Over the last two decades, an increasing number of doctors have looked internationally in their wealth planning—although, overall, still a small minority. That is not necessarily bad, as there are numerous pitfalls for using international planning that can catch naive doctors, including dermatologists. In this article, you’ll learn what to do—and what to avoid—in international planning, and about specific tools top attorneys use in their international planning.

Going Offshore to Avoid US Taxes Leads to Tax Evasion

Americans are liable for taxes on all income earned offshore. However, it is true that many international banks, mutual funds, and other financial institutions will not report earnings/interest to the IRS. This is the chasm where many greedy clients—or unscrupulous advisors—operate. This is also where tax evasion, a federal crime, is committed. The recent disclosure of the “Panama Papers” makes this even more well-known today.

While the client is required under US law to make the necessary tax reporting on income earned internationally (and advisors should instruct their clients to do so), many clients may keep quiet and hope that they are never caught. This “hide the ball” strategy is used not only by knowing clients, but also by shady advisors who concoct ever more sophisticated schemes like moving money from one trust to another company to a third foundation … and so on in hopes of avoiding detection.

Although the pitch may seem complex and impressive, astute doctors know to always ask the following question: If the income will eventually accrue to my benefit, why don’t I have to report it to the IRS? They know that they must steer clear of these schemes unless they want the cloud of a possible tax evasion indictment hanging over them for years to come.

The bottom line: Going offshore to save taxes has rarely been tax compliant, and many tax evaders are now “coming clean.”

Going Offshore to Get Rich Quick Leads to Scams and Frauds

The desire to get rich quick draws many clients in to problems most pervasive in the investment arena. Here, scam artists and fraudsters abound, poised to take advantage of the next client who wants to get rich offshore. The savvy doctor understands that any investment that offers truly outstanding returns is on the radar screen of the world’s most sophisticated financial institutions and their super affluent clientele. Then, the investment is reserved for the financial institution’s billionaire clients. They know that the only thing that can be achieved from chasing fantastic returns in international markets is a significant, if not complete, loss of principal.


Even when a pitch may seem complex and impressive, always ask: If the income will eventually accrue to my benefit, why don’t I have to report it to the IRS? Steer clear of schemes to avoid the cloud of a possible tax evasion indictment hanging over you for years to come.

International LLCs and Trusts: Can Be Part of a Client’s Plan

When done correctly, these tools can be used to achieve a high (+4/+5) level of asset protection. Compared to state (+5) exempt assets (discussed in other articles), which do not have professional, government or accounting fees, these tools are expensive—but they may be the best non-exempt options for doctor clients who must have the top level of protection.

Several jurisdictions have adopted LLC legislation over the last decade, most notably Nevis. Also, many jurisdictions have International Trust (IT) laws as well. Common uses of these tools include:

1. Owning foreign insurance policies: One of today’s leading international financial planning strategies is purchasing a permanent (cash value) life insurance policy offshore. In terms of tax planning, if the policy is US tax-compliant, then all growth within the policy will accumulate tax-free. Further, the proceeds will pay out to the beneficiary income-tax free, and the client can take loans against the accumulated cash values during his life tax free. These are similar to the benefits of a domestic cash value life insurance policy.

2. Multi-generational planning for an international family: Let’s say the goal of a client is to create a nest egg for future generations like children, grandchildren, and beyond, and it is important that the nest egg be asset protected in an ironclad way. In this circumstance, an international trust (IT) would be an ideal tool. This would be especially appropriate if the trust was created in a country where the law does not limit the duration of trusts under the “law against perpetuities,” found in many of the states. By using an IT, the client from an international family could secure the family’s ability to enjoy the fruits of the gift for hundreds of years, as long as other tax issues were addressed by an experienced tax expert.


The benefits of international planning can be significant. However, the international tax and reporting laws are highly complex. There are many areas where an individual or advisor could make a mistake. Though all areas of planning require the assistance of advisors, no area of planning requires greater expertise than international planning. Make sure your team of advisors has an asset protection expert who can help you navigate the tricky waters of international planning.

The authors welcome your questions. You can contact them at 877-656-4362 or through their website, www.ojmgroup.com

To receive a free hardcopy of Wealth Management Made Simple or Wealth Protection Planning for Dermatologists, please call 877-656-4362. Visit www.ojmbookstore.com and enter promotional code PRDERM26 for a free ebook download of these books for your Kindle or iPad.

David B. Mandell, JD, MBA, is an attorney, consultant and author of more than a dozen books for doctors, including Wealth Management Made Simple or Wealth Protection Planning for Dermatologists. He is a principal of the wealth management firm OJM Group www.ojmgroup.com, where Jason M. O’Dell, MS, CWM is also a principal and author. They can be reached at 877-656-4362 or mandell@ojmgroup.com.

Disclosure: OJM Group, LLC. (“OJM”) is an SEC registered investment adviser with its principal place of business in the State of Ohio. OJM and its representatives are in compliance with the current notice filing and registration requirements imposed upon registered investment advisers by those states in which OJM maintains clients. OJM may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. For information pertaining to the registration status of OJM, please contact OJM or refer to the Investment Adviser Public Disclosure web site www.adviserinfo.sec.gov.

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This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized legal or tax advice. There is no guarantee that the views and opinions expressed in this article will be appropriate for your particular circumstances. Tax law changes frequently, accordingly information presented herein is subject to change without notice. You should seek professional tax and legal advice before implementing any strategy discussed herein.