Are offshore accounts designed solely to evade taxes?
It is a common charge that the rich utilize offshore bank accounts merely to avoid paying taxes on their wealth. So, why do wealthy individuals place money in “havens,” such as the Caymans?
SmartMoney sought out the answer to this question and found it is not as simple as merely trying to avoid paying taxes.
So what are the real reasons the rich are casing the Caymans with their cash?
According to Jim Duggan, a partner at the Chicago law firm Duggan Bertsch, there are two: Litigation risk, and “jurisdictional diversification.”
“Litigation risk is the old reason. You could get hit by a crazy lawsuit here in the U.S. The wealthy are an easy mark, and anything onshore is vulnerable. But the U.S. courts don’t have jurisdiction overseas and if you plan things right you have at least some chance of protecting money held offshore, Duggan says. ‘It keeps you away from our court system and the caprices of our courts,’ he says,” notes SmartMoney.