Hiding Assets
Money
Matters
(Subscriber Access Only)
The following is from the ebook, A Survival Guide For Interesting
Times, which is part of my Secrets
Package. As you may have noticed, I am a believer in using
money honestly, and in the value of doing the right thing in
general. Why, then, do I write on how to hide assets? Because
it can be the right thing to do at times. Not all debts are necessarily
just, and not all governments remain worthy of our respect.
In any case, the following are perfectly legal ways to make
your money and assets you own less visible and less accessible
to others, although in some cases mentioned you'll have to talk
to an attorney to be sure you arrange things legally.
Chapter Eight - Hiding Money
Governments and certain people will often try to take what
really isn't theirs. It's your responsibility to make it more
difficult. - Steven Scott
There may be times when you need to hide and/or protect your
assets and/or income. Some debts, after all, may not be fair,
as well as some governments. I'll leave it to you to decide when
it is ethical to use any of the following techniques.
Note: Laws change, so be sure to check with a lawyer before
trying any of the things described here.
Protecting Assets - Bankruptcy Homestead Exemptions
One way that people protect their assets prior to a bankruptcy
is by having them converted into equity in a home in either Texas
or Florida, because of their large homestead exemptions. Florida,
for example, allows an unlimited exemption for long-term residents,
so you keep your million dollar home even when you file Chapter
7 bankruptcy.
Most states exempt some home equity from bankruptcy creditors.
For example, your state may exempt up to $30,000 (more common)
of home equity. For example, if you owe $168,000 on a home that
is worth $190,000, your equity is only about $22,000 and you
would normally be allowed to keep your home.
Notice that you can arrange to have less equity in your home
prior to filing for bankruptcy, by borrowing more (ask an attorney
about this). In other words, if you want to keep your home and
you anticipate a bankruptcy, but you have $60,000 in equity in
it, you might borrow $40,000 against it, reducing your equity
to $20,000 (leaving a safe margin of error for possible appraisals).
As mentioned, you should consult an attorney about these issues.
There are restrictions in some cases. For example, in Florida,
your exemption is limited to $125,000 (or $250,000 for a couple)
if the home became your primary residence within 40 months of
the bankruptcy filing.
Credit Card After Bankruptcy
Plan ahead and you can still have access to credit after a
bankruptcy. The key is to pay off one of your credit cards, even
if that means transferring the balance to another. Be sure that
you make all payments on time on the card, and don't owe a penny
on it the day you go to court. This is so you don't have to declare
this creditor (but if you are specifically asked by the court
to list all credit cards, you will have to do so).
Don't include this card in the list of your debts when filing.
It isn't a debt if you don't owe anything on it. And don't mention
it to anyone. When the bankruptcy is completely done, you'll
have this card available to raise money if necessary, and to
start rebuilding your credit rating.
Foreign Bank Accounts
As it stands now (but always check current laws), you have
to report when the total of you foreign bank accounts exceeds
$10,000. It is a felony if you do not. In other words, this is
a way to hide only up to $10,000 unless you want to risk jail
time.
Foreign Property
A better way to hide assets in other countries may be to own
property there. Creditors can find it, but it is usually too
much trouble to try to collect by forcing a sale. And if you
escape there and the matter is not criminal, you cannot be extradited
for debts alone. A small condo (or several in different countries)
may be the best bet to be sure that you don't provide a good
target.
Offshore Trusts
Forbes magazine recently reported that offshore trusts are
becoming a waste of time and legal fees. The IRS is watching
foreign banks more closely now. Those banks are also cooperating
more often in investigations. (And in any case, I am sticking
to legal methods here, and these trusts have often been used
in illegal ways.)
Precious Metals And Diamonds
If it is really important to hide your assets overseas, you
can do so in the form of diamonds or precious metals. They can
even be legally stored in a foreign bank deposit box (Swiss banks
are reportedly still good for this) without reporting them to
the IRS, since these are not interest-paying accounts. Getting
them there without reporting them can be illegal though, so ask
an attorney about the specific of how to do this.
Some people wear gold chains as jewelry to move assets overseas,
but again, ask an attorney about the legality of this. At today's
prices (roughly $1,000 per ounce), you could walk through airport
security with a $12,000 worth of gold easily doing this. It could
take a lot of trips and costs to move substantial amounts of
your assets in this way, but if you are taking the trips for
other purposes, you can do this to slowly move assets.
Diamonds make transferring larger amounts easier. A necklace
of diamonds might be worth $200,000, after all. If you are a
man you will need help with this, since a man with a beautiful
diamond necklace still attracts too much attention.
The primary problem with these methods is that it costs a
lot of money to move your assets in this way. Travel expenses
are just the start, The transaction costs are what can really
get you. You may pay a premium of as much as 8% for gold coins,
which you lose when you sell. You may lose 20% on gold chains,
even if you get a good wholesale price to begin with.
It can be even worse with diamonds. To keep the costs down, buy
loose diamonds at a wholesale price, and then pay to have them
made into a necklace. This will cost much less than buying a
necklace to start with.
Cash in Other Countries
You can also keep cash in a safe deposit box in another country
without reporting it - again because it does not generate interest
income. But you cannot carry more than $10,000 (check for any
recent changes) with you without reporting it. Still, combine
this with other methods like wearing diamonds or gold, and you
might move some larger chunks of assets safely. Talk to that
attorney, but generally if you follow the letter of the law and
are not attempting to perpetrate or hide a crime with your actions,
you should be fine legally.
Bank Accounts In This Country
If you open a bank account in another city and don't tell
anyone about it, it can be tough for creditors to find. Make
it a non-interest-bearing one, like a basic checking account,
and it will generally not be reported to the IRS by the bank.
Of course if you are sued you may be legally required by the
court to report all accounts. But the point here is to make your
money less visible, so snoopy attorneys and others may think
you aren't a worthy target for a lawsuit.
Using Corporations and LLCs
Corporations have been used for a long time to protect assets.
More recently...
I'll continue this look at how to hide assets and money
in next week's issue...
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