IDPVA

This week the topics have centered around international investing. Today's topic will incorporate a common financial vehicle, an annuity, but get into the special benefits of having an International Deferred Private Variable Annuity (IDPVA). The best advantage of this vehicle is that it is 100% tax compliant with the United States.

When looking at financial vehicles, investing in insurance contracts and annuities may seem to be very common and boring. The returns are generally lower, the flexibility may be limited or offer no flexibility, and they typically have some high maintenance fees and costs included. (For more information on the advantages and disadvantages, you can see posts in this blog the week of November 5, 2007.) However, they do offer deferred taxes on investment gains, and tax exempt proceeds as the death benefit to your beneficiaries.

These are the commonly known benefits. Another one that may not be well known is protecting your assets. Almost every state protects the death benefit of a life insurance policy or payments from an annuity from creditors or in civil case disputes. However, the cash value of a life insurance policy may or may not be exempt. With the annuity, for distributions to be protected, they must be payable to someone other than the contract owner; e.g., your spouse or partner. Once the payments begin, creditors may be able to attack the payments.

The big advantage of purchasing an international variable annuity or life insurance contract is that foreign law governs the contract. By selecting the appropriate jurisdiction, you can achieve a much higher degree of asset protection. This can give you privacy that simply is not available with their domestic counterparts. Indeed, in a suitable jurisdiction such as Austria, Switzerland, Liechtenstein, or Nevis, an international variable annuity or life insurance contract can offer asset protection comparable or better than that of an international trust.

International private variable annuities and life insurance contracts provide numerous other advantages:

• Significantly increased privacy in comparison to domestic annuities
• Tax-deferred access to offshore securities markets, including hedge funds and other international funds, real estate, and other alternative investments
  
• Avoidance of possible foreign exchange controls
• Tax planning for U.S. citizens or long-term residents considering expatriation.

This is the ultimate advantage. If you have a significant amount of wealth to protect, you can create your own private international variable annuity and life insurance company. One way to accomplish this is through a structure called an "International Deferred Private Variable Annuity" (IDPVA).

Your IPDVA is custom tailored to your needs. It can stand alone to accumulate tax-deferred income, and provide asset protection and financial privacy for years or decades to come. It can also capitalize an insurance company that, properly configured, can insure that the assets in the structure pass to your beneficiaries free of estate tax.

Also, an IDPVA can also serve as the centerpiece of a tax-deferred international structure. For example, it can purchase your domestic or foreign business. Once properly structured, formerly taxable assets grow tax-deferred, for years, if not decades.

Your IDPVA can also capitalize an international intellectual property and critical information (IPCI) company. The IPCI company purchases intellectual property and licenses it back out. This structure can handle international licenses for copyrights, trademarks, patents, public appearances, etc. This is a cost-effective solution for licensing intellectual property abroad and deferring tax on the income.

An IDPVA can be cost effective if you have US$250,000 or more to protect. Costs start around US$50,000, including all supporting structures, agreements, and contracts. Operating costs are 1%-3% of the funds under management annually, including compliance with IRS reporting requirements, structure fees, and investment management fees.

There will be much more on international investing this week. Stay tuned ...

I wish to give special thanks to Mark Nestmann for much of the information presented.

However, there should be no poor among you, for in the land the LORD your God is giving you to possess as your inheritance, he will richly bless you, if only you fully obey the LORD your God and are careful to follow all these commands I am giving you today. For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none. You will rule over many nations but none will rule over you. Deuteronomy 15:4-6 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com