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Unique Wealth Management Challenges Faced by Cross Border Professionals


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There are three main unique challenges faced by cross border professionals with assets in the U.S:

  • Asymmetricality: The asymmetrical nature of tax regimes and reach, i.e., U.S. federal and state tax law reaches much farther than does the tax law of almost any other country;
  • Complexity: The complexity of U.S. and foreign laws and regulations; and
  • Scarcity: Lack of sufficient help and information, especially for those who are not ultra-affluent.

Traditionally, it has been fairly common for certain types of professionals, especially those in Europe, to have a fairly high degree of mobility and find themselves living and working in multiple countries over time. Generally speaking, these individuals did not need a great deal of tax or other guidance with respect to how living in multiple countries might affect their personal financial and long-term wealth planning decisions due to the commonalities of those countries.

On the other hand, once an internationally mobile individual touches the U.S. in his or her working life—whether that is made possible by a short-term work visa or a permanent assignment with a green card—then that person effectively becomes a U.S. tax resident, and things become both different and more complex.

The Unites States is the only major nation to tax all citizens and residents on their worldwide income, no matter whether they currently reside in the U.S. So once an individual has official contact with the U.S and they become a U.S. tax resident, they are mandatorily subject to the worldwide nature of the U.S. income tax, and the U.S. will tax you on your worldwide income and assets, no matter what country that income occurs in or those assets are found in. This is even the case if you were to sell highly appreciated property, where the appreciation occurred before you even moved to the U.S.

Fortunately, a fairly complex system of foreign tax credits ensures that there is little or no double taxation. However, there are many tricks and traps that the unwary can fall into, and a little bit of information and planning with regard to minimizing tax can go a long way and make a big difference. Similarly, with regard to assets such as bank accounts, brokerage accounts, retirement accounts, and real property, there are a wide variety of long-term planning possibilities and ways of leveraging and managing one’s wealth for the long-term that are made more complex by U.S. tax law and regulations.

Becoming a U.S. tax resident brings with it a great deal of potential complexity, both with regard to U.S. tax laws as well as other allied rules and regulations affecting things like moving funds from one country to another, opening accounts in more than one country, investing, business ownership requirements, and retirement planning. The U.S. system, then, is generally more complex both with regard to its tax code (many European countries have flat taxes or tax codes that are much simpler than the U.S. code) and the many other rules, regulations, and requirements that the U.S. imposes. For those cross-border professionals and globally mobile families with the most interest in wealth planning—which involves not only taxation and tax minimization strategies, but also questions of investment structure, asset allocation, savings and retirement plans, currencies, and so on—it can be a truly daunting task.

In addition to asymmetricality and complexity, there is a third unique challenge: the scarcity of readily available help and easily accessible information. While those who are ultra-affluent can afford to put together a specialized team consisting of accountants, attorneys, and other professionals, most cross-border professionals find themselves facing a lack of good information and guidance. With so many unknowns and so many unclear (and shifting!) rules and regulations, it can be difficult for such families to gain a clear sense of what they have in hand, to clarify their goals for the future, and to make sure that what they’re currently doing is aligned with and optimized for achieving those long-term goals.

Similarly, for the most part, foreign investment firms and banks will not give advice to, assist, or otherwise get involved with a U.S. citizen living abroad who has questions or problems, due to risk-avoidance and red tape complexities. Interestingly, even those global financial institutions that have divisions in other countries are loathe to advise cross-border professionals, due to similar issues.

Due to the assymetricality, complexity and scarcity issues, advising cross border professionals and mobile families has become an attractive niche for financial advisors to pursue.  To learn more about how to approach these issues, refer to my previous article that highlights ways advisors can become a go-to resource for this multi-trillion dollar wealth management niche.



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