The Two Main Reasons the Wealthy Take Money Overseas

Contrary to popular belief, the rich are not moving their money overseas for tax reasons. The two main reasons the rich send their money overseas are: litigation risk and political risk.

Litigation Risk: The wealthy are an easy target for lawsuits, so any assets onshore are vulnerable to possible judgments against them. U.S. courts do not have jurisdiction overseas though, so the wealthy have a chance of protecting their money.

Political Risk: The rich are trying to diversity from our government, policies, and banking systems. More clients are worried about where our government is headed and fear the hints of socialism, capitalism, and the redistribution of wealth.

If the government ever did come after a wealthy person’s assets, it would probably realistically find and take the offshore money. Brett Arends does not think that the government would even come after the top 1% though because many of them are already in that governmental circle.  However, the concern over the government’s access to even foreign money makes it more alluring to hold some gold within a portfolio.

See Brett Arends, The Real Reasons the Rich Are Moving Cash to the Caymans, Smartmoney, Feb. 14, 2012. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.