The option of putting money into a foreign bank account or an offshore trust is not one that the average person often thinks about. To the general public, these optional "tax havens" are reserved for the very wealthy or for those who have something to hide from the government. In reality, there are options that are readily available to anyone and when set up by legitimate tax advisors, are legal ways to protect your money.

A "tax haven" is a slightly misleading term, since an offshore account does not actually protect individuals from paying income taxes. An offshore bank account is actually set up to protect income after proper taxes have been paid to the US government. Many people choose to use these types of accounts for the benefits that they offer, not found in any US bank account.

Benefits of Offshore Accounts

The most widely recognized benefit of this type of account is complete confidentiality, since the account will never be in an individual's name or social security number. An account is generally numbered and can be accessed only by password and account book. This is helpful for those who have assets that they would like to keep protected from scrutiny.

It is also important to remember that, legally, if there is any income made on a foreign account, the individual responsible for the account must pay taxes to the US government. There are special forms that need to be filled out by the holder of the account. Because of these details, it is a good idea to employ a tax advisor who will be able to answer any questions about the right uses for an offshore trust.