Why Offshore Life Insurance is a Great Tax Shelter
As sovereign debt and financial crises fill the newspaper every day, many people wonder how to protect their hard-earned assets. Financial advisers often recommend insurance as a way to protect the value of an investor’s estate and to settle taxes.
Current and future taxes impact wealth accumulation. That’s why North American tax advisers hawk the benefits of tax-deferred investments, such as annuities. The investor’s money grows tax-deferred until the funds are withdrawn at some future date. If the investor’s tax rate is lower in the future than today, purchasing a tax-deferred investment can help to protect assets against the tax impact.
Future Tax Rates Are Anyone’s Guess
Unfortunately, governments around the world facing financial worries must raise money in some manner to repay lenders. Governments issue loans called bonds and repay both principal and interest to lenders. When governments need money for any reason, their “sovereign” nature allows them to collect taxes. Some locations extract a triple tax on residents, including federal, state, and local taxes.
Because tax rates may rise in the future, counting on the positive net effect of tax-deferred investments may disappoint many safe money investors.
How Offshore Life Insurance Can Help
Offshore life insurance is one of the ways some well-informed investors seek to protect capital’s future purchasing power. Some offshore financial centers, such as Belize, have created an investment environment to attract significant assets. Offshore life insurance products provide significant tax shelter for individuals and families’ capital.
Tax Shelter Haven
A tax shelter haven is a misnomer. In years past, U.S. investors purchased highly leveraged investments, borrowing significantly against the money invested in a limited partnership or Reg D private placement. The cost of borrowing money, for which the investor was usually fully responsible for many years, created a write-off of interest for the investor. How the investment performed was of less value to the investor than how many times and for how many years the investor could write off her investment.
Tax laws in North America closed legal loopholes for tax-sheltered investments. Later, legislation prevented investors’ ability to write off the loan charges on their taxes. For many high net worth accredited investors, these so-called investments did precious little to preserve wealth.
Offshore life Insurance
Life insurance may be an alternative to review with your future income and estate tax planning. Of course, recent years of economic downturns prove that even brand name life insurance companies can suffer during an economic collapse. Selecting the right financial advisers, financial institutions, and jurisdiction is required to take advantage of offshore insurance and investments.
For more information on offshore life insurance, contact Karlsberg.