The 80/20 Rule

The 20% Is Yours With PPLI

In terms of structuring assets for wealthy international families, Private Placement Life Insurance (PPLI) puts you at the top of your class.  What is top of your class? Let us apply the 80/20 rule.

Wikipedia gives us a brief history of the 80/20 rule.

The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.

Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896, as published in his first work, Cours d’économie politique.

Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population.

It is an axiom of business management that “80% of sales come from 20% of clients”. Richard Koch authored the book, The 80/20 Principle, which illustrated some practical applications of the Pareto principle in business management and life.

Expanded Worldwide Planning (EWP) is the overarching principle that our firm embraces that is becoming a new model for those who structure the assets of wealthy international families. If we define success as the 20% part of the 80/20 equation, what are these characteristics that assist in this success:

  • All assets inside the PPLI policy receive tax deferral, not only investments, but business income too.
  • The assets pass tax-free to the beneficiaries named in the PPLI policy. In a properly structured policy one creates a tax-free environment for these assets. Assets can be located anywhere in the world.
  • Because life insurance is used, FATCA and CRS reporting is greatly simplified, and in some cases, is eliminated.
  • Families receive enhanced privacy, because the insurance company becomes the beneficial owner of the assets inside the PPLI policy.
  • The EWP structure provides excellent asset protection.
  • The EWP structure is low cost with fees averaging 1% of assets.
  • The EWP structure is fully compliant with the tax authorities of all tax jurisdictions.
  • Should an untimely death of the wealth creator occur, his family is protected with a tax-free PPLI death benefit.

80/20 In Action

According to a recent report on CNBC, just three stocks are responsible for most of the market’s gain this year.  Amazon, Netflix, and Microsoft together are responsible for 71% of S & P 500 returns and for 78% of NASDAQ 100 returns.  Not quite 80/20, but the principal is there.

Now let see how the 80/20 plays out more personally in our daily lives. If you have had the experience of working closely with a group of people over a long period of time, you find out their strengths and weakness and your own. 

You find that that some do things well in some areas and not so well in others–and if you are honest with yourself–this applies to observations about yourself too.  So if we take the 80/20 rule as our guide, we are grouped into the 80% part or the 20% part, depending on the task or character trait that we are measuring.

Our firm must conduct diligent research to achieve the aims of the families that approach us for PPLI structuring. We must find the best possible way to give them the tax and enhanced privacy benefits that they seek. Our goal at the end of our research, is to place the family in the 20% part of the equation.

We wish to elevate you to the 20% through our rigorous and thorough PPLI structuring process. We invite you to contact us today so we can begin the process now.

Download PDF

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

 

Michael Malloy Information

 

 

 

 

 

 

 

 

 

 

 

PPLI Hits the Mainstream with Bloomberg

EWP: A Giant Structuring Tool

Since we work with wealthy international families, we are expert in using Private Placement Life Insurance (PPLI) as a structuring tool. Our approach is called Expanded Worldwide Planning (EWP). A few weeks ago Bloomberg ran an article on PPLI, “How to invest in Hedge Funds and Pay No Taxes.” We offer quotes and a video about the article below.

First some basics on EWP, and how a properly structured policy can excellently serve the needs of wealthy international families.

  • All assets inside the PPLI policy receive tax deferral, not only investments, but business income too.
  • The assets pass tax-free to the beneficiaries named in the policy. In a properly structured policy one creates a tax-free environment for these assets. Assets can be located anywhere in the world.
  • Because life insurance is used, FATCA and CRS reporting is greatly simplified, and in some cases, is eliminated.
  • Families receive enhanced privacy, because the insurance company becomes the beneficial owner of the assets inside the PPLI policy.
  • The EWP structure provides excellent asset protection.
  • The EWP structure is low cost with fees averaging 1% of assets.
  • The EWP structure is fully compliant with the tax authorities of all tax jurisdictions.
  • Should an untimely death of the wealth creator occur, his family is protected with a tax-free death benefit.

More on Product vs. Structure

The Bloomberg article mentioned above speaks about PPLI as a product, which of course it is, but most importantly it is an EWP structuring tool. One quote from the article is of note:

“When I would talk about it years ago, people looked at you funny,” said Edward Gordon, founder of Preservation Capital Partners. Lawyers for the wealthy hadn’t heard of PPLIs and often dissuaded their clients from trying a product that “sounded too good to be true,” he said. Now, “it’s reaching somewhat of a tipping point.”

Unfortunately, the ignorance of PPLI’s planning possibilities even goes beyond lack of knowledge.  Many asset managers naively sell against insurance structuring, and do not realize that the unique tax advantages of PPLI will give the assets they manage a significant boost in performance.  This is especially true for long-term investments, and those intended for future generations.

Here are some other key quotes from the Bloomberg article by Heather Perlberg and Ben Steverman.

“This is a sexy product that people get excited about owning and tell their friends about,” said Aaron Hodari, a managing director at the advisory firm Schechter Wealth. “It’s an alternative investment that allows you to invest in hedge funds and defer or eliminate taxes.”

“Athletes, celebrities, and family offices are embracing private placement life insurance, or PPLI, as a way to preserve wealth for their heirs. It’s a strategy that’s perfectly legal and has existed for decades. While insurance funds are typically a way to protect assets from lawsuits, the main appeal of PPLIs is that they can help investors avoid taxes on capital gains, ordinary income and high-net-worth estates.”

Bloomberg’s Peggy Collins now offers us a short video about the Bloomberg article:

We invite you to explore with us the structuring possibilities of PPLI and EWP. As always, your comments and questions are indeed welcomed and appreciated.

Download PDF

 

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

Michael Malloy Information

 

 

 

 

 

 

 

 

Jurisdictions Are Key to Non-953(d) Policies

PPLI: Two Sides of One Face, Part II

Understanding the jurisdictions where wealthy international families operate is essential to Expanded Worldwide Planning (EWP). EWP is the over-arching philosophy of our firm’s planning. In Part I of our topic we explored the using a 953(d) compliant PPLI policy. Here we will discuss some uses of the non-953(d) PPLI policy, and how its increased flexibility can solve many planning issues.

Sometimes we tie our blog to a current topic in the news, and this week is no exception. “U.S. on Course to Land on European Tax Blacklist: EU Official” is what caught our eye. The article is by Joe Kirwin courtesy of Bloomberg.

What the OECD finds objectionable in the U.S., can be accomplished using a non-953(d) PPLI policy, and still be fully compliant. This is the case even if the U.S. were to fully acquiesce to the OECD’s objections, and change its existing regulations.  More on this below.

We will illustrate our points with an example. Mr. LeGrand is a wealthy entrepreneur with several companies that operate outside the U.S. He wishes to pass these companies to his daughter, Angela, who resides in the U.S. Mr. LeGrand also wishes to give Angela access to the profits of these non-U.S. companies in a tax-free manner.  Angela is active in operating these companies. This can all be accomplished using a non-953(d) PPLI policy.

Key elements in this planning scenario are diversification and investor control regulations. These regulations must be strictly complied with for a 953(d) PPLI policy or all is for naught.  In the example of Mr. LeGrand, we used a non-953(d) PPLI policy, and the insurance company is domiciled in Barbados. The diversification and investor control regulations do not exist in the Barbados tax and insurance code.

Mr. LeGrand can generate profits from his companies on a tax-deferred basis, and continue to operate these companies himself.  He also does not have to diversify his holdings as he would on a 953(d) compliant PPLI policy.

Now back to our news article, and a few key paragraphs from it:

“If the U.S. doesn’t agree by June 2019 to exchange the bank account details of non-U.S. citizens with governments around the world, it will be placed on the European Union’s tax haven blacklist.

The U.S. is on the clock as the 2019 deadline nears for adopting and applying the Organization for Economic Cooperation and Development’s common reporting standard, Valere Moutarlier, the EU’s head of direct taxation, told a new European Parliament tax investigative committee May 15. The Paradise Papers panel was set up in March following a data leak of more than 13 million files detailing the way wealthy individuals and large companies avoid taxes via offshore structures, such as trusts.”

In our example of the LeGrand family, a bank account can be opened by the insurance company, who becomes the beneficial owner of the assets that Mr. LeGrand places inside his PPLI policy. Mr. LeGrand’s assets are held by the bank in separate accounts in his name, therefore, he can access the account for his own purposes.

Back to Angela.  How can she receive funds from the companies tax-free?  Since all assets are inside a properly structured PPLI policy, funds withdrawn from the PPLI have been re-characterized as tax-free loans and not profits subject to taxation.

Angela simple makes these loans for a 25 bps charge, and the loan balance is subtracted from the death benefit when the insured passes. Angela will receive the companies as a tax-free death benefit at the passing of the insured life under the policy.

All questions and comments are greatly appreciated. Please let us know how we can assist you in crafting structures similar to the one used for the  LeGrand family.

 

Download PDF

 

 

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

 

Michael Malloy Information

 

 

 

 

 

 

 

 

 

A Great Dance Couple: EWP & Trust

“Dancing Cheek to Cheek”

The films of Fred Astaire and Ginger Rogers in the 1930’s and 1940s had some sensational dance routines.  The dance couple of Expanded Worldwide Planning (EWP) and a Trust are poised for equally sensational steps in the realm of planning for wealthy international families.

Our firm specializes in just this brand of choreography: using a properly structured Private Placement Life Insurance (PPLI) in combination with an excellently drafted Trust.  We capitalize Trust(s), because there is a large variety to choose from in international tax planning, and the selection depends on the nationality of the family members, their jurisdictions of domicile, the passports they carry, the location of their assets, and all the various countries’ laws that impact these items.

At the heart of EWP is a properly structured Private Placement Life Insurance (PPLI) policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

A trust can be used in connection with other planning to lessen taxes, but by itself does not automatically confer tax advantages. For example, a trust cannot pass assets as a tax-free death benefit to future generations, as a PPLI policy can do.

For those jurisdictions in the world that recognize trust, there are innumerable techniques used by wealthy international families that favor the use of a trust.

Many advisors who draft trusts miss the opportunity of “dancing cheek to cheek” by not incorporating PPLI policies in conjunction with their trust planning.

Trust and Insurance Comparison

●    Contractually based and used by millions ●    Provides some asset protection
●    Tax deferral ●    Sometimes seen as tool for the rich
●    Insurance company is beneficial owner ●    Requires “trustee” with full control
●    Simplified or limited reporting ●    More stringent reporting requirements
●    Potentially tax free ●    Tax filings for trust and possibly beneficiaries required in some jurisdictions
●    No capital gains tax ●    Limited or not direct tax deferral on payouts
●    No trustee  
●    Asset protection  

In most civil law jurisdictions, trusts are poorly acknowledged and trust law is not well developed. This can create obstacles for those domiciled in these civil law jurisdictions that have created foreign trusts. However, in certain circumstances, a PPLI structure can circumvent these problems and achieve the planning aims one would more commonly be able to fulfill with a trust in a common law jurisdiction.

Our well-rehearsed team of advisors can truly teach you some new dance steps, that partner EWP with trusts, so “Let’s Dance.”

 

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

 

 

 

 

 

 

The Pythagorean Theorem Revisited

PPLI+ Tax Treaty2  = EWP2

International tax planning must combine items from various disciplines to achieve a successful result.  We will take liberties with the Pythagorean Theorem to make our point. Tax codes do not have the exactitude of mathematical formulas, but international families must frequently combine several elements to achieve the desired results. The elements we will discuss are Private Placement Life Insurance (PPLI), Expanded Worldwide Planning (EWP), and international tax treaties.  We will have a short refresher on the Pythagorean Theorem later on, but no quiz!

In the Pythagorean Theorem once two sides are known, you can solve for the third side using the Theorem.

We wish to solve for EWP, so let us explore how tax treaties allow us to achieve a successful result in solving our equation. At the heart of EWP is a properly structured PPLI policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

According to the Wikipedia Tax treaty page, “The stated goals for entering into a treaty often include reduction of double taxation, eliminating tax evasion, and encouraging cross-border trade efficiency. It is generally accepted that tax treaties improve certainty for taxpayers and tax authorities in their international dealings.”

At Advanced Financial Solutions, Inc., we research jurisdictions that give wealthy international families the most benefits.  Let us site an example of a Chinese family, who invests in U.S. real estate through a real estate investment advisor.  Depending on their estate planning needs, the investment advisor can create a new fund as a PPLI or a Private Placement Variable Annuity (PPVA). The policy will be owned by a foreign trust established by the family.

All of the real estate income and gains within the annuity contract will not be subject to taxation or withholding taxes under Article 17 of the U.S. –People’s Republic of China Income Tax Treaty.

Using EWP and PPLI we have provided this Chinese family, tax compliance, tax efficiency, simplified reporting, and enhanced privacy.

I know those of you who enjoy math have been waiting for the return of the Pythagorean Theorem.  Here it is in its most simple form courtesy of Margaret Patterson of Dr. Math:

So if you are told that you have a right triangle whose sides are 3 and 4,
like this:

|\
| \             Then you can use this theorem to find out what the
3 |  \ c          third side is.
|   \           3*3 + 4*4 = 9 + 16 = 25 = 5*5, so c=5
|____\
4

Our firm enjoys solving your problems, so please give us one that can be solved using EWP and PPLI. 

We appreciate your continued trust and support.

 

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

 

 

 

 

PPLI + EWP = Unique Benefits

Expanded Worldwide Planning (EWP)

If a tax authority wishes to tax something, two items of concern are what type of tax to apply and was the transaction done in its jurisdiction. In our internet age this is not always so easy to clarify.  Our embrace of Expanded Worldwide Planning (EWP) makes this process of classification of tax and location simpler.

At the heart of EWP is a properly structured Private Placement Life Insurance (PPLI) policy. The assets inside this policy can be anything that can held by a trust company. These assets can also be located anywhere in the world.  While these assets are inside this PPLI policy, all tax is deferred.  At the death of the insured life/lives under the policy, these assets pass tax-free to the beneficiaries of the PPLI policy.

The news items that gave birth to our thoughts we will discuss below.  But first some more about EWP and PPLI, and how it can streamline reporting obligations to tax authorities, and bypass the need to classify the type of tax that needs to be applied to the assets. As we stated above,all tax is deferred for assets inside a properly structured PPLI policy.

Further, for reporting purposes, the insurance company becomes the beneficial owner of the assets inside the policy.  For clients not seeking to hide assets, but seeking legitimate privacy, this is an added bonus for using EWP.

What to tax and where it is located?

 Our first news item we have quoted previously, and now use it to illustrate how a new tax entity is not so easy to fit into an existing tax code that was written before this new tax entity was even invented. The taxation of property and currency occupy different sections of a tax authorities code.

 Courtesy of Mateo Jarrin Cuvi of Taxlinked.net

“Israel’s tax authorities have decided to classify Bitcoin & other cryptocurrencies as property instead of currencies. How will this affect their taxation.”

Our next quote deals with the location of the item to be taxed, and nicely illustrates how this can be challenging to governments and tax authorities.

Courtesy of Brent Kendall and Nicole Hong of the Wall Street Journal

“High Court Grapples With Case of Emails Stored Abroad”

WASHINGTON—Supreme Court justices voiced concern Tuesday that Microsoft’s resistance to U.S. search warrants for customer emails stored overseas would hamper criminal investigations, in a case that pits leading tech companies against law enforcement.

The justices were reviewing a lower-court ruling Microsoft won in 2016 that clipped the Justice Department’s authority to obtain overseas emails. The battle dates back to 2013 when the U.S. got a warrant that ordered Microsoft to hand over messages in an email account that was linked to narcotics trafficking. Microsoft argued the warrant wasn’t valid because the emails were stored in Ireland.”

Wealthy international clients are looking for simple and compliant structures that also have privacy safeguards.  Using EWP with PPLI can give this to them.  Please let us know how we can assist you further with using these unique and straightforward structures.

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

 

 

 

 

 

PPLI and Cryptocurrency–Together A Winner

Expanded Worldwide Planning (EWP) Embraces Change

Properly structured Private Placement Life Insurance (PPLI) gives the assets inside the policy tax deferred growth for the life of the policy.  When the insured life/lives under the policy pass on, the assets pass as a tax-free death benefit to the beneficiaries under the policy.  If some of the assets inside the policy are cryptocurrencies, they also receive this tax-advantaged treatment. Essentially PPLI is more of an income tax and estate tax planning tool than it is a product.  Many asset classes are supported in an open architecture EWP structure.

We will discuss some more basics on structuring with PPLI in the context of EWP, then, something more on how cryptocurrencies and PPLI both occupy a similar space on the international scene for wealthy clients.

Any asset that can be custodied by a reputable trust company can go into the PPLI structure. Many policies are owned by trusts which can be domiciled in jurisdictions in keeping with the client’s planning needs. In terms of asset management, it is an open architecture model where the assets can be located in multiple jurisdictions with multiple asset managers. PPLI insurance costs generally average about 1 percent of the cash value of the policy, over the life of the policy.

The cost of the death benefit varies with the health and age of the insured person, and generally policies are designed with the lowest death benefit possible. Tax and enhanced privacy benefits outweigh the costs of using a PPLI structure. Asset management fees will depend on the asset manager(s) selected to manage the assets inside the policy. The policy is fully transparent to the client, as all fees and costs are disclosed.

How are cryptocurrency, EWP, and PPLI similar? All three have qualities that a wealthy homeowner would be looking for in an ideal home: architectural elements that truly “speak” to the owner; privacy; a climate that suits the owner; and a sense of security, both emotional and physical. These may seem like strange bedfellows, but what we all seek in the world, whether it is a home or a structure for our financial affairs, can be quite similar in nature.

We will illustrate this point by a few recent news items about cryptocurrencies:

Courtesy of Anne Kadet in The Wall Street Journal.

“NewYorkCoin, created in 2014 by an unknown developer, has enjoyed a surge of support in recent months. More businesses are accepting the currency and there’s a growing interest among cryptocurrency developers. There’s even a new Meetup group where enthusiasts who frequent online forums can gather in person to discuss their altcoin adventures.”

We all enjoy having a local identify and simultaneously having the sense of belonging to something larger than ourselves.  The NewYorkCoin, EWP, and PPLI have these characteristics.  The open architectural elements of EWP and PPLI can incorporate both the local and international in a structure that speaks to the client’s individual planning needs.

Courtesy of Mateo Jarrin Cuvi of Taxlinked.net.

“Israel’s tax authorities have decided to classify Bitcoin & other cryptocurrencies as property instead of currencies. How will this affect their taxation?”

We are not qualified to comment on the taxation issue, but wish to use this invitation post comments to raise a salient point: the use of blockchain technology as the basis for a currency throws into question the very nature of what constitutes a currency.  Or put another way, in the future will currency continued to be issued by governments or by individuals?  The answer to this question is being played out currently on the world stage.  In the meantime, if you are concerned about the tax on cryptocurrencies, you can use a properly structured PPLI policy to shield the tax.

For some readers we may have stretched some analogies, but hopefully we have equally stretched your minds on our topics.  We appreciate your comments and are thankful for your continued trust and support.

 

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

 

 

 

 

 

PPLI for Wealthy Chinese Families

Works for Assets in Both East and West

Wealthy Chinese are not different from wealthy citizens in other parts of the globe in that they all seek to maximize tax efficiency and privacy wherever their assets are located.  Many wealthy Chinese lead dual lives in that they are subject to different laws for their assets inside China and those outside of China.

The concept of Expanded Worldwide Planning (EWP) coupled with a properly structured Private Placement Life Insurance (PPLI) can give these wealthy Chinese a vehicle to achieve tax efficiency and privacy, as well as complying with the dictates of the tax authorities in the different countries involved in their structures.

The beneficial owner of the assets in a properly structured PPLI policy is the insurance company. This greatly simplifies any reporting obligations to tax authorizes, because the assets inside the policy are held in segregated accounts, and frequently spread out over multiple jurisdictions worldwide.  The PPLI insurance company becomes the administrator of the assets and their beneficial owner. Because they are held in segregated accounts, they are not part of the insurance company’s balance sheet and are often placed in the hands of a custodian bank.

Most PPLI companies will accept any qualified institution to act as custodian, and any qualified asset manager to direct the investments in the segregated accounts.  This relationship between the owner of the policy, the insurance company, and the segregated accounts is codified in the laws of the various jurisdictions where PPLI insurance companies are located, and therefore lends viable commercial substance to such a structure.

Depending on the needs of the client, the PPLI policy can be joined to a trust or offshore foundation to achieve the families aims. In addition to tax benefits, trusts also allow beneficiaries to protect assets from creditors as the trust may be bankruptcy remote. For example, under a discretionary trust, settlor could be the protector and one of the beneficiaries. Therefore, the settlor may be able to be protected from creditors and benefit from the trust assets without owning them.

Using a private foundation is not only tax-wise but also helps in preserving and protecting assets and net wealth of a family. What is more is that a foundation opens up ways to avoid problems concerning formalities of a will, claims of spouses or other family members when dealing with an inheritance. One of the major benefits is that the death of a foundation founder does not have any impact on the situation of the foundation on both tax and other issues.

EWP can use trusts and foundations to own PPLI policies that can solve issues not possible with other planning tools.  We welcome your inquiries on how we can achieve for you tax compliance, tax efficiency, and privacy.

 

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

 

 

 

 

 

 

 

 

 

Tax Compliance & Privacy Together: PPLI

Expanded Worldwide Planning (EWP) in Action

A government needs tax dollars to achieve its aims.  Many countries give their citizens, at least in their official pronouncements, a right to keep their financial affairs private.  We have conflict here.  How is this conflict resolved?

In most governmental systems throughout the world, the judicial system has the role of mediator between a government and its citizens. We will discuss two current topics in this area below.  But first, since our role is to assist private clients in navigating the difficult waters between tax compliance and privacy, a word on how we accomplish this.

We are advocates of Expanded Worldwide Planning (EWP).  EWP works to resolve the conflict outlined above. This is achieved by using a properly structured Private Placement Life Insurance (PPLI) policy.

Any asset that can be held in custody by a reputable trust company can go into the PPLI structure. Many policies are owned by trusts which can be domiciled in jurisdictions in keeping with the client’s planning needs. In terms of asset management, it is an open architecture model where the assets can be located in multiple jurisdictions with multiple asset managers.

PPLI insurance costs generally average about 1 percent of the cash value of the policy. The cost of the death benefit varies with the health and age of the insured person, and generally policies are designed with the lowest death benefit possible. Tax and enhanced privacy benefits outweigh the costs of using a PPLI structure. Asset management fees will depend on the asset manager(s) selected to manage the assets inside the policy.

Notable Current Issues on This Topic

These two important items are brought to us courtesy of the Society of Trust and Estate Practitioners (STEP).

  • Powers to issue ‘unexplained wealth orders’ against people who cannot account for their assets, as set out in the UK Criminal Finances Act 2017, will come into effect this Wednesday (31 January), the UK government has announced. A new procedure allowing the authorities to issue bank account freezing and forfeiture notices without a court order comes into force at the same time. An extended legal definition of ‘cash’, to include many kinds of physical property, will come into force on 16 April, along with a new procedure to seize, detain and forfeit it.
  • The trusts, tax structures and other banking arrangements disclosed by documents stolen from offshore law firm Appleby Global are unlikely to be examined in detail in the course of the firm’s breach of confidence litigation against the BBC and the Guardian, according to an interim judgment of the England and Wales High Court. The primary issue will be whether the defendants’ journalism was sufficiently in the public interest to outweigh the breach of confidence entailed by the hacking of Appleby’s computer system, and the subsequent leaking of its client documents to the media (Appleby v BBC and The Guardian, 2018 EWHC 104 Ch).

The first news item is striking in that the UK government has eliminated the obtaining of a court order in allowing authorities to issue bank account freezing and forfeiture orders.  We mention the second item, Appleby v BBC and The Guardian, because the issue the Court is deciding goes to the heart of all the recent leaks of private client information by news organizations and non-profits.

EWP and a properly structured PPLI policy cannot solve all your problems, but we hope we can assist in solving a few of them.  We welcome your inquiries, comments, and suggestions.

 

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

 

 

 

 

Addendum to White Paper on Expanded Worldwide Planning

Additional comments on EWP

Structuring in Puerto Rico—the best of “the new Switzerland” Expanded Worldwide Planning (EWP)

In case you didn’t, please read the “Expanded Worldwide Planning (EWP)” blog post.

Top international tax planners have been quick to realize the implications of our last white
paper, “Structuring in Puerto Rico—the best of “the new Switzerland.” Indeed, one advisor
coined the phrase “Expanded Worldwide Planning” to describe the new paradigm. We have
espoused this phrase as the title of our short Addendum to our white paper and will be
clarifying some of these new possibilities for your planning toolkit. With EWP, the trust or
entity can be domiciled anywhere the client wishes it to be and so can the assets be located
anywhere in the world. Over the last few years, many of the international families we serve
have been described as Global Citizens. In parallel to that, EWP can be viewed as Global
Planning.

If one accepts the tenets outlined in, “Structuring in Puerto Rico—the best of the new
Switzerland,” that is backed up with a very positively worded legal opinion letter by a major
international law firm, it becomes obvious that the Puerto Rican Private Placement Life
Insurance policy functions merely as a second trust to secure the advantages of Puerto Rico’s  jurisdictional position. These advantages have been strengthened by the recent elections in the US, as well as the voices that have been raised about legal and data breach issues inherent in CRS.1

Ironically, under the umbrella of an EWP structure, planning possibilities are expanded rather than diminished as a result of FATCA and CRS. EWP allows for a tax compliant system that still respects basic rights of privacy. It assuages the quite significant objections many major law firms and international planners rightfully raise against certain aspects of the CRS.2

They are not seeking to hide client assets from tax authorities but do intend to protect their
clients’ privacy, which EWP allows them to do.

With the massive amounts of data being exchanged under CRS about to commence, the risk is high for the right of attorney client privilege to be pierced by groups of journalists working in consort in the name of tax transparency.

This has already become apparent in past experiences such as the Panama Papers. It will take years for all the implications of CRS to be worked out, if indeed it lasts that long.
Why not embrace a structure that bypasses the confusion and discord that will ensue in this process? Advanced Financial Solutions seeks to secure its clients in a tax-advantaged and privacy-advantaged environment. We are not looking to hide client assets and work only with those who have undergone a most thorough KYC and AML process. We invite you to explore EWP with us, and welcome your questions and inquiries.

Download the full PDF with endnotes: EWP addendum final (pdf)

 

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