3 People You Need In Your Corner

I’m going to let you in on some of my secrets today… some tips for finding the best people to work with on your overseas journey…

Developing an advisory infrastructure—that is, legal, financial, tax, banking, and structures resources—in the places where you want to live or invest overseas is critical to building a globally diversified portfolio and a globally diversified life.

It doesn’t have to be difficult… but it can take time to find the right people…

I’ve spoken with hundreds of attorneys and accountants in the 30 years I’ve been living and investing overseas. Most of them I’ve met with once and decided, after that initial conversation, that this wasn’t the guy (or gal) for me. Others I’ve worked with for specific investments or structure set-ups and not needed again.

A handful have become long-term advisors and trusted friends.

What’s the difference between the guys I spoke with once and knew I didn’t want to work with and the advisors I’ve cultivated personal relationships with?

That is, how should you go about choosing your own advisors?

Well, make your selections based on these three criteria…

1. Offshore stuff doesn’t have to be complicated—and I recommend you avoid any potential advisor who suggests otherwise.

Over the years I’ve interviewed attorneys who’ve insisted on preparing memos on my situation. I prefer personal meetings if possible and casual one-on-one conversations when trying to source new advisors.

In my experience, the attorneys and tax advisors who prefer more formal getting-to-know-each-other strategies aren’t for me. That’s just not how I’m most comfortable operating. In addition, a more formal, memo approach usually means more complicated recommendations.

I don’t want pages of legalese on different options.

I want a straightforward recommendation of the best option with simple facts to support it. That way, I can make a quick determination as to how to proceed.

2. This doesn’t have to be expensive, either. Offshore attorneys and tax advisors cost money, of course, but they needn’t cost as much as you might fear they’ll cost. And you don’t have to go with the most expensive.

As with all things, you get what you pay for… but you can also overpay.

I’ve found that the guys who want to deal in lengthy memos and multiple options and scenarios prefer those complicated tactics because they can justify higher fees.

Simple is not only better, it takes less time… and, so, it costs less money.

3. Finally (and I’d say perhaps most important), any offshore advisor you engage should be a guy (or a woman) you feel comfortable with.

Base your comfort level on two things.

First is the advisor’s practical experience working with people like you trying to do the things you’re trying to do. Local experience isn’t the same as expat experience.

Second is your gut reaction during the interview. If you don’t like the guy, fair enough. If he makes you feel confused or uncertain about your situation, pay attention to that. Don’t ignore your instincts when making these important choices.

Taking a step back, what “advisory infrastructure,” exactly, are we talking about?

You Need These 3 People…

First, an American going offshore needs a U.S. accountant who understands offshore tax situations for U.S. persons.

CPAs who are fluent in U.S. tax matters often specialize in certain areas, such as corporate taxes. Most CPAs who specialize in personal taxes have never heard of the Foreign Earned Income Exclusion let alone prepared a tax return that included the required forms.

My point is that you shouldn’t expect your current U.S. tax preparer to understand anything about how to manage or report your tax obligations associated with offshore investments or structures.

Over the years, readers have told me that their tax advisors in the States have told them such crazy things as having a bank account in another country is illegal or that they aren’t eligible for the Foreign Earned Income Exclusion because they are self-employed.

You need to find a U.S. tax preparer who specializes in expat tax matters.

They aren’t easy to find, but they do exist.

I’ve spoken and worked with dozens of them over the years. One observation I’d pass along is that you’re better off with one who is an expat himself.

The other core advisor you need is an offshore attorney.

Typically, it’s your offshore attorney who helps you set up whatever offshore structures you want.

Most formation companies and registered agents in other jurisdictions require you to come to them through an advisor, typically an attorney. Sometimes, you can go direct to a formation company or you can use an online service.

However, going direct or using an online service means you are doing this on your own, without personalized legal advice or support.

You’ll be getting a cookie-cutter entity that you’ll need to know how to deal with. You can save money going this DIY route—but, when you’re just getting started, this may not be the best idea.

This is particularly true if what you want is an offshore trust. Trusts are complicated documents that require personalization to be most effective.

An off-the-shelf trust document will cost less… but it won’t likely do what you need it to do.

Whether you’re putting your offshore investments into a trust or holding them in an offshore LLC, you’ll need a place to deposit the capital. That’s where offshore investment or private banks come in. The challenge here can be minimum account balances, which can be as much as $1 million. Some investment banks allow you to open an account with as little as $250,000.

If you’re working with less, you do have options, including brokerage houses offshore.

With this basic infrastructure in place, you can expand organically and over time, as you grow and diversify your holdings.

The majority of my offshore investments are in real estate and direct investments in different countries. This means an important and ever-evolving part of my advisory infrastructure are  local attorneys in every country where I’ve invested.

Critical when choosing a local attorney is language.

Unless you are fully fluent in the local language, you need a local attorney who is fully fluent in English.

No matter your language skills, you want a local attorney who has experience working with foreigners.

At a minimum, your local attorney will review contracts and carry out due diligence for any investment you’re considering in his country.

I’ve found, though, that my in-country attorney advisors often become much more involved in my local activities over time.

They provide references for other resources, provide insights into the local market, alert me to emerging opportunities, even send me deal alerts that I’d otherwise never have access to.

Stay diversified,

Lief Simon

Editor, Simon Letter