Category: Privacy

Privacy

Privacy Today – by Michael Malloy CLU TEP RFC

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HOW?

A Private Placement Life Insurance (PPLI) asset structure could have easily prevented life changing invasions of privacy

(Watch videos at the end)

Introduction

Privacy has become a hot topic in recent years, with numerous controversies surrounding the collection and use of personal data by tech companies and governments. As technology continues to advance, it is important for individuals to understand their rights to privacy and the steps they can take to protect it. This article will summarize key points from a blog post on the topic of privacy and outline the most important takeaways.

The Importance of Privacy

The blog post begins by emphasizing the importance of privacy in today’s world. With the widespread use of technology, personal information is being collected and shared at an unprecedented rate, and it is essential for individuals to understand the implications of this. Privacy allows individuals to control who has access to their personal information, what that information is used for, and how it is shared. This control is essential for ensuring that personal data is not misused or abused.

Key Privacy Concerns

The blog post goes on to discuss some of the key privacy concerns that individuals should be aware of. These include:

  • Data collection: Tech companies and other organizations collect vast amounts of data on individuals, often without their knowledge or consent. This data can include everything from online searches and location data to purchasing history and social media activity.
  • Data sharing: Once personal data has been collected, it can be shared with other organizations, either for commercial purposes or for government surveillance. This can result in sensitive personal information being disclosed without the individual’s knowledge or consent.
  • Data breaches: Data breaches are a major concern in today’s world, as they can result in sensitive personal information being leaked to unauthorized individuals. This can include everything from financial information and Social Security numbers to personal health records and emails.
  • Government surveillance: Governments around the world are increasing their use of technology to monitor citizens, and this can have serious implications for privacy. For example, many governments collect data on internet activity and use this information for surveillance purposes.

Protecting Privacy

The blog post concludes by offering practical tips for protecting privacy in the digital age. These include:

  • Being aware of privacy policies: When using technology, it is important to be aware of the privacy policies of the companies and organizations involved. This includes understanding what personal data is being collected and how it is being used.
  • Using encryption: Encryption is a powerful tool for protecting personal data, as it ensures that information is only accessible to those with the necessary key. This can be especially important when using public Wi-Fi networks, as these are often unsecured and vulnerable to eavesdropping.
  • Being careful with personal information: Individuals should be careful about the personal information they share online, as this information can be used for malicious purposes. This includes being mindful of the information shared on social media, as well as avoiding responding to phishing scams or giving out personal information in response to unsolicited emails.

Conclusion

In conclusion, privacy is a crucial issue in today’s world, and it is essential for individuals to understand the threats to their personal information and the steps they can take to protect it. By being aware of the key privacy concerns and taking practical steps to protect their data, individuals can ensure that their personal information remains safe and secure. The blog post provides a wealth of information on the topic of privacy and is an excellent resource for anyone looking to learn more about this important issue.

Watch one of our most descriptive EWP Stories about #Privacy to understand more

 

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

 

 

 

Fundamentals of PPLI and EWP - Episode 3

Did You Know This About PPLI & EWP? – Episode 3 – EWP’s Foundation Is The Six Principles

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Fundamentals of Private Placement Life Insurance
&
Expanded Worldwide Planning

 

Did You Know This About PPLI & EWP?

EWP’s Foundation Is The Six Principles

Video 3

It makes sense to partner with a concept that is recognized as a cornerstone of financial stability—the six principles of Expanded Worldwide Planning, or EWP for short. The six principles are recognized as such by Wikipedia in its article on International Tax Planning. You too can employ these principles to grow and strengthen your own financial assets. How can you accomplish this? By using an asset structure that has at its very roots the six principles of EWP.

Here is the text from Wikipedia’s article on International Tax Planning which features the Six Principles of EWP

International Tax Planning

International tax planning, also known as international tax structures or expanded worldwide planning (EWP), is an element of international taxation created to implement directives from several tax authorities following the 2008 worldwide recession.

History

In 2010, the United States introduced the Foreign Account Tax Compliance Act (FATCA). Later the Organization for Economic Co-operation and Development (OECD) expanded these directives and proposed a new international system for the automatic exchange of information – known as the Common Reporting Standard (CRS). The organization also attempted to limit companies’ ability to shift profits to low-tax locations, a practice known as base erosion and profit shifting (BEPS). The goal of this worldwide exchange of tax information being tax transparency, it requires the exchange of a significant volume of information. As a result, there are concerns about privacy and data breach in interested industries. EWP has been an important element on the agenda of the OECD following the succession of leaked revelations about various jurisdictions, including the Luxembourg Leaks, Panama papers and Paradise papers. In December 2017, European Union finance ministers blacklisted 17 countries for refusing to cooperate in its investigation on tax havens

Principles

EWP allows a tax paying entity to simplify its existing structures and minimize reporting obligations under the Foreign Account Tax Compliance Act (FATCA) and CRS. At the heart of EWP is a properly constructed Private placement life insurance (PPLI) policy that allows taxpayers to use the regulatory framework of life insurance to structure assets along the client’s planning needs. These international assets can also comply with tax authorities worldwide. EWP also brings asset protection and privacy benefits that are set forward in the six principles of EWP below. The other elements in the EWP structure may include the client’s citizenship, country of origin, actual residence, insurance regulations of all concerned jurisdictions, tax report requirements, and client’s objectives.

Planning with trust and foundations frequently offer only limited tax planning opportunities whereas EWP provides a tax shield. Adding a PPLI policy held by the correct entity in the proper jurisdiction creates a notable planning opportunity.

Features

Privacy

EWP gives privacy and compliance with tax laws. It also enhances protection from data breach and strengthens family security. EWP allows for a tax compliant system that still respects basic rights of privacy. EWP addresses the concerns of law firms and international planners about some aspects of CRS related to their clients’ privacy. EWP assists with the privacy and welfare of families by protecting their financial records and keeping them in compliance with tax regulations.

Asset protection

EWP protects assets with segregated account legislation by using the benefits of life insurance. This structure uses asset protection laws in the jurisdictions of residence to shield these assets from creditors. A trust with its own asset protection provisions can still receive additional protection with the policy.

Succession planning

EWP includes transfers of assets without forced heirship rules directly to beneficiaries using a controlled and orderly plan. This element of EWP provides a wealth holder a method to enact an estate plan according to his/her wishes without complying with forced heirship rules in the home country. This plan must be coordinated with all the aspects of a properly structured PPLI policy together with other elements of a wealth owner’s financial and legal planning.

Tax shield

EWP adds tax deferral, income, estate tax benefits and dynasty tax planning opportunities. Assets held in a life insurance contract are considered tax-deferred in most jurisdictions throughout the world. Likewise, PPLI policies that are properly constructed shield the assets from all taxes. In most cases, upon the death of the insured, benefits are paid as a tax free death benefit.

Compliance simplifier

EWP adds ease of reporting to tax authorities and administration of assets, commercial substance to structures. In addition, the insurance company is considered the beneficial owner of the assets. This approach greatly simplifies reporting obligations to tax authorities because assets in the policy are held in segregated accounts and can be spread over multiple jurisdictions worldwide.

Trust substitute

EWP creates a viable structure under specific insurance regulations for civil law jurisdictions. It also creates a new role for commercial trust companies. In most civil law jurisdictions, trusts are poorly acknowledged and trust law is not well developed. As a result, companies with foreign trusts in these civil law jurisdictions face obstacles.

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Privacy Conclusions

The Expanded Worldwide Planning Stories Video Series – Part 1 – Episode 4

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International Tax Planning

#EWP : Insures: PRIVACY –  Video 4

Intro
In this video we conclude our story on Privacy. Carlos Gutierrez attempts to heal the emotional devastation brought about by the kidnapping of his daughter and a falsified lawsuit, both engineered by a ruthless, Mexican drug cartel.

Carlos is brought to the realization that he needs an asset structure that will shield his business and family from these catastrophic events. That asset structure is easily obtained by employing the six principles of Expanded Worldwide Planning, or EWP for short. This is what our firm, EWP Financial, provides to all families who use our services.

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

The Expanded Worldwide Planning Stories Video Series – Part 1 – Episode 3

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International Tax Planning

#EWP : Insures: PRIVACY –  Part 3

Introduction

Welcome. Privacy is a key element. Wealthy families are looking for ways to keep their affairs private, and still be compliant with tax authorities worldwide.

Today what was once private and personal becomes public and accessible to all. Computers and other electronic devices are part of our lives, whatever our opinion of them. These devices can add convenience and efficiency to our lives, but at a cost.

At EWP Financial we embrace the Privacy Principle. The Privacy Principle is unique as it legally shields wealthy families from unwanted intrusions into their financial affairs. At the same time, the Privacy Principle is fully transparent and gives wealthy families a bespoke, compliant asset structure for all their holdings, wherever they might be throughout the world.

We continue our story on the plight of Carlos Gutierrez. The scene is Mexico City where we discover how the same drug cartel that kidnapped Carlos’s daughter, Lucinda, is planning to publicly destroy Carlos by using bribery to bring a falsified lawsuit against Carlos.

 

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

EWP Stories-1-Privacy

EWP Stories-1

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Expanded Worldwide Planning
International Tax Planning

UPDATED

EWP Stories
Part 1: Privacy

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Privacy is a key element. Wealthy families are looking for ways to keep their affairs private, and still be compliant with tax authorities worldwide.

What was once private and personal becomes public and accessible to all. Computers and other electronic devices are part of our lives, whatever our opinion of them. These devices can add convenience and efficiency to our lives, but at a cost.

At EWP Financial we embrace the Privacy Principle. The Privacy Principle is unique as it simply and legally shields wealthy families from unwished intrusions into their financial affairs. At the same time, the Privacy Principle is fully transparent and gives wealthy families a bespoke, compliant asset structure for all their holdings, wherever they might be throughout the world.

Watch our #Privacy videos


Electronic Privacy?

Andrew Grove, co-founder and former CEO of Intel Corporation, expressed the following thought:

“Privacy is one of the biggest problems in this new electronic age. At the heart of the Internet culture is a force that wants to find out everything about you. And once it has found out everything about you and two hundred million others, that’s a very valuable asset, and people will be tempted to trade and do commerce with that asset. This wasn’t the information that people were thinking of when they called this the information age.”

The ancient Greeks called man, “a political animal.” In today’s world almost all so-called facts are politicized. It is no different with privacy. Certain groups consider the journalistic authors of the Panama Papers and the Paradise Papers heros of a free press. Others say that these same journalists were thieves, who unlawfully stole private financial data. Whatever your opinion, these events did happen, and the targets were most decidedly wealthy families throughout the world.

How does the privacy afforded by a properly structured Private Placement Life Insurance (PPLI) policy protect the families whose financial information was published for the entire world to see?

The Privacy Principle of EWP accomplishes its objective in several key ways:

  • Upon transfer into the PPLI policy, the insurance company becomes the beneficial owner of all the assets in the policy;
  • If there is reporting to a tax authority for the asset structure, only one number is reported. This is the total cash value of all the assets in the PPLI policy. The individual assets are not reported;
  • The bank account that is usually opened in connection with a PPLI policy is opened in the name of the insurance company, not the policyowner. The policyowner has full access to the funds in the bank account in accordance with the assets inside the policy.
Part 1

The hot, dry night air seemed to smother the sleek, six passenger Cessna Citation XLS jet. The plane had just touched down on the tarmac of this isolated runway. Next to the gleaming white jet was a gigantic windowless warehouse. The eerie, yellow lights that protruded from the warehouse turned the body of the private jet the color of an overripe mango fruit.

As he emerged from the plane, Carlos Gutierrez felt the skin on his face tighten from the baking heat of the desert. He walked briskly to the newly completed warehouse and his cell phone rang.

He usually did not answer calls from unrecognized numbers, but he was expecting a call from his daughter, Lucinda.

“Hello,” he said. The voice on the other end was strangely familiar.

“Juan, is that you?”

“Yes.” said the now unmistakable voice of his best university friend. The voice was indeed Juan’s, but it had none of the joy and conviviality that he associated with it from university days.

“Carlos, we have your daughter, Lucinda.”

“What? I don’t understand. What do you mean?”

“Carlos, I now do the finances for one of the cartels that Lucinda wrote about in her article. We want ten million dollars for her release. We will not compromise. We want the money now. We will give you 48 hours to deliver it, and, if we don’t receive it, we will be forced to do other things to your beautiful daughter. I will call you in three hours.”

The line went dead.

The Privacy Paradox

In connection to privacy, there is a concept called the privacy paradox that was first discussed by Bedrick, Lerner, and Whitehead, The privacy paradox: Introduction, News Media and the Law:

“The privacy paradox is a phenomenon in which online users state that they are concerned about their privacy but behave as if they were not. While this term was coined as early as 1998, it wasn’t used in its current popular sense until the year 2000.”

The authors go onto to explain this in more detail:

“Some researchers believe that decision making takes place on an irrational level, especially when it comes to mobile computing. Mobile applications are built up in a way that decision making is fast. Restricting one’s profile on social networks is the easiest way to protect against privacy threats and security intrusions. However, such protection measures are not easily accessible while downloading and installing apps.”

Louis Menand excellently expresses the same thought in his New Yorker article, “Nowhere To Hide,” of June 18, 2018:

“How many of us are going to take the time to scroll through the new policies and change our data settings, though? We sign up to get the service, but we don’t give much thought to who might be storing our clicks or what they’re doing with our personal information. It is weird, at first, when our devices seem to “know” where we live or how old we are or what books we like or which brand of toothpaste we use. Then we grow to expect this familiarity, and even to like it. It makes the online world seem customized for us, and it cuts down on the time we need to map the route home or order something new to read. The machine anticipates what we want.”

Legal Challenges

There is also another type of privacy paradox pertinent to EWP in the reporting of data breaches and news reporting on wealthy families. This is aptly put by Filippo Noseda, partner at the Mischon de Reya law firm in London:

“It is somewhat curious that serious newspapers who have been covering both the private banking scandals and the erosion of privacy seem unable to make the connection between data protection on the one hand, and the Common Reporting Standard (CRS) and beneficial ownership registers on the other.”

CRS was initiated in 2014 by the Organization for Economic Co-operation and Development (OECD) with the goal of creating financial transparency between countries that have agreed to implement its directives. Beneficial ownership registers collate information about the beneficial owner of a financial entity in a registry for storage and use by enforcement agencies.

Mr. Noseda also draws our attention to published material by The European Data Protection Supervisor (EDPS) where he questions the OECD’s goal of total financial transparency.

Mr. Noseda writes: “As if they were living on planet Europa rather than in Europe, the European Parliament, the OECD, and politicians show complete disregard for the warnings raised by their own data protection bodies and instead appear hell-bent on introducing a system of total transparency.”

In October 2020, a client of the law firm Mishcon de Reya filed a claim with the district court in Luxembourg challenging beneficial ownership registers, and alleges that the ‘indiscriminate and generalized’ publication of personal details of individuals connected to family enterprises breaches their fundamental rights to data protection and privacy, and exposes them to ‘unnecessary and disproportionate’ risks.

We have grown accustomed to the idea that transparency is a good thing, something that supports the common good. Like many concepts, if taken to an extreme, it becomes its opposite—a weapon in the hands of governments hungry for wealthy citizens’ tax dollars. As proponents of EWP, we must question this overzealous approach to tax collection.

Part 2

Carlos weaved to the door of the warehouse, followed closely by his pilot and co-pilot. Carlos fumbled with the key and finally opened the door to the office warehouse. His long-time pilot and co-pilot functioned also has confidants and body guards, so he told them in Spanish what just occurred.

Carlos was educated mostly in the United States, having received a masters degree in electrical engineering from Columbia University in New York, but English was his second language. Like all of us in times of emotional turmoil, he sought some comfort. Presently the only solace available was to speak his native language.

The plight of his daughter was beyond devastating, but the next step he knew was only a phone call away. He would call his insurance broker. Carlos had purchased Kidnap and Ransom insurance for his family, since the Mexican drug cartels had recently moved into his native Michoacan state, seeking to legitimize their sources of income by terrorizing the local avocado growers. By means of intimidation and violence, they sought access to this lucrative agricultural industry. His family were third generation avocado growers.

What put Carlos into emotional delirium was hearing the voice of Juan, his best friend at Columbia University. Juan had been a model student, an honor student like Carlos, and a kind and generous person. His involvement in his daughter’s kidnapping seemed preposterous. He would not have believed it, if it weren’t for hearing his voice.

Carlos was meticulous in his financial affairs. His company had the ability to assemble the most advanced and sophisticated electronic components. He had become a billionaire in his early 40s through his design of innovative electronics for medical devices. He abided by the law, both in Mexico and the U.S. Carlos was proud to be a citizen of both the U.S. and Mexico, even though it cost financially to do so.

The last time he had spent time with Juan was after college at the family farm outside the city of Uruapan. They had climbed onto one of the old avocado trees, and to drink beer together and eat avocados. They were looking forward to launching their careers after college. He remembered the solid branches supporting them, the ripe avocados at their fingertips, with the dappled sunlight making the tree a private world of their own. He remembered the light being soft and multicolored like the light coming through stained glass in a church. They exuberantly discussed their prospects. Joining a drug cartel was definitely not on their list of future possibilities.

The Past Lacks Privacy

EWP and PPLI can further the aims of wealthy families seeking increased privacy, asset protection, and tax efficiency, but privacy, as we know it today, is a relatively recent phenomena.

We quote two eye-opening passages by Greg Ferenstein’s “The Birth and Death of Privacy: 3,000 Years of History…,” courtesy of Medium:

“Privacy, as it is conventionally understood, is only 150 years old. Most humans living throughout history had little concept of privacy in their tiny communities. Sex, breastfeeding, and bathings were shamelessly performed in front of friends and families.”

“Privacy-conscious citizens did find more traction with what would become perhaps America’s first privacy law, the 1710 Post Office Act, which banned sorting through the mail by postal employees.”

This last quote seems quaint in light of the large-scale, present-day concerns of unauthorized data sharing by social media sites. The Privacy Principle was created to give wealthy families enhanced privacy. Our firm can be confident of our success, because EWP asset structuring greatly simplifies the process, and in addition, gives you the privacy that you seek.

The Dangerous Mouse Click

An adroit insider in the world of data breaches gives us frightening insights into how easily our personal data can be exposed and made public.

Lucia Vazquez,’s “A Millionaire Hacker’s Lessons for Corporate America,” for the Wall Street Journal, October 3, 2020 tells us:

“Santiago Lopez started invading corporate computer systems at age 16, after he learned to hack from YouTube videos and like-minded friends.

Now 21, he says he never wanted to commit crimes. Rather, he is a bounty hunter, invited by companies to find holes in their business networks and burrow into their vulnerable data. The idea is that a company will then fix what’s wrong to harden itself against bad actors—“black-hat” hackers—looking to steal data, conduct espionage and disrupt business operations. Like others in a stable of “white-hat” attack experts associated with bug-bounty firm HackerOne, Mr. Lopez gets paid commensurate with the severity of the weaknesses he identifies. He and other members swarm applications and websites to look for security holes missed by customers that contract with the San Francisco-based firm. Big problems pay big money.”

In the same article, Ms. Vasquez asked these two important questions to Mr. Lopez:

“You’re really effective at what you do. What does this say about corporate cybersecurity?

They’re not investing money or time or work in trying to grow their cybersecurity team. A lot of companies, if you report bugs to them, they don’t have the expertise to fix them. Software that they build themselves has more bugs but software generally is vulnerable, always. If software has access to important data, then encrypt it.

What kinds of technology changes are coming that will create cybersecurity problems?

Artificial intelligence has helped us a lot to optimize tasks, process data and make decisions much faster than a human being could. However, new technologies, including artificial intelligence, create big cybersecurity risks, as potential vulnerabilities are not fully understood when they are found. This means that with more organizations relying on machine learning to perform business-critical actions, AI systems are sure to become a major target for hackers.”

Part 3

Diego wondered how he was to receive his bribe. He was told by his contact to buy a burner phone on Wednesday, and throw it away that evening after he received a text. His contact had booked him a table for 7pm at the Bellini Restaurant, atop the World Trade Center on the 45th floor in Mexico City.

“Good evening, sir,” said the handsome young man in his well-tailored valet parking uniform.

His car door was politely closed, and Diego pulled away, feeling somewhat sheepish and out of place with his old Prius at this expensive restaurant in Mexico City. The Bellini was an uncomfortable experience for Diego. This showed in the perspiration draining down his shirt from below his armpits. In his highly excited state, he had forgotten to put on deodorant this morning.

He had barely noticed the dazzling lights that lay below him, as he ate but did not taste the exquisite meal that was paid for by his contact. The restaurant magically revolved, but he might as well have been facing a blank wall. Diego only thought of one thing, and one thing only: “Will I get paid, or will they kill me instead.”

As he was traveling toward his small apartment, he received a text, Look in the glove box, then destroy your phone. I mean destroy it completely.

Diego opened the glove box to find a plain manilla envelope, which he tore open to find cash. Plenty of cash. 400,000 pesos, about $20,000U.S. The equivalent of his annual salary.

Why were 400,000 pesos put in his glove box? The reason was simple. Diego worked at the Servicio de Administración Tributaria (SAT). The SAT is the revenue service of the Mexican federal government. Diego had access to information that the cartel wanted to destroy Carlos Guittierez.

A new law had come into effect January 1, 2020, and stipulates that tax evasion will turn into a charge of organized crime if three or more people are aware of a scheme, which could result in companies being held criminally liable. Diego had access to salient information in Mexico’s Register of Beneficial Ownership. The cartel was going to use this information to charge Carlos under this new law.

How ironic that a successful businessman like Carlos could be discredited by an organized crime cartel when he went to great lengths to comply with all of Mexico’s laws. In a sinister way, the designs of Carlos’s intricate electronic components mirrored the devious, deceptive, and criminal practices of the cartel. One was used for good, and the other to destroy an innocent man.

Corporate Cybersecurity Amis

Large corporate data breaches have become almost commonplace in recent years. Here are a few courtesy of Dan Swinhoe from CSO, April 17, 2020:

Yahoo

Date: 2013-14

Impact: 3 billion user accounts

Details: Yahoo announced in September 2016 that in 2014 it had been the victim of what would be the biggest data breach in history. The attackers, which the company believed were “state-sponsored actors,” compromised the real names, email addresses, dates of birth and telephone numbers of 500 million users. Yahoo claimed that most of the compromised passwords were hashed.

LinkedIn

Date: 2012 (and 2016)

Impact: 165 million user accounts

Details: As the major social network for business professionals, LinkedIn has become an attractive proposition for attackers looking to conduct social engineering attacks. However, it has also fallen victim to leaking user data in the past.

Equifax

Date: July 29, 2017

Impact: 147.9 million consumers

Details: Equifax, one of the largest credit bureaus in the US, said on Sept. 7, 2017 that an application vulnerability in one of their websites led to a data breach that exposed about 147.9 million consumers. The breach was discovered on July 29, but the company says that it likely started in mid-May. The breach compromised the personal information (including Social Security numbers, birth dates, addresses, and in some cases drivers’ license numbers) of 143 million consumers; 209,000 consumers also had their credit card data exposed. That number was raised to 147.9 million in October 2017.”

These large corporate data breaches might seem impersonal and far off, unless you were one of the victims. We finish this section with a more sinister example, that highlights the vulnerable interfaces of our technologically dependent world. This example is again from Mr. Menand’s thoughtful New Yorker article quoted from earlier:

“An Oregon couple’s domestic conversation (about hardwood floors, they said) was recorded by Echo, Amazon’s “smart speaker” for the home, which sent it as an audio file to one of the husband’s employees. Amazon called the event “an extremely rare occurrence”—that is, not a systemic security issue.”

Part 4

One week later Carlos Gutierrez found it difficult to pursue life in his usual diligent and focused manner. His daughter Lucinda had been returned by the cartel, unharmed physically, but shaken to the core psychologically. Carlos was now flying back from San Jose to one of his homes near La Jolla in southern California.

He requested that they take a route directly south from Santa Barbara, over the Channel Islands, only veering west after San Clemente Island. It was the most common route when he flew commercially before he could afford to keep two jets. Carlos was attempting to re-establish some order in his life.

Before the kidnapping and the lawsuit, he and his family inhabited a sane and orderly world, cut off from the concerns of those outside this thin bubble. When it burst more illusions escaped than he had ever thought possible. He could repair things with money, but money alone could not repair his family’s current emotional devastation.

One of his business strengths was the ability to inspire those who could put his creative electrical engineering concepts into integrated circuits and the other components of his medical devices. In San Jose he had visited a shop owned by Koreans, who were excellent to work with, and could manage his sometimes maddening deadlines.

Carlos was spared the emotional distress of having to speak with Juan again. The insurance company that wrote his Kidnap and Ransom insurance took over the successful negotiations with the cartel so that his daughter could be freed. He still could not fathom how his best friend of twenty years ago could now be working for one of the most vicious and notorious drug cartels in Mexico.

Although not currently a churchgoer, he was raised a Roman Catholic. He reflected on the forbidden fruit of the Garden of Eden. Just one week ago, they had lived in a similar paradise. But like Adam and Eve, they could now not return to this peaceful and predictable world.

The moist, soft, delicious avocado fruit was his last link to Juan. After all, the fruit that Eve ate was called the fruit of good and evil. How strange it turned out to be good for Carlos and evil for Juan.

His jet gently sloped down to the runway. He promised himself to protect the privacy of his affairs ever more vigilantly. Yes, the former bubble had burst, but he could construct a more solid one going forward. All he could be sure of was that Juan had taken his path in life, and he had taken another. Carlos’s new path would have to include a new, creative design, presently unknown, but one he vowed to find. After all, that is how he had amassed his billions.

Conclusion

As we are learning, the danger of data collection by online companies is not that they will use it to try to sell you stuff. The danger is that that information can so easily fall into the hands of parties whose motives are much less benign. A government, for example.

EWP and PPLI are employed by our firm to not only give you enhanced privacy, we also keep you compliant with tax authorities worldwide. This is something that other asset structures can’t accomplish. The Privacy Principle is integral to our successful asset structures.

EWP has the six principles that matter most to wealthy families throughout the world today—no matter where they are located. They are the building blocks of any successful asset structure.

If an EWP Structure Had Been Used….

Can an EWP Structure prevent kidnapping and extortion? While an EWP Structure can’t prevent the nefarious deeds of organized crime, it can go a long way in securing the privacy that can prevent these acts of physical and emotional violence. Had Carlos Gutierrez had a properly executed EWP Structure, it is doubtful that his story would have unfolded in such a painful way. Since an insurance company becomes the beneficial owner of the assets in an EWP Structure, the reporting requirements to government agencies are very limited.

If the drug cartel wished to secure details about the private financial matters of the Gutierrez family, they would be hard pressed to find them. As it was, the details that they needed to kidnap Lucinda and begin their frivolous lawsuit were readily available to them using the Gutierrez’s present asset structure. The precise, pin-point accuracy of the planning that led to the kidnapping of Lucinda would not have been possible with an EWP Structure in place. The information that the cartel used would simply have not been available to them.

Please Contact Us for any questions you may have.

 

by Michael Malloy, CLU TEP RFC.

CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

EWP and PPLI

Expanded Worldwide Planning-EWP & Privacy

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Private Placement Life Insurance (PPLI) in Action

UPDATED

Part 1: Privacy

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The universality of Expanded Worldwide Planning (EWP) is not to be denied. This is objectified by Wikipedia. In the first sentence of their page on International Tax Planning, Expanded Worldwide Planning (EWP) is featured.
We are taking a cue from Wikipedia. Over the next few weeks, we will feature one of the six principles of Expanded Worldwide Planning (EWP). The six principles are: privacy, asset protection, tax shield, succession planning, compliance simplifier, and trust substitute.
Today we feature PRIVACY. Privacy is a key element. With FATCA, CRS, and Registers of Beneficial Ownership our clients are looking for ways to keep their affairs private, and still be compliant with tax authorities worldwide. But as you know, it is a cat and mouse game that takes study and constant attention to detail. As you can see from our image, we don’t quite know who is winning.

Read the full article in our partner website

Watch our #PRIVACY VIDEOS

by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc

Michael Malloy-CLU-TEP

 

 

 

#michaelmalloy #PPLI #privateplacement #lifeinsurance #advancedfinancialsolutions

 

 

 

 

tax efficiency

Nothing Is Impossible with PPLI

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PPLI: Under Higher Laws

 Part 3

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Our next few articles will comprise an in-depth look at the five main components of our PPLI Concept Map: Professor PPLI Defines Nothing. We also offer you over the next five Parts, “She Was Good For Nothing,” by Hans Christian Andersen. This charming fairy tale supports our theme of nothing.

Winnie-the-Pooh gives us one of his most often quoted and enjoyable quotes that reveals new insight into our theme of nothing:

“People say nothing is impossbile, but I do nothing everyday.”

One thing it brings to mind is how we sometimes come to an understanding through both effort and relaxation. We give you examples of this phenomenon from several authors below.

Private Placement Life Insurance (PPLI) was born out of the necessity to achieve greater tax efficiency, privacy, and asset protection in one low cost structure with institutional pricing. This PPLI structure is made possible through the laws and regulations of life insurance. A much more stable and straightforward body of law than the more politicized tax laws and regulations worldwide. Our goal at Advanced Financial Solutions, Inc. is to make possible what is impossible with most asset structuring techniques available to wealthy families today.

In a Wealthmanagement.com article, “Private Placement Life Insurance Primer, Recent tax law changes make for a particularly interesting time to explore PPLI,”  Brian Gartner and Matthew Phillips explain why trustees are particularly attracted to PPLI.

“Trustees are attracted to PPLI in the context of multi-generational trust planning for three main reasons: (1) assets within a trust allocated through PPLI grow on an income tax-deferred basis; (2) the trustee can make income tax-free distributions to trust beneficiaries from PPLI without having to consider the income tax consequences of liquidating assets; and (3) the trust will eventually receive an income tax-free insurance benefit, which will serve to effectively step-up the basis of the assets within the trust that are allocated through PPLI.”

Relax and Create with PPLI

Author, Jonah Lehrer, gives us an explanation of why relaxation is a key ingredient to creativity in an article by Leo Widrich, “Why We Have Our Best Ideas in the Shower: The Science of Creativity.”

“Why is a relaxed state of mind so important for creative insights? When our minds are at ease–when those alpha waves are rippling through the brain–we’re more likely to direct the spotlight of attention inward, toward that stream of remote associations emanating from the right hemisphere.

In contrast, when we are diligently focused, our attention tends to be directed outward, toward the details of the problems we’re trying to solve. While this pattern of attention is necessary when solving problems analytically, it actually prevents us from detecting the connections that lead to insights.

‘That’s why so many insights happen during warm showers,’ Bhattacharya says. ‘For many people, it’s the most relaxing part of the day.’ It’s not until we’re being massaged by warm water, unable to check our e-mail, that we’re finally able to hear the quiet voices in the backs of our heads telling us about the insight. The answers have been their all along–we just weren’t listening.”

PPLI on Vacation

 One definition of vacation is “to vacate to leave empty.” This definition is in keeping with the above description of how we can have our best thoughts when we are relaxed. Amanda Foreman in “The Ancient Origins of the Vacation” gives us a brief history of the concept of vacation.

 “Finally, Americans are giving themselves a break. For years, according to the U.S. Travel Association, more than half of American workers didn’t use all their paid vacation days. But in a survey released in May by Discover, 71% of respondents said they were planning a summer vacation this year, up from 58% last year—meaning a real getaway, not just a day or two to catch up on chores or take the family to an amusement park.

The importance of vacations for health and happiness has been accepted for thousands of years. The ancient Greeks probably didn’t invent the vacation, but they perfected the idea of the tourist destination by providing quality amenities at festivals, religious sites and thermal springs. A cultured person went places. According to the “Crito,” one of Plato’s dialogues, Socrates’ stay-at-home mentality made him an exception: “You never made any other journey, as other people do, and you had no wish to know any other city.”

The Romans took a different approach. Instead of touring foreign cities, the wealthy preferred to vacation together in resort towns such as Pompeii, where they built ostentatious villas featuring grand areas for entertaining. The Emperor Nero was relaxing at his beach palace at Antium, modern Anzio, when the Great Fire of Rome broke out in the year 64.

The closest thing to a vacation that medieval Europeans could enjoy was undertaking pilgrimages to holy sites. Santiago de Compostela in northern Spain, where St. James was believed to be buried, was a favorite destination, second only to Rome in popularity. As Geoffrey Chaucer’s bawdy “Canterbury Tales” shows, a pilgrimage provided all sorts of opportunities for mingling and carousing, not unlike a modern cruise ship.”

Part 3 of  “She Was Good For Nothing” by Hans Christian Andersen:

“The boy cried too, as he sat alone beside the river, guarding the wet linen. The two women made their way slowly, the washerwoman dragging her shaky limbs up the little alley and through the street where the Mayor lived. Just as she reached the front of his house, she sank down on the cobblestones. A crowd gathered around her.

Limping Maren ran into his yard for help. The Mayor and his guests came to the windows.

“It’s the washerwoman!” he said. “She’s had a bit too much to drink; she’s no good! It’s a pity for that handsome boy of hers, I really like that child, but his mother is good for nothing.”

And the washerwoman was brought to her own humble room, where she was put to bed. Kindly Maren hastened to prepare a cup of warm ale with butter and sugar-she could think of no better medicine in such a case-and then returned to the river, where, although she meant well, she did a very poor job with the washing; she only pulled the wet clothes out of the water and put them into a basket.

That evening she appeared again in the washerwoman’s miserable room. She had begged from the Mayor’s cook a couple of roasted potatoes and a fine fat piece of ham for the sick woman. Maren and the boy feasted on these, but the patient was satisfied with the smell, “For that was very nourishing,” she said.

The boy was put to bed, in the same one in which his mother slept, lying crosswise at his mother’s feet, with a blanket of old blue and red carpet ends sewed together.

The laundress felt a little better now; the warm ale had given her strength, and the smell of the good food had been nourishing.

“Thank you, my kind friend,” she said to Maren, “I’ll tell you all about it, while the boy is asleep. He’s sleeping already; see how sweet he looks with his eyes closed. He doesn’t think of his mother’s sufferings; may our Lord never let him feel their equal! Well, I was in service at the Councilor’s, the Mayor’ parents, when their youngest son came home from his studies. I was a carefree young girl then, but honest-I must say that before heaven. And the student was so pleasant and jolly; every drop of blood in his veins was honest and true; a better young man never lived. He was a son of the house, and I was only a servant, but we became sweethearts-all honorably; a kiss is no sin, after all, if people really love each other. And he told his mother that he loved me. She was an angel in his eyes, wise and kind and loving. And when he went away again he put his gold ring on my finger.”

Using a conservative PPLI asset structuring plan can help you relax in relation to worldwide tax authorities. In a properly structured PPLI policy, you will be in full compliance, yet your assets will be in a tax-free environment, and will pass as a tax-free to the heirs of your choice. We welcome you to take a vacation from more complicated and aggressive strategies, and call us today for a no obligation initial consultation. One Worldwide Toll-Free Number to Serve You: +1 877-811-5846

 

by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc

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The True Value of Zero = Privacy

The True Value of Zero = Privacy

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Professor PPLI Explains Zero

Part 1

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Our next few articles will comprise an in-depth look at the five main components of our PPLI Concept Map: Professor PPLI Defines Nothing. We also offer you over the next five Parts, “She Was Good For Nothing,” by Hans Christian Andersen. This charming fairy tale supports our theme of nothing.

Zero is a powerful number. Any number multiplied by zero becomes zero. Yet, zero is also nothing. How does this nothing relate to the topic of our using of Private Placement Life Insurance (PPLI) to structure the assets of wealthy families? Unless you understand how PPLI works with the six principles of Expanded Worldwide Planning (EWP), you will understand  nothing about PPLI. PPLI makes these six principles come alive like nothing else in the realm of asset structures.

First, we will explore the concept of nothing from a mathematical  perspective, then move on to its relationship to EWP, and conclude with how this all relates to one of the six principles of EWP, privacy.

The Power of Zero

Doctor Ian at the Math Forum demonstrates how multiplying any number by zero equals zero.

“1 * 0 = 0

27 * 0 = 0

1,887,457,234,543,243,113,946 * 0 = 0

When you multiply one number by another, you can think of starting at some point (‘the spot marked X’, or wherever) and moving some distance away from it. To move, you need to know two things:

  1) how many steps you’re going to take

  2) how big each step will be

Now, if each step is of zero size, then you can keep taking them, and you’ll never move anywhere. (Move a step of length zero. You’re still where you started. Do it again. Still there. Keep doing it… how many of those steps will you have to take to actually move somewhere?) So any number times zero is still zero.

Also, if you’re not going to take any steps, it doesn’t matter how large a step you would take, since you’re not going to take it. So zero times any number is still zero.”

For our exploration of zero in the world of PPLI tax structuring, we can think of zero as the actual insurance policy that holds a family’s assets in separate accounts in the name of a custodian such as a trust company, which will be in the name of the beneficial owner of the assets–the insurance company. The assets do not change, but how they are structured changes.

Since you can place almost any asset that can be held by a trust company into a PPLI policy, the insurance policy acts like the empty box that we use to explain the concept of zero. The empty box is an abstraction, yet like the PPLI policy, it is the vehicle that can help achieve the six principles of EWP for wealthy families.

Brian Resnick’s article, “The mind-bendy weirdness of the number zero, explained,” on Vox gives us:

“Zero is in the mind, but not in the sensory world,” Robert Kaplan, a Harvard math professor and an author of The Nothing That Is: A Natural History of Zero says. Even in the empty reaches of space, if you can see stars, it means you’re being bathed in their electromagnetic radiation. In the darkest emptiness, there’s always something. Perhaps a true zero — meaning absolute nothingness — may have existed in the time before the Big Bang. But we can never know.

Nevertheless, zero doesn’t have to exist to be useful. In fact, we can use the concept of zero to derive all the other numbers in the universe.

Kaplan walked me through a thought exercise first described by the mathematician John von Neumann. It’s deceptively simple.

Imagine a box with nothing in it. Mathematicians call this empty box “the empty set.” It’s a physical representation of zero. What’s inside the empty box? Nothing.

Now take another empty box, and place it in the first one.

How many things are in the first box now?

There’s one object in it. Then, put another empty box inside the first two. How many objects does it contain now? Two. And that’s how “we derive all the counting numbers from zero … from nothing,” Kaplan says. This is the basis of our number system. Zero is an abstraction and a reality at the same time. “It’s the nothing that is,” as Kaplan said.”

Since  we are exploring zero as an abstract concept, we will put it to another use below when we discuss privacy. In a sense everything can only be defined through its relationships with other elements and factors. Not wishing to be alone in stretching our meanings too far let us hear from Humpty Dumpty and Alice in Lewis Carroll’s Alice in Wonderland.

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” “The question is,” said Alice, “whether you can make words mean so many different things.” “The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

How Zero = Privacy?

Now let us equate privacy with Mr. von Neumann’s first box above. Remember this first box is described as an “abstraction and a reality at the same time.” This can equally be said of a term like privacy. Privacy can be defined in the abstract, but it is how it is interpreted in reality that counts.

In many jurisdictions, privacy is considered a fundamental principle. In the U.S the right to privacy is stated in the Fourth Amendment to the U.S. Constitution:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

A right to privacy is explicitly stated under Article 12 of the 1948 Universal Declaration of Human Rights issued by the United Nations General Assembly:

“No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honor and reputation. Everyone has the right to the protection of the law against such interference or attacks.”

Caroline Garnham of Garnham Family Office Services in London writes with clarity and understanding about issues affecting wealthy clients. What follows is a telling description of a government’s thirst for tax dollars trampling on its citizens fundamental privacy rights. These are excerpts from her article, “It isn’t fair? Part 3.” How is “tax fairness” playing out in Great Britain today? This article relates recent incidents and key players in the drama.

“Edward Troup, now Sir Edward Troup was appointed Executive Chair and Permanent Secretary to HMRC in April 2016, for which he was knighted in the 2018 new year’s honours list. He was the former head of the firm’s tax department and the most brilliant brain I have ever encountered.

‘Tax law does not codify some Platonic set of tax raising principles. Taxation is legalised extortion and is valid only to the extent of the law’ – a point of with which I concur.

We have tightened our grip on those who deliberately cheat the system and continue to pursue those who refuse to pay what they owe.’

But the question now is, has HMRC gone too far?

The House of Lords Economic Affairs Committee, EAC, published its findings in December 2018, and thinks so!

A ‘careful balance must be struck between clamping down and treating taxpayers’ fairly. Our evidence has convinced us that this balance has tipped too far in favour of HMRC and against the fundamental protections every taxpayer expects.’

In 2000 some employers set up Employee Benefits Trusts for their employees.

This arrangement was considered effective in avoiding tax.

In 2010 HMRC warned that such arrangements were unacceptable, and that those who used such an arrangement had to repay the loan, pay the tax or face fines.

It is clear from what has already been published that the information to be received by HMRC this year from offshore financial institutions under the Common Reporting Standard once analysed will be used to attack settlors of offshore trusts. The first such attacks are expected in about six months.

HMRC has said that it will first go for well-known names with significant assets in trust. It has been advised to attack structures which have Persons of Significant Influence on the basis of sham. It will then look very closely for clauses in the Trust Deed once provided absolving the Trustee from any form of liability and duty to interfere. This it will take as further evidence that the Trust was nothing more than a nominee arrangement and tax the settlor as if no trust had been set up together with 200% penalties.”

Part 1 of “She Was Good For Nothing” by Hans Christian Andersen:

 “The mayor was standing at his open window; he was wearing a dress shirt with a dainty breastpin in its frill. He was very well shaven, self-done, though he had cut himself slightly and had stuck a small bit of newspaper over the cut.

“Listen, youngster!” he boomed.

The youngster was none other than the washerwoman’s son, who respectfully took off his cap as he passed. This cap was broken at the rim, so that he could put it into his pocket. In his poor but clean and very neatly mended clothes, and his heavy wooden shoes, the boy stood as respectfully as if he were before the king.

“You’re a good boy, a well-behaved lad!” said the Mayor. “I suppose your mother is washing down at the river, and no doubt you are going to bring her what you have in your pocket. That’s an awful thing with your mother! How much have you there?”

“A half pint,” said the boy in a low, trembling voice.

“And this morning she had the same?” continued the Mayor.

“No, it was yesterday!” answered the boy.

“Two halves make a whole! She is no good! It is sad there are such people. Tell your mother she ought to be ashamed of herself. Don’t you become a drunkard-but I suppose you will! Poor child! Run along now.”

And the boy went, still holding his cap in his hand, while the wind rippled the waves of his yellow hair. He went down the street and through an alley to the river, where his mother stood at her washing stool in the water, beating the heavy linen with a wooden beater. The current was strong, for the mill’s sluices were open; the bed sheet was dragged along by the stream and nearly swept away her washing stool, and the woman had all she could do to stand up against it.

“I was almost carried away,” she said. “It’s a good thing you’ve come, for I need something to strengthen me. It’s so cold in the water; I’ve been standing here for six hours. Have you brought me anything?”

The boy drew forth a flask, and his mother put it to her lips and drank a little.

“Oh, that does me good! How it warms me! It’s just as good as hot food, and it isn’t as expensive! Drink, my boy! You look so pale, and you’re freezing in your thin clothes. Remember it is autumn. Ooh, the water is cold! If only I don’t get ill! But I won’t. Give me a little more, and drink some yourself, but only a little drop, for you mustn’t get used to it, my poor dear child!”

And she walked out of the water and up onto the bridge where the boy stood. The water dripped from the straw mat that she had tied around her waist and from her petticoat.

“I work and slave till the blood runs out at my fingernails, but I do it gladly if I can bring you up honestly, my sweet child!””

We hoped you enjoyed this article and the beginning of Hans Christian Andersen’s fairytale. Nothing turns out to be an exciting topic for us, and we will continue our lively topic in the next four articles. Please bring us your PPLI questions and inquiries. We enjoy all opportunities to discuss our favorite topic, and bring you an asset structuring tool that offers so many exceptional benefits. Contact Us!

 

by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc

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Let PPLI Be Your First Defense

Fence = Privacy–Well Sort of

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Let PPLI Be Your First Defense

Part 1

Our next five articles will comprise an in-depth look at the five main components of our PPLI Concept Map: Professor PPLI meets Leonardo da Vinci.

These two neighbors are discussing a new tax law in their fenced backyard. Private Placement Life Insurance (PPLI) is a well-established, yet conservation ring fence for your assets. Once assets are structured properly in a PPLI policy, the insurance company becomes the beneficial owner of the assets.

According to Investopedia, “a ring fence is a protection-based transfer of assets from one destination to another, usually through the use of offshore accounting. A ring fence is meant to protect the assets from inclusion in an investor’s calculable net worth or to lower tax consequences.”

This definition reveals the etymology of the word fence. The Online Etymology Dictionary tells us that in the 14th century the word fence was used as an “action of defending, resistance; means of protection, fortification.”

The advantage of an insurance ring fence is that life insurance is a common structuring tool and is used by millions around the world to provide financial security.

Now back to our two neighbors. In our scene the barbecue is pouring out smoke, and smoke can mean trouble. Indeed, it is black smoke which reminds us of a passage at the beginning of Charles Dickens’s Bleak House. We will visit Charles Dickens’s London later on, where Dickens uses fog as a metaphor for the decrepitude of polluted London in the mid-19th century. Indeed, Dickens’s London was a mixture of both fog and smoke during much of the year.

In the context of our story, smoke, whether foul or benign, can easily escape a fenced backyard. Smoke is subject to wind currents, and other atmospheric elements. PPLI structures use a “smoke free” strategy. One that is not subject to the vagaries of the weather.

A properly structured PPLI policy is a ring fence that gives wealthy clients’ assets an airtight chamber. Inside this chamber the six principles Expanded Worldwide Planning (EWP) breathe clean air with no pollutants. The six principles of EWP are: Privacy, Asset Protection, Succession Planning, Tax Shield, Compliance Simplifier, Trust Substitute.

Imagine the scene in our panel taking place anywhere in the world. A government passes a new tax law and its citizens must compile with it, or face certain penalties. Tax laws change frequently and how you must compile–how much tax you must pay under the new law–does not always translate into a simple answer or number on your tax return. This is why we thoroughly research our PPLI structures, and make sure they compile with all the tax authorities involved in the locations of a client’s assets.

Let us back up briefly and visit an excellent basic description of PPLI.

Al W. King III, left, and Pierce McDowell III, are co-founders of the South Dakota Trust Company, LLC in Sioux Falls, S.D. We give you the opening paragraphs from their Trusts & Estates article, “Powerful Private Placement Life Insurance Strategies With Trusts.”

“What is PPLI?

PPLI is essentially a flexible premium variable universal life (VUL) insurance transaction that occurs within a private placement offering. The private placement component adds extensive flexibility to the VUL product pricing and asset management offerings. Because PPLI is sold through a private placement memorandum, every situation can be individually negotiated and custom designed for the client. PPLI can be for single life or survivorship and is offered only to an accredited investor.

PPLI has both a death benefit and a cash value (that is, investment account) and is generally designed to maximize cash value and minimize death benefits. Consequently, PPLI is usually designed as a non-modified endowment contract (non-MEC) policy, with four to five premiums versus a single premium policy (that is, a MEC). In this way, cash values can be accessed tax-free during an insured’s lifetime.

The PPLI cash value is generally invested among a variety of available registered and non-registered fund options (that is, hedge funds, private equity (PE) and other alternative investments).”

From Cole Porter we give you a different aspect of a fence: one that constricts and prevents the innovative structuring techniques that are possible with PPLI. The mystique of the American cowboy roaming the vast open spaces of the western U.S. comes alive in this popular song from the 1930s, Don’t Fence Me In,” courtesy of Warner/Chappell Music, Inc..

“Oh, give me land, lots of land under starry skies above

Don’t fence me in

Let me ride through the wide open country that I love

Don’t fence me in

Let me be by myself in the evenin’ breeze

And listen to the murmur of the cottonwood trees

Send me off forever but I ask you please

Don’t fence me in

Just turn me loose, let me straddle my old saddle

Underneath the western skies

On my Cayuse, let me wander over yonder

Till I see the mountains rise

I want to ride to the ridge where the west commences

And gaze at the moon till I lose my senses

And I can’t look at hovels and I can’t stand fences

Don’t fence me in

Oh, give me land, lots of land under starry skies

Don’t fence me in

Let me ride through the wide open country that I love

Don’t fence me in

Let me be by myself in the evenin’ breeze

And listen to the murmur of the cottonwood trees

Send me off forever but I ask you please

Don’t fence me in

Just turn me loose, let me straddle my old saddle

Underneath the western skies

On my Cayuse, let me wander over yonder

Till I see the mountains rise

Ba boo ba ba boo

I want to ride to the ridge where the west commences

And gaze at the moon till I lose my senses

And I can’t look at hobbles and I can’t stand fences

Don’t fence me in

No

Poppa, don’t you fence me in”

We now travel back to London for a discussion of privacy and data protection. This subject is key to the debate about tax that is taking place on the world’s stage. What our two neighbors are discussing in their backyard is an important topic for governments and those that advise wealthy clients. Caroline Garnham is a London attorney, who heads the firm of Garnham Family Office Services, and is one of our favorite writers on this subject.

First, we give you Dickens’s memorable depiction of foggy London.

“Fog everywhere. Fog up the river, where it flows among green aits and meadows; fog down the river, where it rolls defiled among the tiers of shipping and the waterside pollutions of a great (and dirty) city. Fog in the eyes and throats of ancient Greenwich pensioners, wheezing by the firesides of their skipper, down in his close cabin, fog cruelly pinching the toes and fingers of his shivering little ‘prentice boy on deck. Chance people on the bridges peeping over the parapets into a nether sky of fog, with fog all round them, as if they were up in a balloon and hanging in the misty clouds.”

“Was Tony Blair right second time?

Is privacy and data protection a good thing or not?

Should there be a public register of what you own? Would you like your neighbours, friends, children and employees knowing precisely what you own; properties, businesses, pensions and bank accounts? Why not – if you have nothing to hide?

Tony Blair, is on record as saying that one of his greatest regrets had been his own Freedom of Information Act. Why because in his view ‘information is neither sought because the journalist is curious to know, nor given to bestow knowledge on ’the people’. ‘It is used as a weapon’.

To protect his privacy once he left office and started to make money, he erected barriers to prevent an accurate assessment of his wealth His income was channelled through a complicated legal structure. At the top was BDBCO No.819 Limited a company called either Windrush or Firerush. Windrush Ventures No.3 LP was part owned by Windrush Ventures No.2 LP which in turn controlled Windrush Ventures Ltd. The scheme’s advantage was that the LPs, or limited partnerships, were not obliged to publish accounts. Even without public registers and the protection of limited partnerships, Tom Bower, author of ‘Broken Vows’ managed to track down these details – so why do we need a public register?

Furthermore, the drive for a public register is for ownership of companies and properties, but  not of the beneficiaries of a trust – so for anyone wishing to disguise their ownerships they simply need to set up a trust – or take their assets outside the Overseas Territories and Crown Dependencies – in which case Britain plc is shooting itself in the foot. We will get nothing and business will flee from the territories we should be protecting.

This week a Government Bill designed to protect the City in the event of a no-deal Brexit was pulled in the face of almost certain defeat after MPs added an amendment that would have forced greater transparency on the Isle of Man, Guernsey and Jersey – the Crown Dependencies.

The idea of public registers of companies, was originally proposed by David Cameron and George Osborne in 2013 in the fight against the use of offshore financial centres to launder money using a myriad of offshore companies. It was dropped when May became Prime Minister, but resurrected by a bank benchers Hodge and Mitchell.

It is generally accepted that the UK cannot interfere in the affairs of another country even an ‘Overseas Territory’ such as the BVI or Cayman, or a ‘Crown Dependency’ such as Guernsey except in extreme circumstances.”

The UK has however intervened in the affairs of the Overseas Territories, such as in the repeal of the Death Penalty in 1991 and decriminalising homosexuality in 2,000, but has made no such intervention in the Crown Dependencies, which is why the bill had to be pulled to give time for a more detailed debate.

Hodge takes the view that a public register of ownership to stamp out the ‘traffic of corrupt money and illicit finance’ across the world’ justified such intervention! The Paradise Papers according to the campaign group Global Witness estimates that £68bn flowed out of Russia via the British-overseas territories between 2007 and 2016, – but what of other countries? To date only three prosecutions have been made. Is this a good enough justification for undermining the privacy of many others?

Andrew Mitchell takes it one stage further, ‘It is only by openness and scrutiny, by allowing charities, NGOs and the media to join up the dots, that we can expose this dirty money and those people standing behind it. Closed registers do not begin to allow us to do it’

That did not prevent Tom Bower finding out all he needed to know about Tony Blair!

The real debate needs to be on how far can we undermine the human right to privacy enshrined in many countries so that rich countries can pick out a few bad apples in a barrel of good ones?”

Find out today how an asset structuring technique–PPLI–can be both conservative and sophisticated. PPLI can give you both privacy and full compliance with the world’s tax authorities. We welcome your call or email. Contact Us right now!

 

by Michael Malloy, CLU TEP RFC, @ Advanced Financial Solutions, Inc

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Resolving the Contradiction of Changeless Change

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PPLI Can Do It

Resolving the Contradiction of Changeless Change

Can you use a well-established product as a process for the structuring of the worldwide assets of wealthy international families? Yes, is the resounding response from Private Placement Life Insurance (PPLI).

PPLI is both a standard product and a process, and hence its versatility, and at the same time, its stability. PPLI gives a structural framework to the diverse holdings of wealthy international families. Because PPLI is a product and common in the world’s tax and legal frameworks, there is a large body of laws and regulations that give advisors–a road map to follow.

This allows PPLI to give the assets of wealthy international families full privacy and tax savings, and at the same time, compliance with the world’s tax authorities.

To explore the concept of change, our article gives you an example from the world of self-driving automobiles.   We also share with you a legal challenge to the OECD’s CRS program.

Changeless Change is also a good description of China. This ancient civilization has transformed itself into a 21st century nation in only a few short years. Shanghai, China, is the venue of the video, “Our Journey Together” Part III, of my presentation at the 5th annual FOA Forum that we offer you below.

PPLI is also known as Private Placement Variable Universal Life Insurance (PPVUL). Its name speaks to the internal workings of the product. It is both life insurance and a home for investments. This is a definition from Cornell University Law School’s Wex Legal Dictionary:

“A form of whole life insurance that combines aspects of universal life insurance and variable life insurance and provides for a death benefit and accrues cash value on a tax-deferred basis. Variable universal life insurance (“VUL”) policies allow for flexibility in premiums, death benefits, and investment options.”

So how does a product become a process, a structuring tool? PPLI is a type of PPVUL, but with very unique characteristics. These are the characteristics that allow clients to accomplish so many valuable elements in the single structure:

Open Investment Universe–Almost any asset that can be held by a trust company can become part of a PPLI policy. With proper structuring even operating businesses can be included.

Simplified Reporting–The assets inside the policy are held in separate accounts for the policyholder, meaning that they are not part of the general assets of the insurance company. But for reporting purposes, the insurance company becomes the beneficial owner of the assets.

Asset Protection–The insurance policy adds another layer of asset protection in the structure. The domicile of the insurance companies also is a help here, as they are located in jurisdictions that have strong asset protection laws, like Bermuda and Barbados.

Low Fees/Commissions–Most often there is a 1% set-up fee. And the ongoing fees are frequently less than 1% of the assets inside the policy. This contrasts sharply to the large first year commissions charged by Universal Life and Whole Life policies.

Now for our examples of how change plays out in the world today. Self-driving cars and the OECD’s CRS are concepts that did not exist a few years ago. To make their way into our everyday world is not an easy task. They both have something to offer, but they must fit into other structures that have existed for longer periods. They are like new pieces of a jigsaw puzzle introduced when the puzzle seems to be complete.

“Self-driving cars Encounter Political Roadblocks” by Mike Colias and Tim Higgins of the Wall Street Journal, give us a glimpse into the process of integrating technological change into the world.

“Auto makers and other companies racing to commercialize self-driving car technology are facing pushback from local politicians, complicating their plans to bring real-world testing to more U.S. cities.

In New York City, General Motors Co. has put on hold plans to begin testing in Manhattan because Mayor Bill de Blasio has expressed concerns about the technology’s safety, according to people familiar with the matter. GM said last year it would be the first company to start driverless-car testing in the city, starting in early 2018.

In Chicago, the city council’s transportation-committee chairman has vowed to block self-driving cars from operating in the nation’s third-largest metropolis, citing safety concerns and the potential for displacing taxi drivers and other jobs.

Even in Pittsburgh, a hotbed for autonomous-vehicle research and development, city officials have recently adopted more stringent requirements, demanding that driverless-car developers detail how a vehicle’s safety system works before granting permission to test on public roads.

A fatal crash in March, when an Uber Technologies Inc. self-driving test car stuck and killed a pedestrian in Tempe, Ariz., has fueled concerns over putting such prototypes on public roads, especially in big cities that tend to be more crowded, transportation officials say. Also, many city leaders say they want companies to show that the technology will provide wider social benefits, such as reducing congestion and helping low-income residents get around.

“It’s a lot of local politics that are difficult to navigate,” said Bradley Tusk, founder of Tusk Ventures, which works with startups on regulations and other political issues. “These are hard issues. You’re talking about small spaces that are very congested.

Meanwhile, a Senate bill that aims to establish nationwide regulations for self-driving cars has stalled in Congress. Without federal direction, cities and states are left to act on their own, creating a patchwork of rules and red tape for companies plowing billions into the technology and hoping to eventually turn their testing into profitable ventures.

GM Chief Executive Mary Barra has called self-driving vehicles “the biggest opportunity since the creation of the internet.” GM, Alphabet Inc.’s self-driving car unit Waymo LLC and others are betting these services will create a market for customers wanting to hail a robotic car much like they do an Uber or Lyft Inc. ride. Some analysts estimate that market could eventually be valued at trillions of dollars.

GM and Waymo are among companies that have been testing in a handful of U.S. communities for years and are getting closer to launching services to paying customers. GM plans to introduce a new robot-taxi service next year, likely in San Francisco, where the auto maker has done the bulk of its testing. Waymo said Nov. 13 that it will begin offering rides in self-driving cars to Phoenix-area customers in the coming weeks.

Companies say that in some cities, they are working closely with officials to assuage concerns, but much more work is needed before a wider rollout is possible.”

Barney Thompson of the Financial Times, shares with us “EU National Challenges HMRC Over New Data Sharing Rules.” CRS aims to assist governments in the fair collection of taxes, but are data protection safeguards in place to protect our rights to privacy?

“An EU national is challenging HM Revenue & Customs over new rules that require tax authorities around the world to automatically exchange information on millions of their citizens who live abroad.”

In a complaint to the UK’s data protection regulator, the EU citizen said the common reporting standard — a key measure against tax evasion developed by international experts that is now being gradually introduced by more than 100 countries — made her personal information vulnerable to cyber hacking or an accidental leak.

However, campaigners have defended the measure, saying it was an important tool in the fight against tax avoidance and evasion, notably through offshore financial centers.

The EU citizen who has made the complaint about the common reporting standard — who does not want to be identified — is currently domiciled in Italy but is described as having “a very international background”.

She lived in the UK for several years and was tax resident in Britain, acquiring a unique taxpayer reference and a national insurance number. She also still has a UK bank account with a deposit of £4,000.

Even with this relatively small amount, her bank is required under the common reporting standard to disclose certain information to the HMRC, including the account number, balance, her name, date of birth and tax number.

In turn, HMRC must pass on the information to its counterpart in Italy, which it is due to do in September.

Exchange of information would be automatic

In theory, any UK bank account holder living in another country that abides by the common reporting standard falls under the scope of its rules.

Within the EU, almost 19m people are estimated to live in a different member state to the one in which they were born.

Like the US foreign account tax compliance act, on which it is based, the common reporting standard was designed as a way to counter global tax evasion by making the exchange of information between countries automatic rather than have tax bodies request it if they suspect wrongdoing.

The standard was developed by the Organisation for Economic Cooperation and Development, the Paris-based international body that co-ordinates co-operation between different tax jurisdictions.

Several countries have poor data security

In her complaint against the common reporting standard to the UK Information Commissioner’s Office, the EU citizen said the exchange of information required by the rules will expose her to “a disproportionate risk of data loss and potentially hacking”.

She added: “This risk has crystallised recently in light of incidents in which HMRC has lost data concerning UK taxpayers and recent data breaches concerning UK banks.”

Her complaint cited how HMRC had lost the personal records of 25m taxpayers in 2007, as well as a media report in 2017 outlining how the tax authority’s website was vulnerable to cyber attacks. HMRC subsequently took action to fix the weaknesses.

Among the countries that have signed up to the common reporting standard are several with poor data security records, added the woman’s complaint.

Furthermore, data leaks such as during the TSB online banking failure this year and attempts by cybercriminals to hack the online tax details of British taxpayers illustrated the dangers around the mass exchange of sensitive personal information, it said.

As a result, the common reporting standard infringed the new EU-wide General Data Protection Regulation, which came into force in May, as well as European human rights laws, said the complaint.

Rules risk ‘identity theft on a grand scale’

The Information Commissioner’s Office has the power to impose temporary or permanent limits on the processing of personal data if it decides that GDPR rules are being infringed.

The office said:

“We have received a complaint relating to HMRC and the common reporting standard and will be looking into the details.”

Filippo Noseda, a partner at law firm Mishcon de Reya, who is acting for the EU national, said the data breach risks involved in the standard “could lead to identity theft on a grand scale”.

Mr Noseda acknowledged that rich clients of law firms would appreciate not having their tax details and activities shared between authorities.

But he added:

“The endgame is not to go back to banking secrecy. We need to find a system that is balanced.”

John Christensen, director of the Tax Justice Network, a campaign group, defended the common reporting standard, saying it needed to be broad to deter individuals from using offshore structures to avoid and evade tax.

“The [standard] has given the tax authorities the information they previously did not have access to, which enables them to pinpoint where tax evasion is happening,” he added.

 

“Tax avoidance and evasion are . . . deliberately and purposefully depriving tax authorities of finances.”

 

HMRC declined to discuss the EU citizen’s case but added:

“HMRC shares some personal data with overseas tax authorities to ensure that the right tax is being paid. HMRC only ever shares information when it’s entirely lawful to do so. This includes complying with applicable GDPR requirements.”

 

Advanced Financial Solutions, Inc. uses a stable and well-accepted financial concept, life insurance, to structure the assets of wealthy international families. Our main tool, PPLI, is a versatile and underutilized form of life insurance that gives excellent structuring results. Please join our list of very satisfied clients by contacting us today about your worldwide assets. We are here to bring you the right kind of change that is disruptive in a positive way.

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by Michael Malloy CLU TEP RFC, @ Advanced Financial Solutions, Inc

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