Financial Planning and Living Globally

The past 100 years have seen changes in how people plan for their financial futures and how they live. Borders no longer restrict people from living in one country; their profession often takes them to parts of the world they never anticipated. Today, it’s not uncommon for a family to live part-time in one country or become citizens of another country to work or have a business there. Living globally is a lifestyle that many high net worth families, and others, are choosing.

The U.S. doesn’t formally recognize dual citizenship but has not taken any stand against it either politically or legally. U.S. law doesn’t mention dual nationality or require a person to choose one nationality or another. However, a U.S. citizen may ‘naturalize’ in a foreign state without losing their U.S. citizenship. Not all countries are this liberal, creating financial planning complexities for U.S. citizens that choose to live abroad. Additionally, many governments don’t recognize trusts that were formed outside of its borders on assets located inside its borders.

For high net worth families, preserving assets across multiple borders needs to be well planned out and consider the ‘laws of the land’ the individual occupies at the time of their death. Therefore, setting up trusts within each country of citizenship is imperative if the assets are within that country’s borders.

A secondary issue is the taxation of beneficiaries regardless of where they live. Since the financial crisis, many countries now participate in a global Common Reporting Standard and Exchange of Information agreement. This agreement aims to determine and clarify the personal financial information they must share regarding assets, income, and taxable amounts across international borders. The agreement helps prevent tax evasion by individuals who choose to live globally to avoid paying taxes.

While working or owning a business located in another country may not be the only reason for living globally, for many, retiring to another country to stretch retirement assets is.

There’s a tremendous amount of change occurring globally- economic uncertainty, political unrest, rising tax rates, gender equality, and changing marriage views.  These reasons are why financial planning is essential to preserve your assets and those you intend to leave to beneficiaries. Before deciding to live globally, or if you already are, consult legal professionals in the countries you plan to reside in, even if for only part of each year.

The expansion of wealth, planning for divorce, same-sex marriages, gender fluidity, and extended families through new marriages while living abroad intensifies financial planning. The world will continue to evolve, and investors must keep themselves informed of laws that enhance or create financial planning problems for themselves or their heirs.

If you are considering living or working globally, meet with your financial professional to discuss your investments before relocating.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

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This entry was posted on Friday, May 28th, 2021 at 11:12 am. Both comments and pings are currently closed.

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