International Residency and Citizenship Planning
There was a time when the “American Dream” still seemed possible. Back then, the social fabric was largely intact, and our political situation was not so toxic. Our representatives in Congress and people in general, found ways to compromise. Before the height of the hopelessly futile war on drugs, the rise of the militarized police forces, and the passage of obscure laws and regulations that criminalized an endless array of seemingly permissible behavior, the government wasn’t so “in your face.” That is not to say that there doesn’t still exist limitless opportunities for a comfortable lifestyle in the United States.
But many Americans are looking elsewhere to live, or invest, or general stability, for a variety of reasons. The number of Americans who actually expatriate and give up their U.S. citizenship each year is still relatively small. And yet, the trend persists and is becoming increasingly significant. Many more Americans have decided to retain their U.S. citizenship but, either establish residency in another country or obtain a second passport. Such dual citizenship arrangements are currently very popular and enable Americans to have a place to escape if conditions become untenable in their current location. There are reportedly nine million or so Americans residing in countries outside the continental United States.
There are many reasons for alternative living locations. Some folks simply like to spend a significant part of the year in another country to enjoy the better weather, different culture, informal lifestyle, or the inexpensive cost of living. There are many business and investment reasons for looking outside the United States. One of my favorites, and, among the most important reason is for asset protection. Asset protection is a set of steps that an individual or a family implements to remove a portion of its wealth from what has been described as the great American “lawsuit lottery”. It’s definitely not about hiding assets.
The domestic asset protection planning options are many, but they are complicated, and they have one major drawback. They are inherently flawed as they are governed by U.S. laws. Not wanting to subject themself to the whims and caprices of U.S. courts and juries, a prudent person may consider an offshore structure to benefit from the more favorable laws and more reliable judicial enforcement of select foreign jurisdictions.
The study and pursuit of various asset protection strategies is both endlessly fascinating and critically important. A few comments are in order here. It is helpful to view asset protection measures as being somewhere along a sliding scale. Just as it is unlikely that a client’s assets are ever fully unprotected, it’s also unwise to believe that assets can ever be fully protected. The notion of “bullet proof” asset protection does not exist. But one’s affairs can be professionally managed to achieve an acceptable level of risk.
An absolutely essential aspect of asset protection is to understand that for a plan to have the best possibility to withstand a challenge, it must have economic substance. In other words, the best asset protection plans employ measures that are not typically thought of as asset protection devices. These would include steps taken to achieve a client’s business, estate, insurance, retirement, tax, or some other non-asset protections goals. Judges sitting in the United States take a dim view of debtors who use asset protection artifices to improperly escape the payment of valid debts.
The question often arises as to what’s the best way to move a person’s retirement savings offshore? It’s a common question that depends on what sort of retirement account is involved, how much is in it, and what types of international investments are of interest. There is no one “best” solution. There is only what’s best for the client.
With contacts outside the United States, I am in a position to work with a potential client who wishes to look beyond American borders to determine the possible advantages to be found elsewhere. In addition to having developed professional relationships in other countries, I have met the requirements to become a Trusts and Estates Practitioner, and a full member of the Society of Trusts and Estates Practitioners (STEP), an association of more than 21,000 members in 96 countries.
As their website describes the organization: STEP is the global professional association for practitioners who specialize in family inheritance and succession planning. We work to improve public understanding of the issues families face in this area and promote education and high professional standards among our members.
STEP members help families plan for their futures, from drafting a will to advising on issues concerning international families, protection of the vulnerable, family businesses and philanthropic giving. Full STEP members, known as TEPs, are internationally recognized as experts in their field, with proven qualifications and experience.
The opportunities to step outside the United states are both numerous and perfectly legal. Please call to discuss them.