Top Ten Tips for US Expatriates
We provide a comprehensive planning service for US families who reside outside the US or who have international interests and assets. Those needs are often complex and can vary dramatically between families. We’ve compiled a top ten list to help you get off to the right start.
1. Hire a competent CPA who has relevant experience. This is one of the most costly mistakes we see people make. Whether it’s through us or another firm, it’s critical you select good tax counsel at the outset and follow their advice.
2. Avoid foreign mutual funds and other foreign investments. Unwinding some of these structures is often the first step for new clients we meet. Tax rules make reporting foreign investments punitive and complicated, so be very careful before investing in these structures.
3. Review your estate plan. US documents rarely work well outside of the US. You may not need a full set of wills, trusts, and other documents for your resident country, but you should evaluate this careful and seek professional advice, especially if you have minor children or existing trust structures.
4. Review your insurance coverage and supplement where needed. Benefits packages overseas may not have the same level of coverage and the quality of the coverage is often much poorer. You may need different liability and contents policies and your existing coverage might have exclusions for and overseas move.
5. Keep track of housing expenses. Many American miss this tax benefit because they don’t keep records of their utilities, unreimbursed repairs, insurance and other costs for foreign housing.
6. Get advice on local pension plans. Many of these are tax unfavorably, sometimes resulting in phantom taxes (paying tax on income you haven’t earned yet). Even simple things like government mandated pensions can be problematic.
7. Notify your CPA and financial advisor before setting up a company or trust. Foreign corporate structures have very different tax filing requirements and certain elections must be made quickly after a new entity is set up. Getting the right in advance is crucial.
8. Keep good records. The increased tax and financial complexity makes it more important than ever to keep good financial records in case of an audit and to accompany the estate plan.
9. Avoid most foreign life insurance contracts. These incur additional taxes and reporting and are often very expensive. Most American living overseas do buy US insurance. We specialize in this.
10. Don’t delay planning. We meet clients who have done nothing because local institutions had no knowledge of US issues. We can help. Don’t delay your planning due to a lack of advice.