian documentation is also not recommended at this time due to the large investment required to get involved. If you already have an excellent passport, we do however, recommend the Bahamas as a domicile for you to obtain Permanent Residency. The island lifestyle is superb and the available tax benefits for Permanent Residents are very advantageous. The Republic of Ireland, a respected member of the European Community, offers the best visa-free-travel in the world, plus holders of Irish passports can live and work without a visa in any EC member country. Effectively if you or your family are Irish Citizens, you become citizens of the UK, France, Germany, Italy, Netherlands, Belgium, Luxembourg, Spain, Greece, Denmark, Portugal and soon Austria, Sweden and Finland. The cost for your entire family to become full naturalized citizens of Ireland in 90 to 120 working days is substantial. If you can afford it, then without doubt Ireland is the top of the list. Our next best selection is Venezuela which provides excellent Visa-free-travel at a fraction of the cost of Ireland. Question. Is it difficult to obtain visas? Answer. All of the Central and South American countries have excellent diplomatic relations and visas are easily obtainable (while you wait or overnight). You can apply in your country of "residence". Commonwealth countries require a longer wait. Question. Where do I take delivery of my passport? Answer. Delivery is normally made in Switzerland which is greatly to your benefit. Switzerland is the easiest country to enter on your present passport and if you like you can travel out of Switzerland on your new passport. The Swiss do not stamp visa-free passports either upon entry or exit. Passports that need visas like St.Kitts/Nevis and the Bahamas will be stamped. Delivery can also be

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made throughout the world by courier service. The price includes air courier delivery from the country of origin to you. We also offer a personal delivery service (for a minimum of five orders) whereby the completed documents will be picked up and delivered to you by a personal courier at a fee of US$300 per passport to North America or US$600 per passport to selected European countries, Asia and the Far East, plus air travel expenses Question. Why is there an additional cost for family members? Answer. A few countries such as Argentina and Bolivia allow additional family members to be included in the original passport which greatly reduces the cost to additional family members. However the countries currently on offer issue a separate passport for each family member and the processing time is the same for each. Remember a passport is for life, so even if a child is newly born, he will need a passport to travel and the cost is the same. There are however reduced rates, in some cases, for children under the age of 18 years. If family members are processed at a later date than when the original application was processed then the cost is the same as the original, as the processing implications are the same. Question. For how long are passports valid and can they be renewed? Answer. Most passports are valid for ten years, but may have to be extended at the end of five years. This is not a formal renewing process requiring new forms and photographs. Your present passport is simply taken to any Consulate and is stamped, extending it for a further five years, usually while you wait. At the end of ten years a new passport will be issued through a Consulate or Embassy, new forms and photographs are required. The process will take a few days depending on Consular policy and upon passport traffic at the particular office. Question. How is payment made and is my money at risk? Answer. We are obliged to pay in full, in cash, in advance for your passport package (which is only of value to you) before your application is even considered. Your full payment therefore must be placed in an escrow account with Swiss Bank corporation (SBC), one of five remaining AAA rated banks in the world or another legal Firm on the consultants choice. The money remains your property while it is in the account. It takes two signatures (yours and that of our representative) to release the funds. The money is only released to us when you receive your passport package. If you do not receive satisfactory delivery by a specified time then your money (upon your request) is returned to you in full. You are never at risk. We assume all risk. Question. Are prices negotiable? Answer. All prices are fixed. To the best of our knowledge we have the only reputable organisation offering these services. We have an impeccable record of delivery, which we are very proud of. We will deliver valid passports, valid ID cards and valid drivers licenses through the naturalization process in the specified time, waiving the normal 3 to 5 year residency requirement and under absolute confidentiality and security, delivered to your door. Our fees are not

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expensive for the service offered and you receive a degree of integrity and reliability that is absolutely without equal. There are many travel documents of dubious validity being sold by other firms at the moment, you can be totally confident that those supplied by us are exactly what they are represented to be. Question. Are there any countries on offer but that you do not recommend? Answer. As a last resort, we will offer Paraguay, Chile and Peru. We will not however accept any responsibility for these countries because of constant political and legal changes. There are also potential problems related to customs, immigration and passport renewal procedures. Question. I am a little sceptical. What else should I avoid? Answer. Remain sceptical, Investigate thoroughly before you part with your money. Obtaining a second passport is a major step, and you must choose the firm with which you deal as carefully as you would choose a surgeon. Avoid any firm which asks for advance up front consultancy fees. You will never again see your money or any documents. Your money must go into a protected account with a reliable bank where it takes your signature to release any funds. This is the only way your money is safe. Question. Are my affairs kept confidential? Answer. We are professionals of many years standing. When you become our client your secrets and your privacy are absolutely safe. No one and no other government or any other authority will be notified that you have applied for, much less obtained, a second passport. It is a private affair. Question. Is it possible for me to obtain documents under a different name? Answer. Yes. The question often arises from Middle Eastern clients whose surname might subject them to terrorism. Therefore once we are satisfied that your record is free of criminal convictions, it is possible to apply under a different name, by using a deed-poll legalised name change procedure. We can legally change your name in the country from where your new passport will be issued. To do this we must file the documents necessary for a legal name change in the issuing country, which will then al low us to apply for the passport in the new name. The name change will only be recorded in the issuing country and nowhere else. The additional fee is US$7,500 but we must emphasise that although it is perfectly legal to carry out this task, we must first be satisfied that your intentions are proper. Question. What advantages do Latin American passports have over other passports? Answer. Legally every Latin American has two last names. Firstly, his or her father's last name, followed by his or her mother's last name. For example if your name is John Doe because your father's name was Jacob Doe and your mother's maiden name was Sarah Smith then your full legal name, carried in your Latin American passport is John Doe Smith. Legally you may call yourself John Doe or John Smith or John Doe-Smith, and legally you may travel in any of these names, open bank accounts in any of the se names, hold assets in any of

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these names and maintain credit cards in any of these names. Since most people (i.e. creditors, friends, associates, tax authorities, and even ex-spouses) have no idea what your mother's maiden name was this is a perfect opportunity to protect your assets by using a legal alternative name. And it is 100% legal. Question. Do you plan to offer any other countries in the future? Answer. Yes. We do hope to be able to offer other countries in the future under our expedited naturalization process, including several other EC countries. For the moment however, the countries that we offer represent the best choices available in the world today. If there was something better available, we would have already made arrangements to be able to offer it to our clients. The vast majority of our business comes from referrals by satisfied clients. The reasons for this are simple: service, security and satisfaction. Our years of experience, global research and worldwide contacts keep us instantly informed of new developments. If we do not offer a particular passport, there is almost certainly a very good reason. Question. What is involved in the application process? Answer. You will submit a completed application form (which we will supply to you) along with passport photos, a police clearance, a copy of your present passport and copies of your birth and marriage certificates. We cannot accept an application if we have any doubt as to the intent or background of our client. In the interest of time-saving, if you have ever been indicted or charged with a criminal offence (except for political offences), or if you have ever been imprisoned for one year or longer , please enclose full details with your application. In cases where a police clearance cannot be obtained because of political instability in your country of origin, your attorney’s affidavit, on our affidavit form may be acceptable under some circumstances. When you become our client, your application is received in absolute trust and is covered by the Attorney-Client Fiduciary Privilege of total confidentiality. If for any reason your application is refused, your entire file will be destroyed, and your escrowed funds returned to you in full immediately. Question. How do I start the Process? Answer. Simply notify us through PT Shamrock Ltd. that you would like to begin and tell us which country you desire. We will fax you the application form, a copy of the escrow agreement, together with our final letter of transmittal. You will then simply complete the application form, along with the other required documents and a bankers draft in favour of the escrow account. Things will then get underway immediately. Most of our clients prefer to wire-transfer their funds directly to the Swiss Bank or other legal Corporation Escrow Account, so we also provide wire transfer instructions. After the payment is funded in the Escrow, we will consider your application. We will inform you when your application is accepted and ready for processing. At this point all you need do is sit back and wait for your papers to be delivered. The process is really quite simple and absolutely secure.

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Question. Will your prices increase? Answer. Our prices will go up. All prices are quoted in US dollars. The prices in the February 1, 1998 Fee Schedule list. (These prices are specified in the sections on each country and are subject to change without notice). All prices are however, firm once your application has been accepted, there will be no further increases. Fees include Air Courier delivery and cover all banking fees, escrow fees and taxes, if any. Your payment is fully inclusive - except of course for the direct government investments required by Uruguay, St. Kitts/Nevis, The Bahamas and Ireland. Question. Why do you sell passports and how do I get started? Answer. PT Shamrock Limited does not sell passports. We act solely as an introducer to liable sources known from many years in business through our numerous contacts. Should your application prove successful we receive a referral fee from the legal firm. That legalize aside the large majority of applicants are successful, none have lost money. However some referrals had their escrow deposits returned due to delays in obtaining their documents in a timely fashion. Should you have any questions, do not hesitate to ask. You will be required to provide "proof of funds," in order to proceed. This includes a bankers draft or cashiers cheque payable to the legal firm, or a copy of a bank statement with sufficent funds on credit. Question. How do I get in touch with you? Mail, fax or e-mail your orders to: Sincerely, For and On Behalf of CARLTON PRESS INC. Dr. K.F.B. Weiss President & CEO E-mail: mailto:[email protected] Web site: http://www.offshore-manual.com North America: CARLTON PRESS INC. Empire State Building, Suite 3304, 350 Fifth Avenue, New York, NY 10118-0069, USA Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438 ICQ# 19921677 Europe: CARLTON PRESS LTD.

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St. Georges House, 31A St. Georges Road Leyton, London E10 5RH, GREAT BRITAIN Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168 ICQ# 16070169

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MERCHANT BANKING & BACK TO BACK LOANS. STARTING AN INTERNATIONAL BANK When a notorious bank robber was asked why he robbed banks, he reportedly replied, Because that is where the money is. International investors have discovered for themselves that owning a bank can be even more lucrative than a career in bank robbery. Because running one's own bank dramatically demonstrates the benefits of offshore financial operations, it is the first case study of what can be accomplished once the investor breads free of domestic confines. Banking is not as exotic as it might seem at first glance. A bank is merely a company organised much like other companies. It is built upon trust and it flourishes, as all companies do, by keeping promises. The following material is of equal importance to the user as well as the organiser of any international business organisation. HISTORY OF BANKING Banks were originally warehouses that stored the gold and other valuable property of customers. These warehouses often were operated by goldsmiths who had to safeguard their own stock anyway and issued receipts for the stored valuables. If a buyer wanted to make a payment to a seller, the buyer might sign his warehouse receipt over to the seller or write an order (draft) to the goldsmith telling him to pay some of the buyer's gold to the seller. This was easier and safer than taking his gold out of the warehouse and personally delivering it to the seller. A short time after gold warehousing began, warehouse owners figured out that, gold being gold, they could lend out some of the gold and earn interest, keeping enough on hand to take care of day-to-day withdrawals. Thus fractional reserve banking was born. Whether or not fractional reserve banking was begun with the knowledge of the depositors, it soon became the way most banks did business. Banks came to pay interest on deposits instead of charging storage fees. Today, depositors lend money to a bank and that bank in turn lends most of it to borrowers, acting as a loan broker. Banks are more than that, though. In a real sense, banks make money. Their debts, their promises to pay, are money. A bank account balance, which is nothing more than a debt owed by a bank to a depositor, is treated as money by the depositor himself, by those people he makes payments to, and by the government that counts those bank balances in the monetary statistics. Money has become paper, and banks are able to create money in the course of their day-to-day operations. For example, let's say a deposit of US $ 1,000 is placed in Bank A. Assuming that banks are bound by a 20 percent reserve requirement, (which is higher that that percent normally required by regulators), then Bank A can loan out 80 percent of that money. Bank A thus loans US$800 to Mr. Butcher, who deposits the money in Bank B. Bank B lends US $ 640 of Mr. Butcher's

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money to Mr. Baker, who deposits it in Bank C. Bank C lends US$512 of Mr. Baker's money to Ms. Stickmaker, who deposits it in Bank D, and so on. Notice what has happened. The bank accounts of all of the parties still reflect the full balances that they have deposited, even though most of the money was lent out. As the original US$1,000 works its way through the system, it has multiplied to almost US$5,000. All of this new money was created by the banks involved. Because banks have this unique power to create money, the right to start a bank frequently has been sought by financiers to benefit from their operations and jealously guarded by the entrenched financial establishment. It is more difficult to start a bank than to start perhaps any other business. Brains and money are not enough; political muscle is necessary to overcome the opposition of the established banks who enjoy their monopoly position and fight to preserve it. The bank regulators have established a close relationship with existing banks. Each side benefits from the status quo and no one wants to wee new competition shake things up. The banks will take money and loan it out but they resist letting their clients get into the game. The following pages explain how to start an offshore bank and gain the benefits of banking. GETTING STARTED Although it is difficult to start a bank in most of the large bureaucratic countries, there are many nations whose laws are not as strict. In fact, there are jurisdictions where people have been able to start banks just by incorporating a company with the word bank in its name. This has allowed a number of casual to damage the reputation of other banks. When this happens, the local government often restricts the issuance of new licenses and tries to clear the deadwood out from among the old licensed firms. Other jurisdictions, such as the Cayman Islands, have had reasonable bank regulations for some time and so have prospered as financial centres. When just starting out in banking at a low level of capitalisation, the best strategy is to incorporate the bank in as good a banking environment as one can afford, then to build up enough of a reputation for keeping commitments to start doing business in a better location. Most of today's large banks started with one person or a small group of people who offered nothing but their promises and reputations. Bank formation is a very political activity everywhere, so it's impossible to know what jurisdiction will be best by the time this introduction is printed. Once a site is selected, a local professional will help obtain the bank license. The local assistance of a registered agent will be needed, in any case, and a well - known local professional can open many doors during the organisation process. A travelling to selected locale to find one. The formation process itself can teach a great deal about how things are accomplished in the chosen haven and in the offshore world in general. A short aside about preparation is in order here. It is important to learn as much as possible about investing before moving into the international investment community. Someone uncomfortable doing business with his local bank or broker will not enjoy overseas dealings. It is essential to put in the preparation

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time required by complex ventures, otherwise one may be better off accepting the services of an established international organisation. One shortcut is to buy a bank that is already in existence. This saves a good deal of time and should end up costing about the same as doing it from scratch. There are companies that make their living by establishing banks and then selling them to interested buyers. These companies range from clean to shady and the normal rules apply about knowing what one is buying before paying. It is a good idea to contact the regulatory authorities in the country where the bank is located to check on the company's reputation. In addition, contact an independent local professional in the area to get an opinion on the legitimacy of the proposed sale. ORGANIZING THE BANK Bank organisation will be different for each jurisdiction entered. Many banks are incorporated in two tax havens to facilitate business continuity in case the laws (or the government) change in the primary county. The following decisions are common to most banks and are followed by a typical application process. CAPITALIZATION Capital requirements vary from virtually zero to several hundred thousand US dollars. The lower end applies to countries with no banking laws. The potential banker merely organises a regular corporation and calls it a bank. The more sophisticated tax havens, such as Cayman, The Bahamas, and St. Vincent, have reasonably high capital requirements. This capital need not be cash. Marketable securities, real estate, bonds, and even personal property may be used, provided their value can be proven to the authorities. When carefully structured, most of the money can be borrowed. The borrower must be able to honour the note, however. In most cases, capitalisation must pass through at least one other bank in the tax haven to prove that it does exist. A country that requires the assets to remain there will not remain on anyone's list of desirable tax havens. A country such as Anguilla couldn't begin to absorb that much capital. NAMING THE BANK The selection of a good name is paramount to a bank's success. One's good reputation and financial strength will be associated with the bank's name, which will be difficult to change once business has commenced, both legally and in the minds of clients and correspondents. The bank can create money only if others accept its paper as money. this trust is dependent, in part, on the institution's name. The name should be clean and distinctive. Avoid long, wordy, difficult to spell names. Consider selecting a name in another language to reflect transnational business dealings: Banco de Carib, Banco National de Columbia, or Bankhaus Caveat. Other names create the impression that the bank is substantial, such as: Swiss International Bank Limited, European Pacific Bank Limited, and The First Bank of North America. European Overseas Bank was derived from European American Bank and California Overseas Bank, both multimillion dollar banks.

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Still other bank names are directly associated with the owner. Some examples are: Kennedy International Bank and Trust Company, Alexander Bankcorp Limited, and Banque Peterson. The bank name may also describe the types of activities it conducts, such as EP International Trade Bank, Financial Guarantee Bank, and Caribbean Savings Bank. The international trademarks of other firms must be avoided. Some corporations will sue anyone with names vaguely similar to theirs. Recently, City Bank, a multibillion dollar New-York-based bank, filed suit against 4 million dollar City Bank of San Francisco for having a similar name. While the small bank could win the suit, it might not be able to afford the legal fees. In addition, this type of harassment can affect acceptance of advertising by international periodicals. BANK DIRECTORIES Bankers want to deal with other members of their club. There are thousands of banks in the world, so even major ones may not be familiar to everyone. Two recognised international bank publications looked to for information on the size and legitimacy of banks are the International Bankers Directory, (better known as the Banker's Blue Book), and the World Bank Directory, published by the R.L. Polk Company. Entry in one or both of these listings is highly advisable if a bank wants to do business with organisations that aren't familiar with it or its associates. These publications are serious about maintaining the quality of their listings. At minimum, banks have to submit proof of incorporation. A new bank's incorporator can probably handle the listings. DIRECTORS The bank's directors are elected by the shareholders to direct company policy and appoint the officers of the bank. They are normally the largest shareholders or their close associates. In some cases, outside directors may be elected to advise on areas of expertise not available through the owners or management. Large customers or potential customers may be included both to add knowledge and cement business relationships. A bank directorship is a prestigious and profitable position. The directors know that there is at least one bank where they can get preferred treatment and they also receive a small annual fee. The stockholders of a bank sometimes prefer to keep their investment confidential. For various reasons, they may not wish to appear to be associated with either the ownership or management of the operation. In most tax havens, the use of nominee directors will ensure this. These are appointed agents into whose names the bank stock is transferred by agreement. They are the owners of record but, per agreement, vote according to the instructions of the true owners. A nominee will generally charge about US $ 500 per year for this service. RESIDENT REPRESENTATIVE OR OFFICE All tax havens have local accountants, attorneys, bankers, or quasi governmental officers who act as local agents for banks or other businesses.

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These agents forward mail, answer inquiries, represent the bank to regulatory agencies, and perform any other necessary services. They normally charge a minimum fee for a basic package, plus additional time and expenses for extra services. The bank is expected to pay the direct cost of telephones, telexes, and postage. Annual costs for the agent's services vary greatly according to transaction and communication volumes. The representative is bound by the local bank secrecy and responsibility laws. The establishment of an office offers many advantages over using a representative. For one, the staff is fully dedicated to the bank's needs. A trusted associate who already knows how the organisation operates can handle transactions on site. This reduces crucial communication time lags and lowers the legal exposure of conducting bank business in another jurisdiction. The drawback is expense. The bank has to rent an office and hire staff. Office equipment, supplies, and furniture are surprisingly expensive in less developed tax havens. An expatriate manager has to be paid wages that are about equal to the home salary. As most tax havens do not encourage outsiders to enter their job market, expect difficulty in getting the necessary entry and work permits for a manager. Lastly, remember that business in less developed countries runs more slowly and more inefficiently than in the industrialised world. Whether dealing through an agent or one's own office, patience an tolerance are necessary to successfully manage the bank. INCORPORATION It is possible for the owner to travel to a particular tax haven and follow through on the major items of bank incorporation. It's much the same as trying to act as one's own general contractor. Any money saved will probably not compensate for the time and aggravation expended. It is advisable to retain a well - connected professional experienced in dealing with the particular government and bank licensing. Bureaucracies like to deal with friends. Most tax havens have local attorneys or advisors who specialise in chartering offshore banks and corporations. The incorporator advises the owner on the information required and the form of the documentation necessary, submits the application to the proper authorities, and follows is through the maze of local bureaucracy. Nominee directors are hired by him if necessary. The incorporator helps the owner decide whether to use a registered representative or to open an office. He also helps implement decisions. The incorporator can assist in defining the structure of the organisation, supply information about local conditions, provide marketing ideas, and contribute many more useful services to aid the profitable birth of the bank. HOW TO PROFIT As a profession, bankers enjoy high status and the trust of the business community, with a reputation for being conservative. However, the reader who has had many dealings with banks has probably been frustrated by their lack of imagination or, possibly, by incompetence. The fact that bankers consistently make money is an indication of how easy it is to be a banker. The innovative

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services that major banks cannot or will not offer. The remainder of this introduction covers various services that have been successfully offered by major international banks as will as tax haven banks. DEPOSITS The key to conventional banking profitability is for the bank to borrow money at a low rate and lend it out at a higher rate. The least expensive source of money is deposits: non-interest demand, interest - paying savings, and time deposits. The broader the deposit base, the more stable the bank's money costs will be. The longer the terms of the deposits, the lower liquid reserves need be. One St. Vincent bank was opened by a large US manufacturing company just to take advantage of the US - St. Vincent float. The firm estimates that opening a bank just to pay suppliers added US $ 500,000 to its profits. However, some debtors are hesitant to accept foreign checks and will not authorise credit until they clear. Since governments almost always accept these checks, they are an excellent means of paying tax liabilities. Another selling tool is the numbered checking account where no signature is required, only the account number, although the secrecy regulations of most tax havens do not require banks to even respond to inquiries about depositors. Since each account has a number for accounting purposes anyway, this service requires no extra effort. This offers clients the ultimate in confidentiality but entails a heavy responsibility on the bank's part of protecting the identity of the account holder. The account holder can have all checks and statements retained at the bank or sent wherever requested. A post office box is recommended for all confidential correspondence. Savings accounts are an offshore bank's most attractive deposit service. A tax haven bank is not required to report information on individual accounts to any governmental agency. If the bank's client chooses to evade taxes in his home country and deposit certain assets in his tax haven bank, he can considerably increase the investment yield on his savings account. This is the simplest use of a tax haven bank. It is a use over which the bank has no control. This tax advantage means that the interest rate paid does not have to be much higher than major bank rates. For example, the authors know of offshore banks that paid 9 to 13 percent on US dollars while the Eurodollar rate was 10 to 11 percent. Interest rates vary with the amount and time period of the deposit. As the offshore bank doesn't have a household name and isn't located in a major money centre, it does have to pay slightly higher interest than major banks and provide better, more innovative service. The offshore bank needs impressive documentation, professional advertising, and an articulate staff. It must present a substantial appearance so that people will trust it with their money. Deposits are developed through business associates, family, friends and the public. When advertising, the bank must consider the banking law of each country in which it advertises. International publications with a multinational and sophisticated readership, such as the Economist and the Herald Tribune, are good vehicles for attracting clients. These ads should not be too pointed, so as

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not to attract regulatory attention. Each inquiry is promptly followed up with brochure, rate sheets, and a signature card. A mailing list is established with these names, for sending updated brochures and announcements of new services every few months. Potential customers are reassured by this proof of continuity. Actual deposits can arrive months or even years after the first contract. The bank can accept deposits in any major currency. In these inflationary times, many people seek to protect their assets by investing their savings in a hard currency, such as Swiss francs or German marks. These countries have established a reputation for upholding the value of their currency and for avoiding depreciation by inflation. The bank converts the deposits into the bank's prime currency, figures interest on the original amount, and converts back when the account is drawn upon. The cost of this transaction increases if the currency deposited becomes more valuable than the prime currency, so the bank may cover a larger deposit with a currency futures contract. However, this complicates bookkeeping as a new account must be set up to record currency valuation losses or profits. A classic banking strategy for increasing deposits is to require compensating balances for loans. A 12 percent loan with a 25 percent compensating balances requirement produces an effective interest rate of 16 percent. A 12 percent loan of US$ 100,000 for example, accrues US$ 12,000 annual interest. If the borrower only gets the use of US$ 75,000, the actual rate is US$ 12,000/75,000 or 16 percent. (Loan packages requiring a 100 percent compensating balance are discussed under lending.) Imaginative packaging of services helps increase deposits. Trust administration requires that some money be kept in current accounts to pay for current obligations and new investments. When providing management services for other banks, insurance companies, or trading companies, the offshore bank enjoys, in turn, the deposits and clearing services of these organisations, as well as its management fees. Real estate administration and margin accounts also provide cash flow through the bank. LENDING After the offshore bank has successfully attracted deposits, something must be done with them. Lending money at a higher rate than interest paid on it insures a profit, but only if the loan is repaid. Successful lending depends on good business sense, the ability to read people and balance sheets, knowledge of collateral, and negotiating ability. Spread the risk wide enough that one or two bad loans won't cripple the bank. Most tax havens do not have usury laws, so the offshore bank can charge higher interest rates than are allowed in most countries. The bank can accept a percentage of ownership in a customer's organisation as part of the fee for a loan. When doing so, it tries to negotiate as high a compensating balance as it can to take advantage of a bank's right of offset. This means that if the bank is owed a past - due debt by the organisation, the bank can use any of the

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borrowing assets it controls to offset the debt. Therefore, any compensating balance is money that will not be lost, serving to lower risks and increase profits. Some loans can be structured with 100 percent compensating balances. The loan is immediately transferred to a savings account in the bank. These back-to-back loans have a spread of 1 to 3 percent, the difference between the loan rate and the savings account rate. There are several reasons these loans can be useful. A corporation may need to show a higher capitalisation on its books than it actually has at a particular point in time to enable it to get a loan form another lender or better terms from its suppliers. A principal in the company can borrow a sum from an offshore bank and use it to purchase a time deposit from the same bank. He then uses this certified deposit to purchase more stock in the company. As a result, the company's balance sheet shows increased paid - in capital and increased current assets. The principal's personal balance sheet reflects a higher level of debt and a higher asset value of investment in the company. The interest paid on the personal loan can be deducted, while the company pays taxes on interest received. Since the personal tax rate is normally higher than the corporate rate, the tax reduction can cover the bank's free. An entity producing foreign income can do even better. It can set up a foreign trading company, for instance, to be managed by the bank. The trading company buys a product at production cost and sells it at a normal profit margin. The profit is then invested in a time deposit account. The amount of the deposit can be lent back to the parent company at a 1 to 3 percent spread over the Certificate of Deposit (CD) rate. Since the trading company is based in a tax haven, it pays no taxes on either the profit or the interest received. The parent company gets use of the profit and receives a tax deduction on the interest paid by the bank. Here's an example: Parent company A manufactures a product for US$ 800,000, which it sells for US$ 1 million. The US$ 200,000 profit is invested in an 8 percent CD and is lent to A at 10 percent. A's tax rate is 48 percent and the offshore tax is zero. The balance sheet shows ORIGINAL CASH FLOW $ 1,000,000 sales (800,000) cost 200,000 profit pre-tax (96,000) tax @ 48% $ 104,000 profit after tax With an offshore company and back-to-back loan, the figures read as follows: Parent A: $ 800,000 trading company sales (800,000) cost of goods 0 gross profit (20,000) interest paid @ 10% $ (10,400) foreign sales loss Trading Company: $ 1,000,000 sales (800,000) cost 200,000 profit (16,000) interest @ 8% $ 216,000 T. profit Corporate net: $ (10,400) Parent A's loss 216,000 offset gain$ 205,600 net corporate profit (104,000) profit after tax w/o offshore company $ 101,600 increase in net So, in this example, the after - tax profit on the foreign trade portion of the business increased by 98.9 percent. Other loans made by the bank are covered by various levels of collateral. Business loans can be backed by stock, inventory, and compensating balances. Real estate or constructions loans, of course, are collateralised by the property.

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Personal loans also can be made. An interesting variation is accomplished with a captive insurance company. It works in this way: A US corporation sets up a self - insurance trust to cover employee hospitalisation and worker's compensation claims. This trust reinsures almost all this risk with a foreign insurance company that is owned by a principal or the corporation. The surplus is lent back to the corporation as we have seen previously. This allows companies to retain profits they would otherwise be giving to insurance companies as well as accumulate cash reserves tax - free and obtain current US tax deductions for most of the costs. Lending escrow money is slightly more risky. The bank lends someone a sum that is kept in escrow at the bank or a co-operating escrow company. The agreement must be written such that the escrow cannot be closed and the money transferred unless additional financing is obtained. This allows the client to tie up a property until money is found to pay for it. This type of loan should require higher fees than the previously discussed loans. If the escrow should close, the bank must pay the amount agreed upon. Then there is no deposit to offset the bank's up - fronted cash payments if the client cannot pay. Some banks have received 3 to 10 percent loan origination fees and prime rate plus 3 percent as interest on this type of loan. A real estate expert should approve each escrow agreement before the bank makes the loan. An active securities brokerage profitably increases loan production. The brokers sell the equivalent of a US margin account, allowing the bank's customers to borrow a percentage of the value of their stock or commodity purchase. The bank then lends up to 75 percent of the cost of listed stocks with reasonable safety. A St.Vincent bank, for instance, has a margin account in the US through which it does most of its trading. Through the account, the bank purchases securities for its customers with complete secrecy and lets clients borrow up to 75 percent of the value of the securities purchased at an interest rate of about US prime rate plus 2 percent. The bank borrows 50 percent of the purchase from its clearing broker at slightly less than prime rate. Thus the bank makes about a 2-point spread on half the purchase price. If the bank watches each open position carefully, the only risk is in huge moves or trading suspensions. Say there is purchase of 1,000 shares of EP Corporation at US$ 50 a share. The shares are kept for 6 months and sold for US$ 60 per share. Prime rate and brokerage interest rate is 12 percent. The bank charges 14 percent. Purchase: $ 50,000 initial cost 500 comission 50,500 total cost Payment: $ 13,000 cash 37,500 loan @ 14% 50,500 total payment Sale: $ 60,000 gross proceeds (500) commission (2,625) interest @ 14% of $37,500 $ 56,875 net proceeds 37,500 payment of loan $ 19,375 net to buyer on a cash investment of $13,000 equals 98% annual return on investment The bank borrowed $25,000 from its broker at 12% lending: $ 37,500 to the customer @ 14% 2,625 interest received from customer (1,500) interest paid to broker $ 1,125 net interest on $12,500 net loan 18% annualised return plus $1,000 commission.

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The customer's return is speculative. The bank's return on investment is stable. Another option for the bank is to purchase debt instruments, such as acceptances, commercial paper, bonds, and promissory notes. Purchasing a loan is much the same as making one, although the buyer may be able to get some sort of guarantee from the seller to reduce exposure. Buying or selling instruments allows the bank to balance its loan portfolio and spread its risks much the same as reinsurance. Care should be taken to ensure than loans are complementary to the capital structure. If deposits are short-term, the bank should be careful about making many long-term loans. It should not have too much illiquid collateral, for if some large loans are defaulted, it may become difficult to meet short-term obligations. It's a good idea to keep the size of individual loans below 10 percent of the net-asset base. While this seems like a conservative, corner banker's philosophy, it is also sound business judgement for a small company. Not following this practice reduces one's chances of becoming a big company.A bank must make up for small size with innovation, service, and accommodation. That is how it can surpass the corner banker and avoid the need to speculate or make imprudent loans. INVESTMENTS A tax haven bank can make investments for its own portfolio, particularly when the bank's owner wishes to make investments confidentially and to pay no taxes on the gains. It is also possible to arbitrage investments, (that is, by a stock in one's home jurisdiction while simultaneously selling it short offshore). This is done so that the loss is suffered in the country where a tax loss can be used, while the gain is made in a tax-free jurisdiction. This is most easily done with commodity transactions. Although for tax purposes commodity transactions are marked up to market at the end of each year, no such restriction applies to securities transactions. An Anguilla bank has been able to earn significant profits through commodities brokerage by using some of its particular banking advantages. In one transaction, it was able to purchase sugar in Central America by issuing its own letter of credit to the seller. The L.C. specified that delivery and payment were to be made at a future date. The bank then found a buyer at a higher price. Receiving the buyer's letter or credit, the bank was able to immediately negotiate it at a discount at the buyer's paying bank. Just by exchanging paper, the bank made in excess of US $400,000 in profit with little risk. Anything short of the physical delivery of gold bullion is a paper transaction; the fact that only paper changed hands is what made it a banking transaction rather than an ordinary warehouse transaction. FINANCIAL SERVICES The bank's array of financial services is its most important method of gaining customers and deposits, as well as being a source of lucrative fees. An offshore banking license normally allows the licensee to be a broker, agent, insurer, advisor, manager, guarantor, and perhaps, even confessor. Each of

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these services can be contrived to increase deposit and loan business. In most cases, the fees are competitive with those in a particular market. A few telephone calls can provide the prevailing rates. The authors have noticed that mere mention of involvement in an offshore bank sometimes elicits the comment. "Oh, dirty-money laundering." Some people imagine that a tax haven banker spends most of his time in the back room counting $ 100 bills. A banker who does that type of business undoubtedly knew his customers long before his offshore banking career began and would never talk about them. The money would be deposited, sent to companies who would lend it to others to disperse it even more. A convoluted trail is necessary to obscure from various regulatory authorities the sources and uses of these funds. Corporations are easily set up in tax havens such as Panama or Honk Kong, where little or no reporting is required. As long as countries try to impose confiscatory taxes on their citizens and interfere with free trade, money laundering will continue. There is a related service field that is easier to enter: moving money out of blocked-currency countries. Many countries restrict capital outflow. Whatever reasons may cause a country to block currency will also cause its citizens to want to get their money out. Offshore banks can help these people control their own wealth. There are at least as many ways of circumventing currency laws as there are countries making them. One technique works like this. A manufacturing company wishes to convert blocked currency to US dollars, move the US dollars offshore, then sell the offshore US dollars at a premium. The company arranges for a letter of credit to be issued by an offshore bank in its favour. The credit is payable by a Honk Kong company upon shipment of some high-technology equipment. This credit is taken to a friendly banker who lends the US dollars ostensibly to buy necessary supplies from the US. The funds are transferred to the offshore bank and deposited in savings accounts or certificates of deposit. The company then sells the US dollar funds to nationals at a 25 percent premium over the official exchange rate. After selling, it repays the loan in blocked currency at the official rate. The items are never shipped and the letter of credit expires. The offshore bank gets a fee for the letter of credit as well as new deposits. The original company makes 20 percent on the exchange rate. The offshore bank also charge excess prices for goods and services to entities in these countries and then deposit the excess in their accounts. Here again, the bank gets fees and deposits. This is known as "over-invoicing'. Over and under invoicing for currency and tax considerations is, today, Honk Kong's largest service industry. Several offshore banks have been successful in providing letters of accommodation which can aid third parties in obtaining financing for their projects. This is simply a letter from the bank stating that, upon the deposit of a specified amount into a "sinking fund", it will issue a letter of credit guaranteeing the payment of a larger sum in the future. For example, the letter might require a US $485,000 deposit to guarantee a US $1 million payment in 10 years. The US

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$1 million is simply US $485,000 compounded annually at 7,5 percent for 10 years. The initial sinking fund deposit pays for the letter of credit. Note that the bank does not commit to obtaining the financing or even the initial deposit. Its letter promises so little that the letter must look very impressive for it to be able to help anyone. This type of letter has been successfully used to establish credibility, tie up a deal, and interest other lenders or investors in the underlying transaction. The bank can earn further profits from this venture by actually issuing the letter of credit. It not only gets 1 to 2 percent of the future guarantee as a fee but also a 10 year deposit paying a fairly low interest rate. However, if the client could raise the sinking fund payment, he probably wouldn't need the guarantee, so the bank loans the cash to him. It then gets a 2 to 8 percent spread over the savings account rate. The letter or credit must be written so that it cannot be opened (that is, accepted) unless the underlying deal has a reasonable chance of success. Otherwise, the note will not be paid and the bank will still be obligated to pay someone the face value of the letter of credit at the future date. It cannot offset the savings account because acceptance of the letter of credit moves the bank's obligation to a third party, while the obligation to pay the bank remains with the original party. Therefore, banks that issue many letters of commitment for accommodation or credit are careful about lending money to support the letter of credit. These documents are most useful for reassuring private investors. A prime bank will only accept the letter of credit when it wants to make a loan but needs more documentation for its loan file. A stand-by mortgage commitment is another type of guarantee. This assures an interim lender that the client will have long - term financing available to pay off the construction loan. To begin the project before normal long - term financing is obtained, the developer will have to pay the offshore bank several points for a stand-by commitment he hopes he will never use. The interest rate of a stand-by loan is several points above prevailing rates to compensate for the bank's risk in financing an uneconomical project. The bank charter allows the bank to be a broker/agent for real estate, commodities, securities, or insurance. This can be done for its own account or for clients. Security and commodity transactions can be cleared through established brokers at wholesale rates. The bank offers clients confidentiality and the ability to avoid taxes. A bonus for securities trading client is the ability to circumvent some countries' restrictions on insider trading or trading in restricted stocks. A client sometimes purchases the stock of a company he owns or represents because he is privy to information not released to the public. He can profit from this information through an offshore bank without various government or exchange investigators hounding him. Care should be taken that the actual mechanics of the purchase and sale do not violate the laws of any country where they are

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carried out. This can be accomplished in almost every instance with proper structure and transaction planning. Almost all tax haven bank charters bestow the authority to carry on the business of a trust company, to receive assets into custody on behalf of clients, and to manage, administer, and invest them in accordance with their instructions. Competitive fees are low for this service and the responsibility to the client is great. All jurisdictions are seriously upset by any violation of the fiduciary responsibilities of a trust. Trust laws are complicated and competent legal advice is probably necessary for each situation before a bank gets into this business. Providing management services for other offshore organisations should be profitable, particularly if the bank has an office in the tax haven. In the case of offshore insurance and trading companies, we have already seen that the tax advantages, particularly when coupled with the back-to-back loans, makes management easy to sell. The bank earns fees both for setting up these companies and for managing them. This can also be true with bank management. If one want a bank without the added overhead of a walk-in office, anther bank with an office can be the perfect agent. The managing bank knows the business, can answer questions, and act as correspondent. Both banks profit, one from lower overhead and the other from more fee income. The running of an offshore bank quickly builds valuable experience in investment, tax, trust, negotiation, and such areas. The bank can sell this knowledge as a consultant. Since few people in the world have been exposed to the many types of international services available, the bank can almost always show clients where potential savings can be made. A reasonable consulting fee structure helps avoid wasting time with the merely curious. The bank may waive fees if the client does purchase its services. However, since service is an offshore bank's best selling point, it will offer almost anything to keep its clients happy. RELATED BUSINESS The broad business charter granted by most offshore banking authorities enables banks to participate in profitable related financial activities. Each of these can generate fees as well as new deposit and loan business. Insurance, investment banking, mortgage banking, title and escrow, and fiduciary services can all fit into the business plan. This introduction has discussed how managing captive insurance companies can generate income. The next logical step is writing one's own insurance policies. The organisation can reinsure those captive insurance companies already under its management, as well as insuring or reinsuring its own (and its associates') risks. The bank keeps the profits and the investment capital. Until its reserves have grown enough to pay large claim, it should reinsure at a comfortable level. Reinsurance companies keep low profiles but are easy to find in the United States, Europe, and most island tax havens. It is relatively simple to decide what

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areas to insure. Compare premiums for the last five years with claims paid. Check the most profitable insurance companies to see what lines they sell. Consult an actuary before reinsuring for others; they keep track of statistical probabilities of various claims and losses. Actuaries can be found in the telephone directory of any major city. An insurance company can also sell annuities, a lump sum payment that guarantees the client a specified stream of income for life. The cost and payout are derived from actuarial tables and suitable interest rates. Deposits derived from annuities are particularly suitable for long-term investments such as real estate. Accordingly, insurance companies can perform much of the same investor services that banks do. Investment banking, a related business which requires sharp financial, marketing, and negotiation skills, can be quite lucrative. When underwriting a large project, there are fees for packaging and marketing the issue. The underwriter may negotiate a percentage of equity ownership or the project as an added incentive. Deposits are created from the proceeds of the issue and from a normal banking relationship with the client. The prospectus is the primary document an investment bank uses to raise money from the public. It must show a strong professional business plan and detail a complete description of the venture and its risks. The successful underwriting of a large project will bring the bank prestige as well as profit. Mortgage banking is a less exciting but still valuable service. The bank can invest in mortgages for itself or be an agent for others. Payment collections, record maintenance, and remittances to the mortgages are an additional source of fees. Entrepreneurs needing mortgage money can be cross sold such services as financial guarantees, escrow loans, and tax reduction services. A title and escrow company associated with the offshore banking and mortgage banking business provides additional possibilities. The bank lends money to a client who gives it to the escrow company to deposit back in the bank. Thus the money never leaves the bank until the escrow closes. The agreement can be written so that the escrow does not close until the client resells the property or gets paid back without ever losing control of the money. The bank receives escrow fees, loan fees and interest on the loan. The client has tied up a large piece of property with little front money and can make a quick profit on the sale. This chapter has shown some of the ways that money can be made with an international bank. Most of these techniques also apply to international corporations generally. These techniques have worked for others. How far each person can go with them or add to them will be determined by his or her imagination, determination, intelligence, and salesmanship. The authors make no ethical or legal judgements concerning the application of the techniques to any specific case. Moral and legal standards vary widely among the jurisdictions with which a transnational trader will probably do business. Accordingly, these judgements must be left to the reader and legal counsel.

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Tax considerations have been treated rather simplistically due to the differences in local laws. In almost all cases, tax problems can be solved legally. An expert in the area's local law should be consulted. FINANCE In mature economies, growing businesses have problems securing expansion capital. This leads to the slow growth and the negative growth trends that have been the most significant features of the American economy over the past 25 years. Commentators spend a great deal of time wondering why the economy is growing so slowly. The answer is simple: economic growth is slow because there has been precious little capital accumulation. People have not been saving at the rates that they used to because the government siphons off an increasingly larger chunk of people's money. Government polices make it easier and more beneficial to spend and consume rather than to save and invest. Why should anyone bother to save when he will not be able to enjoy the fruits of his savings because of high tax rates? Remember, consumption is not taxed as much as earnings and leisure is not taxed at all. Instead of saving for retirement, people are trapped in an old-age welfare program that keeps money unavailable for investment in productive enterprises. By transferring wealth from the industrious to bureaucrats and slackers, the government has guaranteed that waste will replace industry. The government has placed other barriers in the way of raising capital. The rules and regulations of the SEC make it very expensive and time consuming to raise money. A public offering usually takes more than six months to put together and costs anywhere from US $50,000 on up. The SEC leaves a person with two choices when he wants to market his securities: he can place them privately among friends and relatives without active marketing, (this can be effective if one's relatives are named Rockefeller), or he can register his securities with the SEC do a public offering. Private placements make it difficult to raise substantial sums of money unless one is well connected. The SEC allows a maximum of only 35 friends and family members, so they had better be willing to invest a lot. The seller can also place shares privately with "sophisticated" investors who invest over US $150,000, but they can be hard to find. Public offering require the seller to file numerous pieces of paper and then wait months for the SEC to approve the proposed sale. A huge company with a staff of lawyers may be able to cope with the piles of paperwork required for a public offering but a person just starting his own business may find it unworkably difficult. This is doubly bad for the economy because employment experts project that the vast majority of new jobs will come from small companies. No one knows how many people remain unemployed because companies could not get money to fund their start-up operations. Public offerings are so expensive and so slow that they are useless for taking advantage of immediate opportunities. By the time all the paperwork is done, the chance has slipped away. Public offerings also require that companies

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disclose confidential business information to competitors and whoever else is interested. This information sharing can be particularly damaging to new companies in areas of emerging technologies. Recently, the National Security Agency, (America's eavesdropper to the world), asked that one of its contractors, an electronics company, withdraw its public offering. The NSA feared that the annual filings that the company would have to make would give other nations too much information about the relationship between the agency and the company. These problems with public offerings have caused a number of major companies to go private in recent years. They no longer wish to deal with the burden of Securities regulators. Individuals can use the international financial markets to go private too. This chapter discusses how to legally sell securities in a broader market than that allowed with private placements. The reader will learn how to improve his balance sheet in a remarkably short period of time. He will also find out how to tap into the international investment community, where the wealth of the world feeds from restrictive taxes and regulations seeks new outlets for profit. A large American institution recently found itself in some financial difficulty. It needed to borrow a great deal of money. This institution had nearly exhausted the resources of domestic lenders, so it turned to the international offer lenders anonymity and tax-free interest to entice them to lend their money. Thus the US government recently began to market its obligations to foreign nationals. It repealed, (for some types of payments), the 30 percent withholdingtax law that had required withholding taxes from payments made to residents of countries without tax treaties with the US. It also allowed foreign banks to buy securities and hold them for anonymous beneficial owners, as long as the banks certified that the true owners were not residents of the US. These two new regulations also apply to obligations issued by US banks and corporations. The official explanation for these changes was that they allow large US borrowers to tap the Eurodollar market directly for funds, without having to use the numerous subsidiaries that they have set up in the Caribbean to get around the domestic restrictions. The real motive, however, was that the US government itself wished to enter the market to hold down its cost of borrowing, and to reduce the risk that its massive borrowings would dry up the credit markets and bring on a recession before the 1984 presidential election. In order to play the informational money game, even the government of the United States had to bow to the rules and give foreign lenders the conditions they demand. It is not as generous with its own citizens. They remain subject to the Bank Secrecy Act, which requires banks to reveal all fact about their customers, and to the standby withholding regulations, which require banks to withhold taxes from the interest payments of all account holders who have failed to supply their correct Taxpayer ID or Social Security number. It might be worth one's while to discover how to follow the example of the federal government and large corporations and raise money overseas cheaply and privately. BEARER DEPOSITORY RECEIPTS

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The Securities and Exchange Commission is limited by restrictions that do not necessarily apply to a private company or individual. The basic restriction on the SEC's regulatory authority is geographical; its authority does not extend beyond the borders of the United States. It is therefore possible to construct a series of domestic and foreign transactions that might not be legal in a single country but that are legal in the country in which each transaction takes place. Such a series of transactions requires careful planning and expert legal and financial advice, but can be a fast and private way to raise money. QUANTUM, INC. Here is an example of how such a financing plan might work. Quantum, Inc. is a small but innovative electronic company that needs money in a hurry for substantial speculative research. An eventual breakthrough in the research project would reap tremendous rewards but no breakthrough can be guaranteed. For these reasons, Quantum would have liked to finance this research by going public. However, because of difficulties and delays imposed upon companies going public in the United States, a normal regulated public offering cannot meet Quantum's needs. Time is of the essence in the highly competitive field of electronics. Step 1: Incorporate Honk Kong holding company. The series of transactions necessary to generate capital for Quantum begins with the incorporation of a Honk Kong company named Quantum Holding, Limited. Honk Kong has been chosen for this example but any of 15 other jurisdictions could have been used. Quantum Holding is incorporated and managed by nominees, and its scope of authority is severely limited. The number of its authorised shares and their par value identical to those of Quantum. Step 2: Holding company purchases stock from Quantum. Quantum Holding makes an offer to Quantum to purchase 10,000 shares of Quantum stock, the same number Quantum would have issued if made a public offering. In lieu of cash, Quantum Holding pay for the shares with a one-year promissory note. This transaction is permitted under securities regulations because the buyer is foreign and no offer to sell is made domestically. Step 3: BDR are sold in London. The nest step is for Quantum Holding to issue 10,000 shares of its stock, placing them with a St. Vincent bank that act as depository. In exchange, the depository bank issues 10,000 bearer depository receipts (BDRs). These BDRs are placed, on best-efforts basis, (in some cases this function is not needed or can be performed elsewhere). Arrangements are also made for the broker-dealer to act as market maker for the BDRs as well. Note that these transactions do not take place domestically and do not involve domestic nationals. Therefore, they are beyond the jurisdiction of domestic securities regulations. In the countries in which the transactions occur, they comply fully wit local laws and regulations. Step 4: BDR proceeds are paid to Quantum. When the BDRs have been sold, the funds generated from the sale are remitted to the depository bank in the West Indies. Under prior agreement, the depository bank forwards them directly to Quantum, on behalf of Quantum Holding, to retire the promissory note. As

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before, this series of payments is fully permissible in the jurisdictions through which they pass. The only legal caveat that should be made at this point is that securities regulations do not permit such a sale if there is a pre-existing intent to distribute the bearer depository receipts domestically or to distribute them to domestic nationals abroad, except by unsolicited private placements. Although one cannot be held accountable for who ultimately possesses these bearer documents, it would be improper for the distribution to be made with the express intent of putting such BDRs in the hands of fellow citizens on a general offering basis. MAPLE LEAF REAL ESTATE, INC. Another example of how bearer depository receipts work is provided by Maple Leaf Real Estate, Inc. It is a publicly held company. However, large blocks of its stock are held by management and promoters in lettered or restricted form. These shareholders are active in a wide range of capital intensive business dealings, many of which require a high degree of liquidity from their participants. For this reason, the management of Maple Leaf Real Estate would like to accommodate its needs for liquidity through the legal transfer of the lettered shares. Step 1: Shares are deposited and BDRs issued. To provide the needed liquidity, an agreement is entered into with an offshore bank to act as a depository for shares of Maple Leaf stock. Under this agreement, the depository bank issues bearer depository receipts in exchange for shares of Maple Leaf stock deposited by both Maple Leaf and other holders. These BDRs can be held by the owners of the deposited stock or by the depository bank itself under a placement agreement. Step 2: BDRs are sold through London market maker. As in the case of Quantum, arrangements are made to have a London broker-dealer act as a market maker for the BDRs. Once this is done, the market maker may be contacted directly for the buying or selling of BDRs. If preferable, the depository bank places the BDRs with the market maker for sale on behalf or the depositor of the original shares of Maple Leaf stock. Step 3: BDR sale proceeds are paid to stock owners. The funds from such sales are remitted to the depositors of the shares, thus providing them with the liquidity they seek. In addition to the greater flexibility that holders of restricted shares of Maple Leaf Real Estate now have, Maple Leaf itself raises capital from new offerings, just as Quantum did. Note that in each case there is no restriction on domestic buyers purchasing the BDRs on their own initiative. However, no recommendation may be made to a local client to buy the BDrs through the London market maker. On the other hand, a duty to disclose the existence of a London market for the related BDRs arises when such information is material to a domestic transaction. GILT COMPLEX MINING Gilt Complex Mining is a newly claimed, one-man gold mining operation in Colorado. Although assay reports have been very good, (0.47 to 0.63 ounces per ton), the extent of the ore body has not yet been fully determined. Another

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uncertainty arises from the fact that the ore is made up of complex gold-telluride compounds that may be very expensive to refine. In spite of these problems, the owner of Gilt Complex believes that the company's claim can be brought into profitable production if enough money is raised. A number of social and business associates have expressed an interest in investing but the funds they could contribute fall short of what is needed to bring the mines into operation. Because of the highly variable gold market, the delay inherent in a fullblown SEC registration is considered unacceptable. As the company is in the initial stages of development of its mining properties, its funds are already committed to assessment of the claims, payments on equipment, and salaries. There are no extra moneys available to pay for an offering of BDRs through London as described in previous examples. An analysis of Gilt Complex Mining's situation suggests that a two-stage procedure should be used to raise funds. Step 1: Raise seed money. The first step is to raise as much money as possible through domestic private placements. The owner's friends and acquaintances, (numbering no more than the SEC-approved limit of 35), and unlimited numbers of sophisticated investors, (those investing more than US $ 150,000 in cash), can be approached and persuaded to invest. Step 2: Seed money funds BDR London offering. This private-placement seed money is then used to fund a Honk Kong holding company and BDR sales in London as in the example of Quantum, Inc. These two steps complement one another. The first phase provides money for the second and the second phase gives the domestic private-placement investors an easily ascertainable fair market value for their shares. All that they need do, if they wish to determine what their shares are worth, is to find out what the BDRs are trading for in London. BUSINESS BALANCE SHEET LOANS Wouldn't it be wonderful it one's business could create net worth just like a bank? With an accommodating financial institution, it is possible. The case history that follows shows how small businesses can use these methods to get the financial help they need. William Ballast is the owner of a wholesale distribution company. When one of his suppliers announces a gigantic inventory sale, Ballast is eager to take advantage of it. He knows that if he can increase his inventory with goods at the lower price, his average unit cost will be lower and profits would increase accordingly. Ballast calls a financial consultant to discuss his problem. Ballast is advised to submit a current balance sheet reflecting higher cash assets to obtain a more favourable line or credit. Although Ballast favours such a move, he also wants to avoid a long-term debt commitment. He fears that the interest payments from such a debt would wipe out any gains made by buying the additional inventory on sale. Step 1: Owner borrows moneys from lender. The consultant suggests that a personal loan be made to Ballast. The funds from this loan are to be placed in a savings account in the name of Ballast's company. After the funds are deposited,

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the company would have a new balance sheet prepared according to accepted accounting practices, which would reflect its increased liquidity. With the stronger financial picture presented, the supplier could be more favourably disposed toward extending the line of credit. Ballast is convinced that this is a sound approach and enters into an agreement to implement the plan whereby the funds would be provided by a lender supplied by his consultant. Step 2: Deposit loan proceeds in company account. When the funds are lent to Ballast, he simply endorses the cashier's check to the bank on which it was drawn. At the same time, a passbook for a savings account, containing an identical balance and bearing the name of Ballast's company, is issued and turned over to Ballast. Step 3: Increase company assets on balance sheet. Based on the updated balance sheet, the supplier increases the line of credit for Ballast's company. After the new credit line is established, the funds, no longer needed, are returned to the lender. The cost of the program was kept to a minimum and the desired profits realised. ESCROW LOAN Robert Jensen knows of a valuable parcel of land that he believes could be profitably developed. If he could get an option on the property, he could organise a highly successful joint venture to develop the land. Jensen is afraid that if he doesn't act quickly, someone else will buy the land from under him. He needs time to secure funding for the option and line up partners for his joint venture. Step 1: Secure option on land. Jensen convinces the landowner to give him 90 days to raise the total purchase price of US $2million. In order to hold the land for 90 days, Jensen needs to deposit 10 percent in an escrow account as a demonstration of his financial strength. Step 2: Borrow money to open escrow account. Working with a consultant, Jensen arranges for a bank to loan him US$ 200,000 and hold it in an escrow company account on his behalf. After the account is opened, the company provides Jensen with documents showing that the moneys are on deposit. The escrow company then writes a series of letters indicating the steps being taken to assure the successful completion of the transaction. The satisfies the seller and gives Jensen time to put his investment group together. Step 3: From joint venture. Potential investors approached by Jensen are excited by the project and are especially impressed by the fact that Jensen has already secured an option on the land. They agree to fund the project with Jensen as equity partner and project manager. Jensen contributes his option. Step 4: Substitute new escrow account. The joint venture then opens a new escrow account for US$ 200,000 and substitutes it for the one originally opened by Jensen. The old account is closed. The funds in the original escrow, having served their purpose, are returned to the lender. As a result of the above transaction, Jensen now holds substantial equity in a commercial real estate development worth several million dollars. His only costs were a few points for the loan, the escrow account, and the supporting documents that went to the various interested parties.

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If the reader can learn to think about money the way a banker thinks of it as a bookkeeping entry - then he can get his balance sheet to work for him. He can also use this knowledge to provide sophisticated services to others through his own financial service business. Balance sheet loans and bearer depository receipts are natural products to sell through an international bank or financial brokerage business. For serious parties only, e-mail [email protected]. We charge a US$35 finders fee (to avoid the merely curious,) we will pass along your questions to the principal party involved. Credit Cards accepted. Alternatively mail your questions along with US$35 to: Mail, fax or e-mail your orders to: E-mail: mailto:[email protected] Web site: http://www.offshore-manual.com North America: CARLTON PRESS INC. Empire State Building, Suite 3304, 350 Fifth Avenue, New York, NY 10118-0069, USA Tel: +1 (212) 208-0998, Fax: +1 (212) 214-0438 ICQ# 19921677 Europe: CARLTON PRESS LTD. St. Georges House, 31A St. Georges Road Leyton, London E10 5RH, GREAT BRITAIN Tel: +44 (0)171 681-3167, Fax: +44 (0)171 681-3168 ICQ# 16070169

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