How to Protect Your Assets in Times of Instability: A Second Passport or an Offshore Company
Political conflicts, economic crises, and pandemics are capable of making you feel uneasy and uncertain about your future. Everything changes so fast in this life and those who felt safe yesterday might find themselves in a difficult situation today.
In times of instability, it is especially important to have a ‘plan B’, an alternative solution that can help you protect your assets as well as bring you personal security. Acquiring a second passport, opening an offshore bank account, and/ or registering an offshore company are the options that you should definitely consider. Below we discuss alternative ‘plans B’ that can let you feel certain about tomorrow.
Why do you need a second passport?
You might never have thought about it but it is legal in many countries to hold dual citizenship, that is, to be a citizen of a foreign country too. When you have two passports, you actually have two home countries, which certainly enlarges your opportunities including the opportunities to protect your assets.
Advantages of foreign citizenship
A second passport brings serious privileges to its holder including the following ones:
- Visa-free access to a larger number of countries, which makes it easy to go there;
- An opportunity to find an asylum in case your home country becomes politically or economically unstable;
- Access to a larger number of immigration programs;
- Access to banking services and investment opportunities in a foreign country, which can be vital for protecting your assets;
- An opportunity to reduce your fiscal burden if the tax policies are milder in your second home country than they are in your first home country;
- An opportunity to renounce your first home country’s citizenship if you want to disconnect with it for political, social, or fiscal reasons;
- More educational opportunities for your children and better prospects for them;
- An opportunity to avoid various limitations that are in place in your first home country.
Overall, acquiring foreign citizenship would give you a chance to improve the quality of your life, find security, and become financially independent.
Methods of acquiring foreign citizenship
There are several legal ways of obtaining a second passport and we discuss them in the table below.
| Legal grounds for obtaining foreign citizenship | Description | Advantages | Disadvantages |
| Descent. Available in Armenia, Romania, Germany, Greece, Hungary, Latvia, Lithuania, Poland, and a number of other countries. | If one of your ancestors was a citizen of a foreign country, you may be able to acquire citizenship too. | No administrative obstacles. Fast foreign citizenship acquisition. Minimal costs. | Not all countries grant this opportunity. Ancestry may be hard to prove. A serious archive search may be required. |
| Naturalization. Available in the USA (5 years), Argentina (2 years), the Dominican Republic (no set residence period), and most other countries. | You have to reside in a foreign country for several years on legal grounds to become a naturalized citizen. Consequently, you have to acquire a residence permit first. | An opportunity to legally live and work in a foreign country. A stable legal status. An opportunity to integrate with the community in the foreign country. | A long process – acquiring citizenship by naturalization usually takes several years. You have to find some legal grounds to qualify for a residence permit. Naturalized citizens normally have to pass language and history tests. |
| Investment (economic citizenship). Available in Malta, St Kitts and Nevis, Antigua and Barbuda, and a few other countries. | Some countries will grant you citizenship if you purchase real property there, invest in a business venture, or make a donation to the state fund. | The fastest way of acquiring foreign citizenship. An opportunity to choose the financial route. Permanent residence in the foreign country is not required. Foreign citizenship can be obtained remotely in some cases. | High cost – from hundreds of thousands to millions of dollars. The terms and conditions of citizenship-by-investment programs often change. |
| Marriage. Most countries grant citizenship to foreign spouses of their citizens in a simplified way. | If you marry a foreigner, you can apply for citizenship of his/ her country. | Marrying a foreigner makes the naturalization process faster. A legal residence permit is usually issued right after the marriage contract has been made. | Permanent residence in the foreign country is required. Fake marriages are punished severely. The process can take a few years. |
| Birth or adoption. Available in Brazil, the USA, Canada, and some other countries. | Some countries practice jus soli – right of soil – and grant citizenship to anyone who is born within their borders. | Parents of the child born in a country where the right of soil is applied can easily qualify for citizenship of that country. | Various legal requirements have to be followed. Not many countries grant citizenship by birth. The child’s parents have to live in the foreign country to become citizens. |
The choice of the method will depend on your financial situation, personal preferences, and the country that you would like to make your second home country.
Offshore companies and bank accounts as asset protection instruments
Opening an offshore bank account or registering an offshore company can serve as an efficient instrument of asset protection and diversification. We describe several available options in the table below.
| Instruments and countries | Description | Advantages | Disadvantages |
| Offshore bank accounts in Switzerland, Singapore, or Luxembourg. | A bank account in a foreign country. | High level of confidentiality. Access to international financial markets. Protection against political and economic instability. | High initial deposit requirements (in Switzerland, for example, a foreigner has to deposit at least US$ 250,000). Possible difficulties with access to the account. Changing legislation and international pressure. |
| Offshore trusts in the Cook Islands, Nevis, or Belize. | Assets kept in offshore trusts are hardly accessible to third parties. | High level of protection against creditors. Confidentiality. Flexibility in asset management. | Complexity in creating and managing an offshore trust. High maintenance costs (The cost of creating a trust in the Cook Islands, for instance, starts at US$ 15,000 and the maintenance costs are US$ 100,000 per year). The choice of the jurisdiction may be crucial. |
| Offshore companies in the British Virgin Islands, Cayman Islands, or Panama. | Offshore jurisdictions offer attractive business conditions to foreign companies. | Low or even zero tax rates. High level of confidentiality. Lax administrative requirements. | Negative image and reputational risks. Pressure from the international community. Potential changes in the legislation. |
Whichever offshore structure you choose, you have to consider each option with great care. Please make sure that you consult our experts who will be happy to recommend the most efficient asset protection mechanisms to you.
How to choose the best strategy and put it into practice
You have to choose the right strategy to efficiently protect your assets. You have to take various important aspects into consideration including the following ones:
- Asset type (capital, real property, or business);
- Possible risks;
- Economic viability;
- Tax consequences;
- Service cost;
- Confidentiality level;
- Legal requirements.
Our consultants may be able to come up with some options that you have not even thought of. In any case, you have to weigh all the pros and cons of each asset protection mechanism carefully.
Practical steps in implementing a ‘plan B’
If you have already defined your strategy, it is time to put it into practice. Take the following practical steps:
- Choose the jurisdiction to register an offshore company with our experts’ advice.
- Collect the required documents.
- Submit them to Offshore Pro Group experts and prepare to wait a bit while we process the documents.
- Keep track of the changes in the legislation of the country that you have chosen. Please rely on us to inform you about such changes.
- Be ready to adapt your plan of action to changing situations.
Conclusion
You have to have a clear understanding of your personal and financial goals to be able to draw up a successful ‘plan B’. Defining the risks, seeking professional advice, and weighing all pros and cons will help you make a balanced decision.
You have to realize that financial security is not a one-time task but an ongoing process that requires control and adaptation. Be prepared for changes and remain flexible to preserve all the strong sides of your ‘plan B’.