About the International Privacy Trust and Protectors

I often advise clients to establish an International Privacy Trust from the Bahamas as part of their asset protection and tax planning plans. I get a lot of questions about this, and I believe there is a lot of confusion about it.

The International Privacy Trust is usually used to own another entity in a more private and confidential manner. It is also useful in establishing a separate taxable entity and to provide advanced asset protection if certain steps are taken to insure that the trust is not treated as an alter ego of the client. This is a real advantage since the Bahamas treats these entities as non-taxable as long as they earn no active income in the Bahamas.

The Trust itself is established by The Squire Organization, LLC, (or some other non-US entity) which serves as the initial Trustor, Trustee, Beneficiary and Protector of the Trust. Of the four positions, the Protector is the most important. The Protector has the power to remove and replace the Trustee, and, most importantly, change the Beneficiary. After the trust is established, the old Protector resigns and appoints a new Protector(s) . The Client has the option of naming himself or some other trusted individual as Protector, or name more than one Protector. He or she can also change the Beneficiary at that time or at a later date.

The new Protector is now effectively in control of the trust and the account, however the client is not listed anywhere in the Trust formation documents. The Client can maintain control over the Trust without becoming either a Trustor, a Trustee or a Beneficiary.

In order to maintain the advantageous tax benefits of the trust and the asset protection benefits, it is often necessary to appoint more than one Protector, particularly in the United States, the United Kingdom, and other jurisdictions which can trace their laws back to English common law. This is because in these jurisdictions the "power of appointment" (that is the power to name a beneficiary), and the power to remove and appoint a trustee creates an alter ego situation, and the courts treat the trust like a grantor's trust. In order to avoid this designation you need to have at least three Protectors with the client being one of the three. The other two cannot be immediate family, but can be trusted friends and associates. It is often wise to appoint a professional such as an attorney since attorneys often have a legal duty of loyalty to the client that is actually enforceable in court. In “Code” jurisdictions it may not be so important to name at least three Protectors since the “power of appointment” is considered an option contract that is not effective until exercised. All the same caution would suggest that naming three Protectors could be a wise choice even in “Code” jurisdictions.

It is also important to maintain a non-US Trustee since naming the wrong person as Trustee could have negative tax consequences, and would reduce the asset protection aspects of the Trust. Please feel free to contact us if you have any questions.

Yet another ridiculous ruling from the Peoples Republic of California

I am not a big fan of noncompete agreements unless they really are entered into with consideration (that is both sides understood and receive adequate compensation for the terms, and there is no duress or unfair influence). California seems, according to Mr. Ha (no relation), to have not only invalidated this particular noncompete agreement, but to invalidate ALL noncompete agreements. Now it is not uncommon for a court to strike down a noncompete clause in a particular agreement as being unfair, entered into under duress, or without adequate consideration. But to simply declare that all such agreements are illegal.... well it just takes my breath away!!!! What an act of over-zealous judicial behavior that we have come to expect from the Supreme Court of the Peoples Republic of California. It would have been so easy to have declared this particular contract unenforceable without setting aside the entire legal precedent regarding employment contracts. But that is the wacky world of California jurisprudence! Expect the unexpected!

I advise all my clients TO NEVER DO BUSINESS IN CALIFORNIA!!!! It has become a communist anti-business jurisdiction where only lawyers and politicians can make a living (oh and I guess you have to include large corporations that believe they are still able to corruptly influence corrupt politicians). Go to Tijuana where the crooked police and politicians will at least stay bought (at least until they are gunned down in the street)! Best of luck to those of you who are stuck on the Left Coast. Clearly the clock is ticking and it is only a matter of time before some court in California changes the law in reference to something that effects your business to your profound detriment.


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California Supreme Court says noncompete agreements are illegal
Anthony Ha | August 8th, 2008

California’s highest court has ruled unanimously that a common feature of employment contracts called a noncompete clause is illegal under state law and has been since 1872.

Basically, a noncompete says a company’s employees can’t work for or start a competing company, usually for a certain period of time. The rationale is that employees shouldn’t be able to take a company’s secrets and put them to use for someone else.

Apparently, the court’s decision, made yesterday, doesn’t just stop employers from including noncompete agreements in future contracts; it also applies to noncompetes signed in the past.

The ruling comes in a suit filed by tax manager Raymond Edwards II against former employer Arthur Andersen, an accounting firm. After Andersen shut down in 2002, Edwards tried to get a job with a subsidiary, but to do so he needed to be released from his noncompete agreement. Andersen would only agree to the release after Edwards signed away his right to bring future claims against the company; Edwards refused and filed suit. Now, the Supreme Court has ruled the noncompete was illegal.

This case is based on California law, so it doesn’t apply in the many other states that allow noncompete agreements. And since it’s a question of state law, this ruling is probably the final word.

One of the most prominent recent cases of a former employer suing a startup’s founding team was Iconix’s suit against former employees Lance Tokuda and Jia Shen, who created slide show site RockYou. In that case, which ended in a settlement, the allegations weren’t limited to a simple noncompete violation, but also included accusations of intellectual property theft.

Info on USB Backup Sticks

I know this really has nothing to do with exciting business stuff, but if you are like me, technology is a fascinating but often confusing thing. Such as how to back up my computer? I don't want to back up everything. I just want to back up the good stuff onto a USB stick, and I would like to push one button to do it, not root through my file directory like some pig snuffling for truffles. Well USB sticks are so cheap that there is no reason you should not have a pocket full of them for various purposes. But for me I just wanted one that was big enough to hold my stuff, and a program that would sync my stuff.

I went to Micro-Center, a local computer warehouse, and bought a 4 GB stick for about $13.00. I then went to http://app-stick.com/ and found some fairly useful programs that I could load on the stick, and that would work from the stick. In theory these programs will work on any windows computer! I then found a really nice free sync program called Allway Sync 'n' Go (http://allwaysync.com) that gave me my push button
syncing/backing up.

Now I know people who have a back up stick for each file. I actually think that is a little overkill, and maybe even a security risk unless you encrypt everything. I know you can load self-booting Linux OS on a stick so that you can have a Linux computer without mucking up your Windows computer. This is actually quite handy at times because I like Linux apps for some things more than windows apps. But I need Windows
for some programs that simply do not exist in Linux. As the sticks get bigger and cheaper, I suspect it will be possible to build entire devices that essentially have plug and play operating systems. If you want Linux, you plug in your Linux stick. If you want Windows, you plug in your Windows stick. The computer itself will just be the hardware you need to get the stuff to work. That is about all a computer is now, but with less flexibility. I think it would be very cool to have a small light inexpensive device that used small modules to do what you wanted.

Take care.

--
Alexander J. Hay III
International Business Consultant

SKYPEIN (tel): 01-281-968-0764; SKYPE: alexanderhay
email: alexanderhay@post.harvard.edu
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blog: [http://squireorg.blogspot.com/]

ASSET PROTECTION, TAX REDUCTION AND IMPROVED FINANCIAL PRIVACY.

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Troubling Events

I generally try to resist the temptation to use my blog as a soapbox to express my political beliefs and philosophical ideas (particularly since I doubt anyone really too much cares what I think). Instead, I prefer to use it as a tool of commercial exploitation and shameless self-promotion. All the same some events have occurred that simply will not leave me in peace. I hope that discussing them here (even if it is a monologue heard by no one) might in some way help to expunge the irritation from my psyche. That way I can get on with the important business of lining my pockets by assisting my clients to protect their assets, reduce their taxes and obtaining greater financial privacy (there I got the plug in!).

Snipes Hunting?

The first event that has troubled my consciousness is the Wesley Snipes affair. This sorry sham of justice has all the telltale signs of a Stalinesque Show Trial gone bad. From the results of the trial, it would seem that the judge and the prosecutor had already decided upon the guilt and punishment of Mr. Snipes before the trial had even begun. Only the jury did not cooperate.

Snipes was charged with numerous felony counts of tax evasion in addition to misdemeanor charges based upon his failure to file his tax returns, but the jury found Mr. Snipes innocent of the more serious charges and only guilty of the misdemeanor charges of failure to file. It would seem that the jury believed that Mr. Snipes was simply a good-natured knucklehead whose only crime was foolishly deluding himself that the silly arguments propounded by some very convincing tax protesters had merit. Although his actions were clearly not appropriate, the misdemeanor charges, for which Mr. Snipes was found guilty, are only slightly more serious than running a stop light, and clearly not as serious as driving under the influence.

Taking into account Mr. Snipes' spotless criminal record and outstanding reputation in the community, it is really very difficult to understand how the judge could sentence Mr. Snipes to three years in jail when such a sentence is usually reserved for people who are actually convicted of the more serious charges, not found innocent. It would seem that the judge simply did not want to stray from the predetermined script. So much for an unbiased and objective judiciary.

Gay Marriage in California

The next issue that I found disturbing is the recent California Supreme Court case "overturning" a ban on single-sex marriages, declaring that the "right to marry" must be extended to gay couples. Without getting into the complex moral and philosophical arguments about the effects (or lack thereof) that gay marriage might have on a society, I think the real shocking issue in this case is that the California Supreme Court overturned a fairly modest law enacted by the State of California through an authorized referendum of the people defining marriage to be only permissible between two consenting adults of the opposite sex.

Normally when a court overturns a law, there needs to be some basis other than the personal beliefs and prejudices of the judges, but it is very hard to find more than that in this case. By ruling that gay couples have a right to marry, the court is essentially stating that gays somehow have a special right to legal protections that non-gays do not deserve (polygamy based on religious convictions is still banned????). In addition, the court is essentially saying that the State of California either does not have the right to regulate who can and cannot get married under such cases, or that the State's right is simply insignificant and unimportant.

There is no valid precedent for a validly enacted law to be overturned in such an arbitrary manner on this issue. Comparing gay marriage to the civil rights battles of the 50s, 60s and 70s is silly and demeaning. The US Constitution, by and through various clauses, clearly protected people from racial discrimination, the USA fought a long and bloody civil war to remove the stain of slavery of the nation, and there is a long tradition of Western Thought that supports the proposition that "All Men are Created Equal" (it is in fact the basis of our national existence). No where is there even a hint of law or tradition that supports the idea that gays have an inalienable right to marry, and in the absence of a legislative decision on the part of the electorate to give them such a right, this decision is nothing more than an arrogant usurpation of the rights of a people to control their own society.

Now I have a question to ask: If the state does not have the authority to proscribe against non-Traditional gay marriages between consenting adults, does the state have a right to proscribe against polygamous gay marriages? On what basis could the State of California restrict more than two gay individuals from marrying each other? Since there is no historical, traditional, religious or philosophical basis to demand that two gays be given a right to marry above and beyond the legislative actions of the State of California prohibiting such union, how can the same court say that marriage must be limited to two gay individuals????? There is no record or tradition of gay marriages being sanctioned by the state or by religion. But many religions have at one time or another tolerated and approved of polygamy. How can the court impose a right to gay marriage over the wishes of the electorate, societal tradition and legal precedent, yet restrict gay polygamy??? I would suggest that it cannot.

Families or Freak Shows?

Finally comes a tale of tragedy as much as governmental abuse: The CPS raid taking over 400 children away from their families. Based on a fraudulent complaint of child abuse (a woman claiming to be a 16 year old girl impregnated by an older man and being held against her will), the Texas Children's Protective Services stormed into a religious group's compound and took away all the children living there.

As time goes by this story becomes more and more troubling. The only person who has so far been charged with a crime is the woman who made the initial charges of child abuse. It also seems likely that the authorities knew that the call was baseless prior to raiding the compound, yet they proceeded anyway. It appears that they knew that the man being accused of child abuse had not been in Texas for over 20 years. Some of the "minor pregnant girls" being held against their will turned out to be in their twenties. This however did not stop CPS from taking away the newly born infants from their mothers.

Recent comments by CPS suggest that the real issue has nothing to do with actual abuse so much as religious beliefs that the CPS finds unacceptable. The FLDS seems to believe that polygamy is a valid basis to form a family. However, it seems clear that they have gone out of their way to avoid violating the laws against polygamy. Perhaps they have relied on "mere technicalities" by not officially marrying their additional "wives", but it is just such technicalities that mean they are not guilty of any crime. It appears that they have decided that until such time as the law reflects and accommodates their religious beliefs, they will modify their actions to accommodate the law.

Time will tell what happens in this case. The State seems to be very reluctant to release any information on the case, and that information that is coming out is making their case look worse and worse. Psychologists retained by the state to evaluate the children concluded that they are well balanced healthy children, and that the only harm that has been done to them is to separate them from their families. These consultants were of course discharged. But evidence may yet emerge concerning child abuse, and criminal charges may yet be filed against perpetrators in the group. But in the absence of such evidence, a question must be asked: Is this really about "protecting the children" or just about religious persecution? No doubt these people are weird, and they have weird beliefs. But to take a family's children away because of its religious beliefs, not the actions of the individuals, is against everything that this nation has ever stood for.

Who Gives a Damn?

The thing that I find most troubling and discouraging is the utter lack of interest displayed by the American People. It is easy to blame the media, but the members of the Media are people who have to make a living just like the rest of us. Their job is to entertain the American People and sell advertising. If the American People do not care about Judicial Abuse and Illegal Governmental Intrusion, then why should the media be obliged to force it down their unwilling throats? Particularly when there is American Idol to watch, or something or other about bizarre suburban housewives, or even has-been celebrities dancing???

It is an old adage that people deserve the government that they get. If the inverse of that is true, the apathetic attitude of most Americans requires that the government Americans are going to get is going to only get worse and worse. But who cares? As long as they keep adding more channels to the cable system, everything is ok.

In Praise of PayPal

I thought I would give you an idea of how PayPal can be of assistance to you. When most people think of PayPal, they think of Ebay, usually when they are paying for something on Ebay. This is because PayPal is owned by Ebay and is the method used to pay for what you buy there. Thus, PayPal is not only useful, it is indispensable if you are selling or buying on Ebay.

However, PayPal offers many other services that are quite remarkable. In addition to providing an easy and convenient way for buyers to pay you on Ebay, PayPal offers a very nice Mastercard Debit Card that can be issued in the name of non-US residents (if a proper structure is being used to set it up). This card is a real advantage because it acts like a regular credit card when used. This is nice if you are trying to reserve or check into a hotel; as you may have noticed normal debit cards will not work. Even if you never use PayPal for anything else, this feature can be very handy since it allows you to check into a hotel and then when you leave you can pay with any method you like.

Another very nice feature of PayPal is the ability to accept credit cards from clients. This feature is becoming more robust and professional all the time including sophisticated protocols that allow you to integrate the PayPal payment system with your website, or simply issue email invoices that are sent directly to the client. The best part is that the buyer does not need to be a Member of PayPal (although of course PayPal encourages this).

Finally, a feature that I have only recently discovered, PayPal gives the user the ability to manage and maintain numerous foreign currencies. For a long time now I have been searching for an inexpensive convenient option for my clients who wish to maintain balances in Euros, British Pounds, etc., but I have been unable to find such an option. But it turns out it was under my nose all the time.

PayPal is necessary if you are using Ebay to either buy or sell. It is incredibly useful if you want an additional credit card that is based in the USA, wish to accept credit cards, and want to maintain various foreign currencies. The best part about it is that it is free.

Well almost free. PayPal does not charge you anything for all these services, but I charge $150.00 to set it up properly so that everything is correctly linked to your asset protection structure!!! I decided to add this service because I had several clients try to do it themselves, and they made some rather modest errors that resulted in huge delays. I ended up having to get involved to fix these PayPal accounts, and it ended up taking much more time since it is always easier to do something right the first time rather than it is to correct something that was done incorrectly.

This month I am offering a small gift to new clients: For anyone ordering a new structure by May 31, 2008, I will throw in a fully functional PayPal account fully setup and linked to the new system.

Remember our goal is to protect your assets, reduce your taxes and provide you with greater financial privacy. PayPal, if properly integrated into your asset protection structure, can add convenience to your system. Please visit: http://www.squireorg.com/ or http://www.TaxHavenUSA.com/

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Little Time Left to Fix Your Belize Trust

TO: Clients with Belize Trusts

Last year I notified you that I had bad news regarding a change in Belize trust law that will have a negative effect upon your asset protection and tax planning structures. Last summer Belize changed its trusts laws requiring that all trusts must now register with the Belize authorities by filing documents that disclose confidential private information about the trust, paying a one-time fee, and maintain a Registered Agent and Registered Office. One of the really nice aspects of Belize trust law was that the trust could remain private since it did not have to be filed with the Registrar, it was not necessary to incur any expenses in filing the trust, and there was no need to maintain a Registered Agent and Office. To make matters worse, Belize now made it a crime for anyone who was not registered with the Belize authorities as an International Financial Services Provider to participate in just about any aspect of trust formation and management.

There is some good news. You have one year from the date of the enactment of the law to either comply with the law or transfer your trust to another jurisdiction. We advise you to transfer your trust to another more friendly jurisdiction; The Commonwealth of the Bahamas.

If you wish to stay in Belize and comply with the new rules, then please contact us as soon as possible, and no later than May 31, 2008. Since The Squire Organization, LLC does not intend to register with the Belize authorities, and does not want to be in any way liable for violations of some of the most vague and poorly worded rules we have ever seen, we are gong to have The Squire Organization resign as trustee from any trust that intends to stay in Belize. We can forward you to a very competent firm that will be able to help you file the trust, pay the fee, appoint a Registered Agent and Office, and obtain a replacement trustee for your trust.

If you wish to take our advice and transfer your trust to the Bahamas the process will be very quick and easy. Every trust created by The Squire Organization, LLC contains terms that allow the Trustee to transfer the jurisdiction of the trust if the Trustee believes it is necessary. All that will be required is a brief amendment/supplement to the Trust by the Trustee changing the jurisdiction and the law of the Trust. Although the Bahamas does not require that the trust or even a copy be filed with the Registrar, it does require that a $50.00 fee be paid. That is it. Belize trust law used to be almost identical to the Bahamas (since Belize essentially copied its rules and regulations from the Bahamas and the British Virgin Islands, and then made rather modest improvements). Whereas recent changes in Belize law has made using trusts in Belize much less advisable, recent changes in the Bahamas actually serve to make the Bahamas a more friendly location for a foreign trust. The Bahamas has stated clearly that trusts of the type used by The Squire Organization are acceptable and appropriate by clearly stating that Protectors may have the power to appoint and/or change beneficiaries of a trust (in the USA and other “Common Law “ jurisdictions this is referred to as a 'power of appointment' -- in Belize this power was never stated in the law and as a result we occasionally found local Belize banks confused by these terms). In addition the Bahamas has clearly stated that foreign firms may act as trustees of foreign trusts as long as the trustee is not acting in the capacity of a “bank or trust” in regards to the day to day management of financial assets. There are other recent changes to the Bahamas rules and regulations that make the country more advantageous, but I suspect most would find these changes tedious and boring. All the same I find them very encouraging.

The Squire Organization, LLC will transfer your trust over to the Bahamas for a one time fee of $300.00 including all fees and expenses incurred in the transfer and registration; everything else will remain the same. I think this compares very nicely to the costs that will be incurred if you stay in Belize: $100.00 government fee, fees and costs for transferring and filing the original trust document ($100.00 or more), cost of Registered Agent and Office (perhaps $100.00 or more each year), cost of appointing a new trustee (probably $100.00 in documentation fees plus annual cost of $100.00 or more).

If you wish for us to transfer your trust please let us know by the end of this month. If we do not hear back from you by May 31, 2008, we will resign as trustee and await further instructions on what you need us to do regarding your trust. Unfortunately for those of you who have not responded to prior requests, you now have little time to make other arrangements since the deadline is in June of 2008.

All this aside, we still believe Belize is a good jurisdiction in which to form companies and we intend to continue to use Belize IBCs in connection with our various asset protection and tax planning strategies.

Thank you for your continuing patronage and support.

Sincerely,

Alexander John Hay
Senior Consultant