Some U.S. entrepreneurs are seeking international residencies so that they can exercise a greater degree of financial freedom than their home country allows. Modern trends in local laws can make it harder for people to protect their hard-earned assets in the United States.
By becoming expatriates, these individuals and their families can benefit more from their properties without breaking the law. Here are some of the basic factors that you may want to consider prior to leaving your U.S. domicile in favor of another country.
Protecting Your Assets Legally
Expatriates don't enjoy unrestrained latitude in their financial actions. The U.S. government has enacted laws that require reporting on any assets held in bank accounts with balances of more than $50,000, and the country is the only industrialized nation that still taxes citizens on income they earn abroad. Although you can exclude up to $91,400 of such income, this means little to high earners and active business owners.
Short of renouncing their citizenship and losing important rights, many expatriates elect to diversify their holdings based on recommendations from their asset protection attorneys. Certain kinds of property, such as irrevocable living trusts and family trusts, benefit from specific legal protections against court-ordered seizures and other forms of forfeiture. By working with a legal adviser who can help you arrange trustees, insurance and local providers, you'll be able to use your assets as you wish and still comply with applicable tax-reporting rules.
Increasing Your Assets
One of the top concerns for expatriates living abroad is how they can manage their local and foreign assets in a fashion that improves their portfolio security. In normal cases, people accomplish this by investing, but the kinds of financial products that investors buy into at home may not be suitable for generating profitable foreign returns and simultaneously safeguarding one's assets.
International trusts and estates are commonly-used alternatives that allow investors to engage in legally valid offshore asset protection, and they bear a number of other advantages as well. Expatriates often use trusts to provide for their spouses and children upon their deaths, and the fact that executors can modify estates to mitigate your legal tax obligations makes such investment alternatives highly advantageous.
There are many different types of trusts that help investors protect their properties. Charitable, spendthrift, and insurance trusts all have different purposes and uses, making it important to consult with an expert planner before setting anything up.
Creating an Asset Protection Plan
It's critical to have a plan for asset protection prior to expatriating. The best way to avoid increased scrutiny from agencies such as the IRS or SEC is to consult with an asset protection attorney that can help you plan and setup a valid estate before you move. Doing so helps you avoid common filing errors and reporting mistakes that might prompt investigations.
Remember that you require more than just an attorney who can file paperwork. The more experience your estate lawyer has with actually setting up international assets and performing global tax services, the more likely you are to stay compliant with United States and foreign laws.
IRS Circular 230 Notice: The Statements contained herein are not intended to and do not constitute an opinion as to any tax or other matter. They are not intended or written to be used, and may not be relied upon, by you or any other person for the purpose of avoiding penalties that may be imposed under any U.S. Federal tax laws or otherwise.