Getting Your Financial Assets Out Of The U.S.
Protecting what you own and making sure it is available to you in your new home
If you have an IRA, a 401(k), RRSP, pension fund, savings account or other monetary assets in the United States, you will probably want to move them offshore to protect yourself from the declining value of the dollar, and the meltdown of the U.S. economy that is sure to follow in the wake of America's enormous budget and trade deficits. You're going to be living in a foreign economy and paying for everything in a foreign currency, so the dollar exchange rate matters to you much more than it does to the average American living at home.
For this reason, you will need to prepare yourself, before you leave, to begin to transfer your assets out of the U.S. and into an offshore bank account or other financial instrument so your funds will be readily available to you as you need them. This will require some advance planning, as it can have some serious consequences for you, particularly in terms of taxes and ease of transfer of the funds.
The first thing you need to be aware of is that, as a "U.S. person," the United States government severely restricts where and under what terms you, as an American, can open a bank account, invest in a mutual or hedge fund, transfer money to and from, and engage in other economic activities that facilitate the protection of and access to your assets. Ostensibly, this has been done in the name of fighting money laundering, but it has the effect of severely restricting your freedom of financial movement.
For this reason, I would strongly recommend that you discuss your situation with a certified public accountant or certified financial planner, one who is familiar with these issues as they relate to expatriates, and with your investment advisor if you have one. Between the two of them, they should be able to come up with a plan that enables you to get your money safely out, and into a situation where you can have a reasonable degree of security and ready access to it.
There are at least two creative methods of quickly getting your money out of the States, regardless of the amount: Perth Mint Certificates and Swiss annuities. A Perth Mint Certificate is a depository receipt for your purchase of gold. You buy the certificate in the United States from an authorized dealer, and leave the physical gold on deposit with the Gold Corporation, a corporation that is owned by the government of the State of Western Australia and is located in that state's capital, Perth. Since the certificate is legally merely a "receipt," it is neither cash nor a negotiable monetary instrument, and therefore need not be declared for customs or treasury purposes.
Once you arrive in your new destination, you then sell the certificate to an authorized dealer nearest your destination, outside the U.S. There are authorized dealers in Panama, the Bahamas, Australia, Singapore, Indonesia, and Switzerland where this can be done. The dealer then wires the proceeds to your new bank account in your new home. Note that your new bank account should be a non-dollar account, and the transfer should be denominated in a non-dollar currency; otherwise, the transfer, if greater than $5000, will likely be routed through the United States anyway, and will be subjected to examination and approval by U.S. Federal Reserve. See below.
The Swiss annuity is a refundable annuity contract you buy from a Swiss insurance company through an authorized broker. Most Swiss annuity contracts can be cashed in at any time; so you buy it in the States, and when you arrive in your destination country, you notify your broker that you would like to cash it in, and have him wire the proceeds to your new bank (see the comments in the paragraph above about the wire transfer). I am not in a position to be able to recommend any of the hundreds of Swiss insurance brokers; you can do a Google search and find dozens of their web sites. Because it is a contract, it is a non-negotiable document (an asset, not a money instrument) and since it isn't a monetary instrument, it need not be declared to a customs inspector or reported to the U.S. treasury.
Since Swiss annuities can be denominated in a range of currencies, and Perth Certificates are based on the value of gold, they are both also good vehicles to guard against the decline of the value of the dollar while you are in the process of moving your money.
Some of the mechanics of moving money around of which you should be aware:
- Other countries cooperate closely with the United States in restricting what "U.S. Persons" can do with regards to bank accounts and investments, as well as wire transfers involving U.S. dollars. Foreign countries and banks have little choice - so they will frequently restrict what types of bank accounts you, as a U.S. Person, can set up, what kinds of securities you can invest in, and how much money you can transfer in and out of your local bank account, and where it can come from or go to. Check with the banks in the destination country when you are on your exploratory trip, on what they will let you, as a U.S. Person, do. This is very important!
- Once you, as a U.S. Person, own or have signatory authority over any foreign bank account(s), you are required by U.S. law to report the details on any and all of them to the U.S. Treasury Dept. on Treasury form TDF 90.22 by the end of June each year, every year. This requirement will remain, regardless of the balance in that account, for as long as you remain a U.S. person and a signatory on such an account, regardless of where you are resident. Another reason why you want to drop that U.S. passport just as soon as you possibly can!
- The United States has imposed reporting restrictions on any wire transfer of more than $5,000 involving a U.S. bank. So you thought buying a house involved a lot of paperwork? Wait till you see what is in store for you if you try to transfer more than five grand in or out of the U.S.! Offshore, the paperwork is usually much less, but that doesn't help you if you are in the States or wish to retain the privacy of your transactions.
- It is best to liquidate all your real estate assets before you leave. Selling property from abroad entails all manner of subtle risks and tax consequences, both at home and abroad, and it can be exceedingly difficult to do in a fully secure manner. So it is best to dump not just your house, but that rattletrap rental and the Arizona cactus you own before you go.
- Many third world countries do not honor credit cards, and getting a cash advance on a credit card can be difficult or impossible. In countries where corruption is a problem, credit cards are often limited in availability and acceptance, so don't figure that you can plastic your way around foreign countries like you are used to in the States, except, if you're lucky, in the classier tourist venues. Better be prepared to pay cash for everything. I paid cash for my car and even my house when I moved to Costa Rica. This is why a local bank account is so vitally important - in many countries, bills, big and small, are often paid by making transfers from your account to the creditor's account - so make sure it is possible for you, as an American, to open one.
- Checks are surprisingly well accepted in most parts of the world, but figure that you won't have access to your purchase for as much as two months. They take an enormous amount of time to clear - not because the process is time consuming for the bank, but because the bank likes to use your money for free for as long as they think they can reasonably justify. Dollar checks on U.S. banks, for example, take 45 days to clear in Costa Rica - even though they will typically be debited from your U.S. account within three days.
- Many foreign banks do not guarantee the security of wire transfers. Most will happily perform them - for a price, of course - but they don't guarantee the success or security of the transfer. Best to transfer money in relatively small amounts, several times as needed, to get the sums transferred that you require. Small transfers usually go through much more quickly and cleanly than large ones. Also, keep in mind that $5,000 limit in the States - and expect to fill out paperwork in the foreign country as well, if the transfer is larger than $5,000.
- Most foreign banks are not insured, and many are quite risky. To some degree, you can protect yourself through diversity - have your money in several banks and keep an eye on the stability of each of them. Big granite buildings and marble lobbies are not an indication of the soundness of the bank or the liquidity of the banking system - just ask the Argentinians. If you are going to be living in the third world, it is best to keep your money in a secure offshore bank (such as a Channel Islands bank), and transfer it into the country as needed and only when needed. Having it in several banks will ensure that if one gets placed in receivership and the accounts are frozen, you can still get cash to live on.
- Wire transfers denominated in U.S. dollars that involve more than $5,000 in most cases are transfered through the United States routinely, through correspondent banks in the States, and must be approved by the Federal Reserve Bank, even if neither the sending nor receiving bank is American. This process greatly complicates the logistics of the transfer as well as reducing its security, because many more entities are handling the transfer. This means your big transfer can take several weeks, while the Federal Reserve gets around to approving the transfer. I know of one person who waited three weeks for a transfer of only $13,000 to be completed - and almost lost her home as a result of the delay. One more reason to get those assets offshore and denominated in another currency.
- You can usually manage to transfer up to $5,000 every two weeks indefinitely without invoking a reporting requirement. This might be a way to get some money out, but if the amount is very large, it might take awhile. You may have to arrange for automatic transfers if your bank will do this for you. Better to use one of the methods mentioned above to get it all out quickly.
- Since the U.S. government severely restricts what U.S. persons can do in terms of bank accounts and investments abroad, best to check with your certified public accountant regarding what restrictions are in place in the country of your destination before you commit to moving there.
- Carrying large amounts of cash or negotiable monetary instruments on your person across international borders is exceedingly risky. Besides the robbery problem, most countries require that you declare money you are carrying, larger than a certain dollar amount, and any non-cash negotiable monetary instruments regardless of denominated amount of those instruments. If this ends up being significantly more than the minimum reporting requirement, expect to be hassled by the customs authorities going into the country of your destination. You should expect to have to answer some questions. In fact, a lot of questions. And if you are entering a third-world country, don't be surprised to be relieved of your instruments as a price for your continued freedom.
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