Ramesh Sarva Circular: Urgency of Divesting Foreign Liquid Assets (bank and brokerage accounts) to avoid FBAR taxes and penalties.

Screenshot 2016-07-16 16.45.15

Urgency divesting your foreign assets:

We have been helping you since 2009 in complying with Foreign Bank Account Disclosure (FBAR). Now we have some valuable data to share. Several of you paid 10% negotiated penalty on funds less than $250,000 and 20% penalty for amounts exceeding $250,000.

You must have read about the IRS going after UBS (Union Bank of Switzerland) and that IRS obtained full particulars of more than 5,000 US Citizens holding money in Swiss banks. They successfully collected 1.4 Billion in back taxes. They initiated similar demands against other foreign banks like HSBC and Deutsche Bank holding accounts of US Citizens in India and other countries.

It is only a matter of time until US and India will initiate exchange of tax information.

Solution: You create a Family Trust in India. It will be a Non-Discretionary Trust”. Transfer all assets to the Trust. Simply the name on your personal accounts will read as trust name (PSRS Family Trust is my name). Real property, land, buildings or apartments should be also transferred to the trust. You nominate your grandchildren as beneficiaries (if you have, already) and appoint your children as Trustees and Custodians. You can also insist the trust proceeds must be used for college education of grandchildren and great grandchildren.

This will ensure the following:

  1. Your foreign assets are no longer in your name; hence, you do not have to comply with any disclosure on your personal tax return and you are not liable for FBAR penalties;
  2. Those assets, often inheritance, will not be included in your estate for estate tax computation, in USA (there’s no Estate Tax in India). Investments in Real Estate in India are appreciating rapidly with the growth of affluent middle class;
  3. You will secure the funds for perpetuating good education for your posterity long after you are gone.

If you need help:

We have recruited the services of local attorneys to work from our office in Pune (Vonage number 718-301-9131). If you complete and send all the required information, our Pune office will get the Trust Registered in India. Fortunately, the registration process is uniform throughout India. They do not have separate State Laws for registration process. Costs Rs.50,000 (About US $1,000) including Government registration fees of Rs 19,000.

When the process is complete, you will have:

  1. A Family Trust in place;
  2. It will be assigned a TAN/PAN number (like Taxpayer identification number in USA);
  3. All your bank and brokerage accounts can be transferred to your trust;
  4. All real estate can be transferred to your trust;
  5. You can freely buy real estate in your home town and profit from it. We have seen 100% appreciation in four to five years in real estate;
  6. You can designate your nephew or niece as a Trustee to handle your Trust Assets in India or you can use a Chartered Accountant/lawyer  as your Joint Trustee/Co-Trustee on Hire.


Ramesh Sarva

Leave a Reply

Your email address will not be published. Required fields are marked *