Cross-Border Planning: A Financial Strategy for Money Crossing Borders

globe traveling abroad

There is a new kind of wealth planning emerging; one that is essential for anyone who holds assets or has family connections in more than one country. In an increasingly globalized world, the cross-border planning strategies of the global elite are becoming essential to a greater number of families. Is your life based in more than one country? Do you have business interests in multiple countries? Are you moving to the US either temporarily or permanently? Alternatively, are you leaving the US to work overseas? Or do you plan to retire abroad? Unsurprisingly, there are special considerations – not to mention pitfalls – when money moves across borders, so cross-border wealth planning takes into account everything from currency fluctuations to tax rules, estate planning, and even to political instability.

As with all financial planning, a cross-border strategy is all about helping you keep as much of your money as possible. Even if you aren’t moving countries, you can benefit from this type of planning if you have financial interests outside of the U.S., if you have dual citizenship or if you or your spouse have foreign family members.

Let’s take a look at what cross-border planning entails.

What to Plan For

When it comes to moving money across borders, the global financial landscape and associated legal issues are complex. Tax laws certainly come into play, but so do immigration, labor, real estate and securities regulations. The complexity is magnified because many of these laws are ever-changing, meaning planning with a trusted financial advisor is critically important.

Failing to follow proper protocols can lead to pitfalls ranging from severe tax penalties for failure to pay proper taxes to banks refusing to make your desired transactions. The following elements all require specific attention in order to ensure smooth cross-border transactions:

Cash Management

It is essential to meet all disclosure requirements and regulations that govern the movement of assets from one country to another. U.S. citizens and taxpayers must disclose overseas accounts annually to the IRS through the Report of Foreign Bank and Financial Accounts (FBAR) form. Failing to do this could cost you up to $10,000 per violation. Another often overlooked requirement is that the IRS may require you to file special form 3520 when receiving a gift or inheritance from abroad.

It’s also important to recognize that currency exchange rates could impact the value of your money once moved.

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Income Taxes

This one can trip you up if you aren’t prepared – American citizens living in other countries must still pay U.S. income tax. This is in addition to any taxes required by the country you live in and work in. This means you need to pay attention to tax code regulations in both your country of origin and your country of residence.

Retirement Planning

Retirement savings accounts are taxed in ways that vary by country. The U.S. doesn’t recognize the tax-free nature of UK ISA’s and, a worker who wants to roll over their U.S.-based 401(k) account to Canada could be required to pay taxes on the full value immediately unless proper processes and coordination take place. If you don’t know – or understand – the rules in each country, you risk overpaying, underpaying and facing strict penalties, or failing to take advantage of benefits you may be eligible for.

Estate Planning

Even if you have taken great pains to formulate an estate plan under U.S. law, a foreign jurisdiction may not recognize it at all. For instance, transferring your London flat to your US Trust may be considered a taxable event in the UK. There is a multitude of differing tax regulations and treaties among countries, and your heirs could be at risk of being heavily taxed in one country but inheriting your assets completely tax-free in another. Seeking expert legal counsel on this matter is critical if you’re moving money across borders.

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When investment income is either generated internationally or moved to another country, tax liabilities and regulations will apply. For instance, the IRS calls investment funds (like mutual funds) that are located in foreign jurisdictions “Passive Foreign Investment Companies” and makes holding them virtually prohibitive. Likewise, the UK tax authorities don’t like their taxpayers to hold US Mutual Funds and require you to hold your US investments in other structures. A trusted financial advisor can guide you on what is required of you.

Insurance Benefits

You should ask questions about all types of insurance if you’re transferring policies from country to country. U.S. health insurance, for instance, may not be recognized in a foreign country, leaving you to pay out of pocket for treatment. When it comes to life insurance, some foreign governments allow your beneficiaries to receive a payout free of taxes, but others do tax this benefit.

Seek Professional Guidance

It’s easy to see why cross-border planning is vitally important if you’re considering moving your residence or your assets from one country to another. With so many factors to consider – and a political and legal landscape in constant flux – advanced planning with a trusted financial professional is the best way to avoid potential pitfalls.

DISCLAIMER: We are not allowed to give tax or legal advice; the above content should not be construed as such. Seek advice from your tax or legal experts in all the relevant jurisdictions before taking action.


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WellAcre Global Wealth Advisors is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where WellAcre Global Wealth Advisors and its representatives are properly licensed or exempt from licensure.  This website is solely for informational purposes.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by WellAcre Global Wealth Advisors unless a client service agreement is in place.