Charitable Foundation for Tax Free Investing
In our opinion, a bullet proof tax free investing strategy would involve ONE charitable foundation that has been set up several years or more prior to a "generous donor" approaching it. This ONE charity foundation is involved with contributing to worthy programs that the donor can truly see value in. The best plan would be for this foundation to be diversified into many worthy programs just as it diversifies into many investments for these programs.
Therefore, the donor gives a substantial amount of money to the charitable foundation and then afterward is asked by the foundation council if he or she would like to manage the amount they contributed minus a fee for processing their contribution. They of course would agree as an independent contractor to set up a very private foreign llc (foreign limited liability company) or ibc (international business company) for the benefit of the owner, manager, member or director which would be the charity foundation .
A bank account is then opened and the money is then transferred from the charitable foundation to the bank account of the foreign llc or ibc. From that bank account, money is sent to various investment accounts for tax free investing or wherever the donor / independent contractor directs it to go. If the independent contractor is a good advisor / manager then the onshore or offshore assets will grow in value. The investment accounts do not need to be offshore.
The independent contractor of the foreign llc or ibc which is owned by the charity foundation has a contractual consulting agreement with the charitable foundation and with the foreign llc or ibc he or she is an independent contractor of. The independent contractor may be granted tax free loans from the foundation council. Or, the foundation council can pay the donor contractor a salary for the work as an investment adviser of the assets they contributed to the foundation. But accepting loans instead of a salary could be more advantageous.
If you are an American living and working abroad for this foreign llc or ibc then you can legally use the foreign-earned income exclusion (FEIE) if you are paid wages as an independent contractor of the llc or ibc. As an American abroad the FEIE allows you to exclude up to US$87,600 ( as of 2008 ) foreign-earned income from U.S. federal income tax liability. Therefore, one of the many benefits for an American of living or retiring abroad is that if you're a foreign resident, you're eligible to make foreign earned U.S. tax free income. But be sure and fill out the proper federal forms along with your 1040 form to take advantage of the FEIE.
Through the contractual consulting agreement the independent contractor of the foreign llc or ibc can make tax free investment choices and make other recommendations to the council for the benefit of both the foundation and the llc he or she is working for. Furthermore, this charitable foundation can reimburse this donor contractor for the expenses generated by looking after the affairs of the offshore llc or ibc, including lodging, food, travel, and transportation etc. and this could be done through a salary or bonuses from time to time. But the independent contractor could decline a salary and just be given tax free loans from time to time. Citizens of all countries of the world are not taxed on loans given to them.
How is this charitable foundation and foreign llc or ibc arrangement legal, while the strategies of those who peddle private trusts or foreign grantor trusts which the hucksters claim are tax free are not legal? Well, the main reason it is legal is that the charity foundation was not set up for the donor, but was established years prior to the llc or ibc that is set up for the management of the money that the donor contributes to the charitable foundation. This is the secret of why our strategy is superior while the strategies of those who want to make money off of you by selling you defective trust structures are not legal and why they can get you into permanent trouble.
Those who set up a trust or a foundation "for you" suggest that you are supposed to hide the fact that you had something to do with the foundation or the trust. You are supposed to not believe that the lawyer who set this up for you is not acting as an agent for you. But after they peddle to the unwary this defective structure years later the tax authority finally catches up and probes deep enough and labels what you did as a sham for tax evasion and rules against you with fines and possibly jail time.
But if you contribute as a donor to a charitable foundation that has been set up years previously, then the record is right there on the internet and also in legal paperwork, and you have something in your defense should the issue ever be investigated by the tax authorities. So you can see why this arrangement is better than a new secret private trust or a foreign grantor trust or a "tailor made for you private foundation" and why our structure provides bullet proof asset protection, tax free investing, compounding and income for the charity foundation and also income or even tax free loans for the independent contractor who benefits from being the lucky donor who made a contribution to the charitable foundation and then discovered this little known tool and one of the only legal loopholes available for tax freedom.
Therefore, we do not introduce people to those who can set up secret private trusts or foundations which are set up specifically for the client so that the client later gets into trouble with their tax authorities because they had a legally defective structure. Instead, we have a charity foundation which has been set up for several years. You donate to an established charitable foundation so you can manage your donation for a service to the foundation PLUS in return be bestowed with "good things" as a show of gratitude for helping manage your donation. If you want to donate please contact us at service @ freedomoffshore.com and ask us how you can make a donation that will not only change your investment life but also help the lives of those who need it the most.