and Tax Aduanta

50 THE OFFSHORi H O H E Y B O O Ksubject itself to the Foreign Investor in Real Property Tax Act of1980 (FIRPTA) and the Economic Recovery Act of 1981 and have U.S.capital gains taxes withheld in escrow upon sale of the property inthe U.S. It could also be a limited partner in a limited partnership.In Figure 5.2, IBC 4 is a member (owner) of a U.S. limited liabilitycompany.All four of the operating IBCS have central management throughan os holding company, IBC 5. So long as it is not prohibited in thejurisdictions where established, there can be total commonality ofmanagement-the same directors and officers for all five IBCS. Furtherprivacy could be achieved by placing the operating companiesin the Bahamas and by establishing the holding company in theNetherlands Antilles. If money is no object and privacy is of utmostimportance, or you are just plain paranoid, each IBC could be incorporatedin a different tax haven. Further, each IBC could have differentofficers and directors. No one but you would know what washappening. If you arrange such a complex structure, make sure toleave good notes in case of your disability or premature death, or noone will be capable of running it. I suggest that you have a masterbook in any case, updated as necessary, held offshore, sealed and inescrow, for that ultimate day.Figure 5.3 is a variation of Figure 5.1. It is a simpler structurethan Figure 5.2 in that the holding company is replaced by a familytrust, called an asset protection trust (APT), where the APT providesinsulation for the settlor and his or her family.Note in Figure 5.3 that the prior roles of the r~cs' directors andofficers have been taken over by a pair of administrators and fiduciariescalled the trustee and the trust protector. The trustee and theprotector manage the trust on behalf of the three beneficiaries identifiedas Beneficiary I, 2, and 3. Figure 5.3 is a popular os combination,combining the features of the IBC for asset managementand the trust as an inter vivos and/or testamentary vehicle. Thetrustee could also act as the asset manager or hire an asset managerfor the IBC.A structure for handling the "problem" of excessive equity inU.S. real property is the equity stripping company (see Chapter 10,page 144). In Figure 5.4, the domestic real property is an attractive