Special Tax Planning Alert For Americans - An Interesting Window Of Opportunity Has Opened

"I´m proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money." ~ Arthur Godfrey

Dear Mountaineers,

Generally, the information we share with you in regard to tax planning and regulations is at best rather bland and at worst outright depressing. Most of the time, over the past years, the treasuries of most Western governments have hardly been generous or forgiving with taxpayers. In fact, at times it has appeared as though fiscal imbalances have given governments a carte blanche to hunt, shoot and kill on sight.

Today, we´d like to alert our American readers to a window of opportunity that is unique and deserves serious consideration. Bernarda Pesantez, who heads up our client advisory team, has summarized a recent piece of tax legislation that affords substantial tax and estate planning opportunities.

I look forward to reviewing and discussing this topic further and in depth at our upcoming Inner Circle Briefing on February 15th. We still have a few seats available. Be sure to sign up as soon as possible.

One more point that I´d like to mention today: After the recent pullback in gold and silver prices, this appears to be a good time to increase your holdings of physical precious metals. We have already seen a significant pickup in purchases at Global Gold over the past week. Don´t wait too long...

Sincerely,

Your "Swiss Mountain Guide"

Frank R. Suess

Estate Planning Opportunity To Inherit Up To US$ 10 Million Tax-Free
By Bernarda Pesantez, Director, BFI Client Advisory Services

On December 17th, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Among others, the Act includes provisions related to estate, gift and generation-skipping transfer tax rates and exemption amounts. Below, we will comment on the specific provisions that, via proper planning, will allow for substantial estate and gift tax savings.

Transfer tax changes

In essence, the aforementioned Act provides that during the years of 2011 AND 2012:

• The maximum estate and gift tax rate will be 35%. Note: that is the lowest since 1931.
• The estate and gift tax exemptions are unified and raised to $5 million per individual.
• The generation-skipping transfer tax exemption has been increased to $5 million.
• The generation-skipping transfer tax rate is also set at 35% instead of the prior rate of 55%.

These provisions will be valid ONLY for 2011 and 2012. It seems that on January 1st, 2013, the rates and exemption amounts would go back to those in effect in 2001 (prior to the Bush administration), namely an exemption amount of $1 million and a tax rate of 55%!

Planning opportunities

Since the Act allows for the use of the unified gift and estate tax exemption during life, it presents an attractive planning opportunity for individuals to efficiently take funds out of their estate without raising transfer taxes...and if so, at a rather low rate. But again, this can be done only during these next two years!

Furthermore, it seems as those individuals that used their lifetime gift tax exemption in the past when the exemption amount was lower (e.g. $1Mio), could top-up their gifts to the new $5 million allowance.

Readers that share the views and philosophy of BFI will note that this presents a unique opportunity to not only take assets off their estates, but to also achieve international diversification for the same by including currency and geographical diversification to these assets.

Since international diversification - despite the funds being out of your estate - will still need to comply with the laws of your home country, it is only recommendable that it is achieved by using compliant solutions. For that, we are happy to provide some planning ideas.

The new Act provides no assurance as to what will happen after 2012. Nevertheless, the rules for 2011 and 2012 are set. And surprisingly, they are set to your advantage. Now is an ideal time to review your estate plan and ensure you take maximum advantage of this temporary law. Be sure to contact us should you be interested in exploring options related to this.

 

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For US citizens, it is worldwide tax on worldwide income...forever. Worldwide reporting of financial assets...forever. Huge penalties are written into US statutes for failure to file forms even if not a dollar is due in tax.

Congress is chasing the IRS to raise revenue, and with this in mind, the new amnesty is expected to give the IRS the power to collect penalties that will eat up over a fifth or more of some folks´ entire life´s savings. US tax penalties are remarkably different from those in other countries. In the UK, they are a percentage of tax due. In the US, however, they are often simply an incredibly expensive proportion of financial assets.

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"This reinforced our existing perception: despite the upheavals in terms of private banking confidentiality, Switzerland is still a good place to manage your money. In our opinion the bankers in Switzerland are the most professional in the world. Switzerland may no longer be a place to hide your money (they don´t want that business any more) but it´s still a great place to manage your wealth in full compliance with your local laws. And despite what you hear about Europe´s financial problems, walking past the stores and banks on the Bahnhofstrasse you would never realize that much of the world is in the midst of a global depression."

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