Estate Planning for Multinationals
About the Guest(s):
Paula M. Jones has been practicing law for almost 25 years. After a decade at large international law firms, she opened her own practice in 2016.
LinkedIn - Paula M Jones, Esq
Her domestic estate work includes wills, trusts, powers of attorney, living wills and beneficiary designations. She employs marital, residuary, disclaimer, dynasty, asset protection, grantor-retained annuity and intentionally defective grantor trusts, as well as family corporations to protect and preserve assets for many generations. She represents trustees and beneficiaries of trusts in trust-related matters. Her Orphans’ Court practice includes trust reformations, trust mergers and divisions, terminations, accountings and audits. She represents parties in negotiations to avoid fiduciary litigation.
Her work with international clients includes efficient planning in regard to U.S. estate and gift taxation, qualified domestic trusts, residency determinations, tax treaty applications, pre-immigration planning for non-resident aliens coming to the United States, expatriation tax planning for residents and citizens leaving the United States, administration of estates of foreign individuals with U.S. property and other related matters. She has represented many individuals in regard to foreign account and asset compliance issues.
Paula is currently an adjunct professor at Western New England University School of Law where she teaches International Estate Planning. She has guest lectured at Columbia University, Temple University School of Law’s Masters of Laws Program and Rutgers University School of Law. She lectures frequently for organizations such as the American Immigration Lawyers Association, Society for Human Resource Management and the American Bar Association, as well as local estate planning councils.
Paula has authored several articles in respected industry journals such as Trusts and Estates, AICPA’s Tax Advisor and the ABA’s Practical Tax Lawyer. In addition, she developed a workshop on estate planning basics, titled “Will Power: Wealthy or Not, Your Estate Matters.” The companion book was published by The Graduate Group.
Paula is admitted to practice in the State of New York, the Commonwealth of Pennsylvania, the State of New Jersey, the U.S. Tax Court and the U.S. District Court, Eastern District of Pennsylvania.
Episode Summary:
In this episode of the Money Roots podcast, host Amy Irvine engages in an enlightening discussion with Paula Jones, the esteemed owner of Jones Estate Group. With a robust background in international and domestic estate law, Paula delves into the intricacies of cross-border estate planning. She offers valuable insights into the roles her firm plays in estate planning, particularly emphasizing the importance of having a qualified team comprising estate attorneys, financial planners, and immigration lawyers when considering dual citizenship or cross-border living.
Throughout the podcast, Paula addresses key issues associated with holding assets across different countries and the complex scenarios faced by individuals with multinational ties. Her discussion includes an exploration of residency determinations, tax treaty applications, and the vital significance of qualified domestic trusts in safeguarding assets. Paula’s practical advice caters to a growing audience interested in international living, offering concrete steps to ensure seamless estate planning while navigating diverse legal systems.
Key Takeaways:
- Having a qualified team of advisors, including an estate attorney, financial planner, and immigration lawyer, is crucial for cross-border estate planning.
- Qualified Domestic Trusts (QDOTs) are essential for non-citizen spouses to avoid hefty estate tax bills in the U.S.
- The concept of residency for estate tax purposes is distinct from income tax residency and can vary significantly across international treaties.
- Trusts may not be recognized by all countries, thus understanding local laws is vital to maintain estate planning efficacy.
- Ongoing estate plan reviews are recommended every 3-5 years or after significant life changes, especially when acquiring assets in different jurisdictions.
Notable Quotes:
- "I'm part of the team, I'm part of the advisors team. They still need to work with an advisor, they still need to work with an immigration attorney."
- "If you're a U.S. citizen and you decide to go live in Portugal somewhere, you still need to file your U.S. income tax return."
- "People do all kinds of things and they move all kinds of, of places because they need family, a support system."
- "It's reality and this is life. And, you know, I'm not going to feel bad because I'm not the first person someone decides to call."
- "If you have a connection to another country, you can go ahead and elect that other law."
Resources:
- Jones Estate Group: Jones Estate Group Website
- Western New England University School of Law: Western New England Law (Note: specific URLs are not mentioned in the transcript.)
- LinkedIn - Paula M Jones, Esq
Tune into the full episode to dive deeper into the nuances of international estate planning and to benefit from Paula Jones's extensive expertise. Stay connected with the Money Roots podcast for more insightful conversations that help keep your finances grounded and future growing.
Transcript
Hello Money Roots listeners.
Speaker A:I am excited today to have a special guest on the show, Paula Jones.
Speaker A:Paula is the owner of Jones Estate Group International and Domestic Estate Law.
Speaker A:Paula has over 20 years of experience.
Speaker A:She's and the Jones Estate Group Inc.
Speaker A:Serves clients in all aspects of international and domestic estate planning and estate and trust administration, even business succession planning, family corporations and private charitable foundations.
Speaker A:One of the things about Paula with regards to international estate matters, it's including foreign accounts and asset compliance, residency determinations, expatriation planning and pre immigration planning.
Speaker A:Certainly from a foreign ownership of US Real estate, a foreign non grantor trust and even probate of US Assets owned by non US Persons.
Speaker A: m, she opened her own firm in: Speaker A:Her domestic estate work includes wills, trusts, powers of attorneys, living wills and beneficiary designation.
Speaker A:She employs marital residency disclaimer, Dynasty Asset Protection grantor, retained annuity and international effective grant trust as well as family corporations to protect and serve assets for many generations.
Speaker A:She represents trustees and beneficiaries of trusts and trust related manners and her orphans court practice include trust reformation, trust mergers and divisions and terminations, accounting and audits.
Speaker A:She represents parties in negotiations to avoid fiduciary litigation.
Speaker A:Now her international work or her work with international clients includes efficient planning in regards to US Estate and gift taxation, qualified domestic trust residency determinations, tax treaty applications, pre immigration planning for non resident aliens coming to the United States, expatriation tax planning for residents and citizens leaving the United States, Administration of Trust of foreign individuals and U.S. property and other related matters.
Speaker A:She has represented many individuals in regard to foreign accounts and assets and she's currently an adjunct professor at Western New England University of Law where she teaches international Estate law.
Speaker A:Lots of good information.
Speaker A:And just so you know, for those of you that are wondering where does she practice, she is permitted to practice in the State of New York, Commonwealth of Pennsylvania and State of New Jersey.
Speaker A:So I think you're going to love this show.
Speaker A:It's intriguing to say the least.
Speaker A:And I say sit tight and hold on because there's a lot to come.
Speaker A:Well, welcome to Money Roots.
Speaker A:Paula, we are so excited to have you here.
Speaker A:This has been on the books for a little while and I have to tell you this is a topic that's been coming up a bunch this year.
Speaker A:So I'm super, super pumped to have this discussion.
Speaker A:And just for full disclosure, disclosure just before we even get into anything.
Speaker A:So that when people are listening, you practice estate law and cross border context.
Speaker A:That doesn't mean that you help somebody pick a country or you're not helping with immigration law, which are two very different areas.
Speaker A:You're focusing on the estate planning component that goes with the decision to have cross border living, whether it's, you know, separate countries or whatever it is.
Speaker A:I just, I always like to throw that out there just for clarification so that people know when you're the, the right fit for them in the right context.
Speaker A:Right, Yep, yep, absolutely.
Speaker A:Yeah.
Speaker A:And I, I think you and I had kind of had a pre conference talk or pre podcast recording talk and one of the things that you made very clear to me is that you said I'm part of the team, I'm part of the advisors team.
Speaker A:They still need to work with an advisor, they still need to work with an immigration attorney.
Speaker A:They still need to, you know, do the research about where they want to live.
Speaker A:I'm just here to help them on the estate planning piece.
Speaker B:Right, right.
Speaker B:And I know one, one of the questions you have is, you know, what, what things should people put in place before they have a connection to more than one country, for instance, or before they're becoming dual citizens of, you know, two countries or something like that.
Speaker B:And really the first thing I would say is first contact your advisor and kind of get your team around you.
Speaker B:So you're going to have more than one advisor on your team.
Speaker B:You are going to have an immigration attorney, you're going to have to have one to figure out how to get to add another country to your portfolio, let's call it.
Speaker B:And they need to advise where are you allowed to go?
Speaker B:Are you allowed to leave?
Speaker B:If you leave, will you be able to come back?
Speaker B:Those are all good questions to ask prior to making any final decisions.
Speaker B:And an immigration attorney is your contact person for that.
Speaker B:A good accountant is good because everyone needs to ask the income question of I know I'm in the US I need to file my income tax return each year and if I go to another country, how is that going to change, if at all?
Speaker B:And what sort of filings or income tax liabilities do I have in another country?
Speaker B:Fortunately, the US has many, many, many treaties, income tax treaties with other countries with the general provisions that make sure that you are not going to be paying twice on the same income.
Speaker B:You know, you're not going to be paying double the income tax on the same income.
Speaker B:And that's what those treaties are really there for.
Speaker B:So there's, there's a lot of things in place to, to make sure that kind of bad results don't happen.
Speaker B:And yet it's good to check in beforehand.
Speaker B:And then you're going to have an estate attorney like me who is going to help with the assets that you own and if you need to be moving those assets and what is triggered by either another citizenship, another residency, the moving of assets.
Speaker B:Because the US in general is unique from other countries in that it reaches well beyond its borders and it follows its people around the world.
Speaker B:What I mean by that is if you're a U.S. citizen and you decide to go up and go live in Portugal somewhere, you still need to file your U.S. income tax return.
Speaker B:You're still subject to U.S. federal estate tax.
Speaker B:And a lot of other countries don't view it that way.
Speaker B:They tend to say, well, once you're beyond our borders, you're kind of out of our taxing jurisdiction.
Speaker B:And the US doesn't say that.
Speaker B:So, yeah, that team of people around you, and certainly your, your financial planner is part of that team to say, what are we going to do with the assets?
Speaker B:Who, who were we allowed to work with and not allowed to work with?
Speaker B:You know, that's something that your industry has been very, very much affected by in the last 10, 15 years.
Speaker A:Yeah, especially the last five.
Speaker A:I mean, yes, 10, 15, but the last five in particular, and a big component of that too is like, you know, for some people, it's, it's trying to clarify are they actually giving up their citizenship or are they actually maintaining both.
Speaker A:Both citizenships and which country recognized citizenships, which ones don't.
Speaker A:And yeah, the US Is a unique country from my experience in dealing with people that are coming either into the US or even, you know, like I would say having dual citizenship with either like Canada or the uk it's, it is a very different environment.
Speaker A:And, and how.
Speaker A:Not just that tax component, but who, who drives where, how long are you going to be in which country and who drives the not.
Speaker A:So we have our, we have our.
Speaker A:When you're thinking about US Citizens from a tax perspective, it's like, where is your citizenship, but then also where is your residency for tax purposes?
Speaker A:And the two don't always agree, right?
Speaker A:They can.
Speaker B:Yeah, yeah, yeah.
Speaker A:It's really important to have that conversation with somebody who's knowledgeable about it.
Speaker B:Yeah, that's a really, really interesting concept.
Speaker B:The concept of residency is really, really interesting.
Speaker B:In A lot of different disciplines.
Speaker B:So, you know, from an estate tax point of view, there's a definition of residency.
Speaker B:So first of all, if you maintain your U.S. citizenship, it's kind of an easy rule to remember because wherever you go, wherever your assets are, it all comes into the U.S. right?
Speaker B:This is the reaching beyond the borders and not letting its people go.
Speaker B:That's what the US Does.
Speaker B:So if you're maintaining the citizenship, easy to understand that you have the same relationship with the estate law that you did if you resided in the US it doesn't change from a US perspective.
Speaker B:But the second question is, what if you're not a US Citizen?
Speaker B:Where are you resident?
Speaker B:And the answer for an estate law point of view is one unique definition that has no bearing to the same to your income tax status and whether or not you're deemed income tax resident in the United States.
Speaker B:That's a completely different test.
Speaker B:Immigration wise, you are considered resident or not considered resident.
Speaker B:That may be a completely different test.
Speaker B:And then there's a fourth category, and that is what is your treaty residency.
Speaker B:So if there is a treaty with another country, whether it be income tax or estate tax treaties, because they're different treaties, they tend to have a residency category that says where, for the purposes of these two countries, for this particular tax, where are you considered resident?
Speaker B:And so that treaty provision can actually tweak the definition that you have already determined for estate purposes or for income tax purposes, and it's in the treaty, you know.
Speaker B:So from an estate tax point of view, the good point about that is we only have about 16 estate tax treaties with other countries.
Speaker B:So the chances are your other country that you're interested in isn't going to have a treaty.
Speaker B:So you're still just going to have the estate tax definition of residency and then your income tax definition and your immigration one.
Speaker B:So you know, those are going to be.
Speaker B:So you just have the three.
Speaker B:But if you are, for instance, in the U.K. or thinking about having a relationship with the U.K. in addition to the U.S. there is a treaty definition of residency that tweaks the already, you know, in place estate tax definition of residency in the United States for those purposes.
Speaker B:So it's just always something to check.
Speaker B:You know, when clients come in, I go, okay, what category are you in?
Speaker B:Number one U.S. citizen.
Speaker B:Okay, that's the easy one.
Speaker B:Everything, everywhere, all at once.
Speaker B:You know, it all comes into the federal to estate tax law.
Speaker B:The second one is residency.
Speaker B:And that's a, that's a big question.
Speaker B:So we have to look at a Lot of different factors to determine is someone a resident for estate tax purposes?
Speaker B:And then we also have to say, and is there a treaty out there that tweaks our answer here.
Speaker B:A lot of other countries, once you are a determined resident or non resident, everything falls into that category, meaning whether it's inheritance tax, income tax, anything else, it's just all you're either resident for all purposes or not.
Speaker B:And of course, the US has to be a little bit, you know, unique and high maintenance in that it says, okay, we've got definition, different definitions of residency for different things.
Speaker A:And then you get into the state residency, right.
Speaker A:That component potentially too, that you have to throw sort of in the mix, like where if I am, you know, if I'm a resident of the United States, if I'm deemed a resident of the United States for state tax, like which state of the United States am I a resident of?
Speaker A:And what estate taxes go along with that particular.
Speaker A:Yeah, it's about as clear as mud.
Speaker A:And one of the reasons why.
Speaker A:Well, let me back up and ask the question because, I mean, this is fascinating to me.
Speaker A:You and I had about a half an hour conversation previously and I just, I find this so fascinating, I think in today's environment, because we're getting so many questions and people are starting to think more globally living, you know, and so this particular area of focus that you work in, which is on international and domestic estate law, like, you know what, like I said, so fascinating to me.
Speaker A:What made you decide to go that route?
Speaker A:Was there any particular event that happened in your life or was it just this level of interest that you had in this particular topic?
Speaker B:Yeah, there was a particular event.
Speaker B:I had been practicing in domestic estate law, you know, kind of, I'll call it sort of your plain vanilla estate firm.
Speaker B:And it was about a year, you know, I was a new lawyer and a woman came in.
Speaker B:Her husband had unfortunately passed away rather suddenly at kind of middle age, sort of unexpected.
Speaker B:And neither one of them were actually US citizens.
Speaker B:They'd lived in the US for many, many years, about 30 years.
Speaker B:They were both green card holders, you know, very common.
Speaker B:And he died suddenly.
Speaker B:And she was informed at that time that because of, you know, they had a fair amount of wealth and the, the federal estate tax.
Speaker B:She was looking at a $400,000 federal estate tax bill.
Speaker B:Okay, huge.
Speaker B:And she didn't know why, and she didn't see it coming either.
Speaker B:And she had an estate plan in place, which she had gone to a domestic estate attorney who just did a regular estate plan.
Speaker B:For her.
Speaker B:Well, what they failed to realize is that there is a very small, limited marital deduction when the surviving spouse is not a U.S. citizen.
Speaker B:So normally if you have two U.S. citizen spouses, one of them passes away.
Speaker B:If they've got $50 million that they're leaving to their surviving spouse, it all goes by way of an unlimited marital deduction.
Speaker B:Right.
Speaker B:So you have this huge estate and you know, good, a lot of wealth there.
Speaker B:As long as it's passing to a US Citizen spouse, you are not going, you're still going to file a federal estate tax return, you're going to put $50 million gross estate, you're going to put deductions, you're going to put $50 million marital deduction, unlimited, thank you very much, tax due.
Speaker B:Zero.
Speaker B:Okay.
Speaker B:And you know, for, for a lot of attorneys, they just kind of assume that that's the case.
Speaker B:Well, when you have a non citizen spouse and a green card holder is just that they're a green card holder allowed to be here, lived here for 30 years, you know, born, raised their kids here.
Speaker B:The whole thing had no intention of going back to their country of origin.
Speaker B:And yet there's a limited marital deduction.
Speaker B: So in: Speaker B:That's it.
Speaker A:Right.
Speaker B:So if you have an estate, you know, greater than that, or in this case I should say this is going back a few years.
Speaker B:Obviously, you know, they had an estate that was very much in excess of both the limited, very small limited marital deduction and the federal estate tax exemption amount that everyone gets, even the green card holders.
Speaker B:Okay.
Speaker B:So theirs at the time, that marital deduction was not going to cover them.
Speaker B:And so she was looking at a 4, $400,000 federal estate tax bill.
Speaker B:So the older partner in the firm turned to me and said, go figure out if there's anything we can do about this.
Speaker B:And of course I'm a brand new lawyer and I'm thinking, oh, he's testing me, you know, to see if I can figure this out.
Speaker B:Well, I figured it out, but I also figured out that the partner, he didn't know either, so, so I figured it out.
Speaker B:And in fact you can do a post mortem qualified domestic trust that mimics the marital deduction that is needed for a lot of different reasons that, you know, I don't necessarily have to go into here, but I figured out the puzzle.
Speaker B:She was able to transfer assets into a trust and did not have to pay $400,000.
Speaker B:Her tax bill went down to zero.
Speaker B:And so I kind of latched on.
Speaker B:I thought, ooh, first of all, this is complicated and it's like a puzzle.
Speaker B:And I love to figure things like that out.
Speaker B:No situation is like any other.
Speaker B:You know, every single client situation comes in as different.
Speaker B:And also on a personal level, I am also very much like my clients.
Speaker B:I am both a US And a UK citizen.
Speaker B:My original family represents four different countries among five different people.
Speaker B:And so it's very much in my lifestyle to understand that it is completely normal to have a spouse, a child, a parent, whatever that is, from another country, speaks another language, is another religion, you know, than you are.
Speaker B:And it's all within the same family.
Speaker B:And those are the clients that I work with.
Speaker B:That's the norm for us.
Speaker A:Fascinating.
Speaker A:And you mentioned the qualified domestic trust.
Speaker A:That's something that obviously, if you can do it before, it's ideal.
Speaker A:So if you have a situation like that where.
Speaker A:And we do have a few clients that we've actually been, you know, really pushing to get this put in place.
Speaker A:Now, whether, yeah, whether.
Speaker A:All healthy and there's no stress associated with it other than going through.
Speaker A:Through the process.
Speaker A:But that is a huge benefit to, to the whole process in general.
Speaker A:Right.
Speaker A:And I suppose you could talk about possibly disinheriting assets if the kids are.
Speaker A:But that's a whole nother, like poss.
Speaker A:You know, that just raises like, okay, how did they live if.
Speaker A:If they disinherit everything that they would have normally been eligible for?
Speaker A:And it really complicates the situation when it doesn't need to be complicated.
Speaker A:I mean, it's complicated enough, but if you can pre plan ahead of time, it really makes a big difference.
Speaker A:And we talked about this.
Speaker A:Oh, go ahead.
Speaker B:And Amy, it's really important what you're doing as well.
Speaker B:You know, what I always say on this is, is you have to have your team around you.
Speaker B:And so you as a member of the team, raising this issue for your clients and saying, you know, guys, there's a qualified domestic trust.
Speaker B:If you get it in now, it sure is going to save a lot of heartache and headache later on after the fact.
Speaker B:If we're kind of rushing around to do that, that's really, really important, you know, for you to be kind of raising the issues for other areas of the team.
Speaker B:You know, in the same way that I try to do that with clients, as I say, you know, okay, you have all these assets all over the place.
Speaker B:Frankly, they're a mess.
Speaker B:You know, you don't really have a plan in Place you don't really know what the deal you've got got to hire someone else for your team.
Speaker B:So I think that's, that's really important.
Speaker B:And as for every member of the team, it is always better if the clients come to us ahead of time rather than rushing around after something has already happened, trying to clean up a mess.
Speaker B:You know, we would love it if all clients were that forward looking and it's great that all members of the team try to, you know, help them along with that.
Speaker A:Yeah.
Speaker A:Even the custodians that are being utilized for the assets themselves, like which custodians work in which countries.
Speaker A:And you know, knowing, because that as you mentioned sort of, you know, very lightly earlier, it's, it's, some of the custodians will not work, not allow, they won't custody the assets in certain, they live in certain other countries.
Speaker A:So it becomes a problem.
Speaker A:We've, we've had some expats that we've worked with.
Speaker A:Right.
Speaker A:They've worked for a big, large organization that has facilities that they send their employees to that are in other countries.
Speaker A:And it's, it becomes a little bit on the challenging side sometimes for the custodians to say, oh wait, their address is, you know, blah, blah, blah.
Speaker A:We don't, we don't, we can't do, we can't.
Speaker A:Their assets can't be with us anymore.
Speaker A:You can't, you know, you can't be the advisor and you can't have the assets here anymore.
Speaker A:You have to find another custodian.
Speaker A:So knowing some of those countries ahead of time too and knowing, you know, where's the right place.
Speaker A:So for example, if somebody is a US citizen and wants to ultimately become a citizen of another country and maybe their residency is more directed towards that other country, is the custodian that you're working with actually a custodian that they can continue to work with or do you need to make the changes before.
Speaker A:And that, that's sort of, those are some of the questions that we start to ask when somebody talks about adding and switching or not to mention like if they're going to give up their citizenship.
Speaker A:That's a whole nother conversation that you could get into.
Speaker A:But, but when they're dual citizens, you know, are there other, I know you mentioned a few previously, but are there some other things that they should be thinking about when they are seriously, you know, getting to that point where they've, they've already worked with the immigration attorney.
Speaker A:They're, they're in that process you know, they have the assets.
Speaker A:It's like, okay, I'm, I'm still here.
Speaker A:I'm still working through this.
Speaker A:What are some of the things that I should be making?
Speaker A:What changes should I be making right now that would be helpful?
Speaker B:Yeah.
Speaker B:So they, they should definitely, like, take a look at their estate plan.
Speaker B:So a couple of the kind of most common issues I would say is, is where they own real estate, right?
Speaker B:So maybe before they purchase, purchase real estate in another country.
Speaker B:And some people, they want to do that simply because they've been traveling a lot to a particular place.
Speaker B:They love it.
Speaker B:You know, they've fallen in love with another country and they want to buy a home there, you know, instead of paying for hotels all the time.
Speaker B:You know, as they get older, as they're thinking about retirement age or something, they, they say, wouldn't it be wonderful to spend maybe two months a year in Rome?
Speaker B:You know, and why don't we buy an apartment in Rome?
Speaker B:And what, what does that trigger if we do something like that?
Speaker B:So sometimes it's really kind of that simple, that their whole life is us, but they've got some, some real estate that they want to spend some time in, you know, and then others are a lot more complicated than that, that some people are saying, no, I really am going to go reside in another country, and when I do that, I'm going to buy real estate.
Speaker B:Should I hang on to my US Real estate?
Speaker B:What should I do?
Speaker B:So I just bring it up to say real estate tends to be treated as a special asset.
Speaker B:And the reason why is because it is physically located exactly where it is, whereas most other assets, there's planning techniques to do to sort of put them elsewhere, or they're considered under law that they follow you where you go, you know, because they are intangible.
Speaker B:Well, real estate isn't.
Speaker B:It's a big hunk of, you know, bricks and mortar sitting in a particular country.
Speaker B:And so it does tend to be treated a little bit differently.
Speaker B:Even for those countries where we do have a treaty with them.
Speaker B:Real estate, or they call it immovable property, tends to have its own article, you know, in each treaty.
Speaker B:So, so I'll give an example.
Speaker B:Having real estate in another country is probably going to trigger the person having a separate will, you know, so if you still have a US Connection, you're going to have your US Estate plan, and it's going to be an international estate plan, right?
Speaker A:Because.
Speaker B:Because it is going to recognize the fact that you have assets, beneficiaries, real estate residency, perhaps in that is outside the U.S. okay, so you know, as an example, my clients who just fell in love with Rome and bought an apartment there, they are going to have a separate will.
Speaker B:They're going to ask Italian council, do I need a separate will here or does my US Will cover it?
Speaker B:How should we proceed?
Speaker B:Okay, and here's where the attorneys on the team, I'm not going to give them that advice because I'm not an Italian attorney.
Speaker B:But we're going to reach out.
Speaker B:We're either going to have a notair or a lawyer or an attorney in Italy to answer that question as to what do they need over there.
Speaker B:Let's say they're going to spend a couple of months a year, but that's it.
Speaker B:Or maybe they're going to start out paying, you know, spending a couple of months a year.
Speaker B:And then, hey, Italy has this really attractive residency program over there where wealthy folks or high, high earners pay a flat income tax rate each year.
Speaker B:So they could actually by becoming resident in Italy, really save a lot on their income tax each year.
Speaker B:So that's looking pretty attractive to my, to my clients who happen to be high earners, you know, so they're falling in love with Rome even more.
Speaker B:And so we're gonna, we're gonna do a cross border estate plan for them.
Speaker B:We're gonna have Italian council advise us on, you know, what, how much the Italian plan is going to cover.
Speaker B:And then, you know, we're going to have the US Plan that Italian plan.
Speaker B:For instance, just to kind of throw out an example of how different things can be.
Speaker B:The European Union has a regulation that allows people who have another citizenship or a connection to another country to have their assets distributed according to their other country.
Speaker B:So my US folks who are spending a lot of time in Italy can have an Italian will that says we would like US Law to govern the disposition of our property because otherwise Italy has, has forced airship provisions under their law.
Speaker B:You know, not a concept that is, that is, you know, attractive to, to the US mentality at all.
Speaker B:There are a lot of other countries that have at least some portion of your estate that must go to either spouse or children or some combination and that even a will can't overwrite that.
Speaker B:The law says you must give x percent to these people.
Speaker B:You know, and so some people really want to.
Speaker B:They don't like that law.
Speaker B:They haven't liked that law for a long time.
Speaker B:So, so the EU did come up with this regulation that says, you know, if you do have a connection to another country, you can go ahead and elect that other law, you know, so those are the things that, like, we couldn't possibly analogize it to how we do things in the US because you know, some places just have a completely different perspective on things than we do.
Speaker A:Yeah.
Speaker A:In some ways, you know, it's the way it used to be.
Speaker A:Right.
Speaker A:You know, it's not, it's not the way it is here, it's the way it used to be.
Speaker A:And so, and they haven't changed that where the US has gotten a little bit more aggressive about those options of what, what we can do with our estates.
Speaker A:And you know, that, that sort of leads into that question that, not that you necessarily would be able to go down through the list of countries that are more inviting than others, but I think it's important for people to start asking those questions.
Speaker A:If, if somebody really wants to be a citizen, a dual citizen of another country, then they have a lot of other reasons.
Speaker A:But boy, it'd be really good to know what you're getting into and ask those questions.
Speaker A:To say, if I want to live in the UK versus the eu, there's a difference between Europe.
Speaker A:Right.
Speaker A:There's a difference between where you are right now in Europe.
Speaker A:And so asking those questions, I mean, is Austria better than Germany?
Speaker A:You know, is it, I don't know, you know, asking those questions that if I want to be in this region, it's the same thing we do to a certain extent even in the states here.
Speaker A:If I want to be in this region of the country, is it better to be in Pennsylvania or New York, Is it better to be in Idaho or wy?
Speaker A:You know, it's the same thing.
Speaker A:And I think, you know, there are more, I guess there are some countries that are sort of more inviting in that and than others.
Speaker B:It is very much.
Speaker B:It is, it's very similar to that.
Speaker B:I totally agree that we have 50 states and sometimes I will get calls from clients who say I could, I can work from anywhere or I am retiring.
Speaker B:You know, I'm not, I'm not working right now.
Speaker B:What is the cheapest state that I can be resident in?
Speaker B:You know, or, and I'm happy to go through the list of other reasons why people are looking outside the US at this particular time, but it is, it's kind of the same analogy.
Speaker B:So I find that first of all, the question is, well, why are you looking anyway?
Speaker B:Like, what has motivated you to look outside the U.S. so, you know, a tried and true age old reason is economic opportunity.
Speaker B:Opportunity.
Speaker B:Right.
Speaker B:Someone has A career opportunity, an educational opportunity, a business is expanding into a new territory.
Speaker B:Possibly they're, they're diversifying their brokerage account, right?
Speaker B:They may not be moving, but they want to invest in, you know, a completely different market in a different part of the world to diversify their holdings.
Speaker B:You know, that's, that's certainly something that we see more now than, than we ever used to.
Speaker B:And they want to be open to another country's economic changes that might be a little bit at the opposite of our, of this country's economic changes.
Speaker B:And so they're, they're, you know, diversifying in that way the assets themselves.
Speaker B:So, you know, economy is one or economic opportunity is one.
Speaker B:Second is family and loved ones.
Speaker B:You know, people do all kinds of things and they move all kinds of, of places because they need family, a support system, a personal support system for, for whatever reason.
Speaker B:You know, sometimes they do it on a personal reason because they, they want to obtain an ancestor's citizenship, right?
Speaker B:You know, they are doing their genealogy or they're very, very interested in kind of where they came from or something.
Speaker B:And there are countries that go back quite far to grandparent or great grandparent, and they offer citizenship to people who really can prove that, yes, they are, they are a descendant of, of that particular country.
Speaker B:And so they are, they're able to get the citizenship for that.
Speaker B:Sometimes, like I said, travel introduces people to a new place and they fall in love with it.
Speaker B:You know, my, my husband fell in love with Amsterdam when we went.
Speaker B:It's just one of his favorite places in the world.
Speaker B:And he said, I think we should buy a house here, you know, and spend time here.
Speaker B:And I thought that that's, that's great.
Speaker B:You know, I look everywhere we go, we always look at the real estate listings.
Speaker B:Wherever we are in the world, we just want a place everywhere.
Speaker B:But, but it was interesting that he actually didn't seem to realize that you can't just get up and, and move to another country.
Speaker B:You need permission to do that, you know, and, and it was, it kind of was interesting to me.
Speaker B:I had to laugh about it because I didn't realize there are a lot of people who don't actually know that, right?
Speaker B:They, they really think that you can just get up and go and move somewhere.
Speaker B:You can't.
Speaker B:You know, most places you can't.
Speaker A:And then, of course, are starting to get, you know, you're starting to have to pay for that even a little, right?
Speaker A:It's not even just about the get up and move.
Speaker A:It's Even just visiting the country for an extended period.
Speaker B:That's right.
Speaker A:In a short period of time.
Speaker B:Yeah, that's right.
Speaker B:They're trying to stem the tide of, of tourism because it's, it is overwhelming some places, you know, in, on the planet.
Speaker B:And the other thing that of course is more lately is geopolitical uncertainty.
Speaker B:There is increasing violence, there is increasing extremism.
Speaker B:And just lately that's fueled a lot of people in the US from looking to other countries and sort of asking themselves, is that a backup?
Speaker B:Is that a possible backup plan?
Speaker B:For me now it's not just happening in the US it really is popping up all over the globe, that extremism.
Speaker B:We are in an interesting time or it is popping up all over the globe.
Speaker B:And so I call it global musical chairs that everyone is kind of looking to other places and simply asking the question, on what basis might I go elsewhere if I feel I need to go elsewhere?
Speaker B:And that's something that has been asked throughout history, depending on what's going on in the globe.
Speaker B:We happen to be in another one of those times.
Speaker A:Series of times.
Speaker A:Yeah.
Speaker A:We've got some same sex couples that we work with that are very consistent concerned about their rights as couples at this stage of the game.
Speaker A:And that's really honestly been one of the predominant groups of individuals that I work with that are looking at Canada particularly, that seems to be an area of interest.
Speaker A:Portugal seems to be Spain, like those countries seem to be really of interest to them.
Speaker A:They feel very safe and welcome there and they feel that their relationship will not be challenged in the future.
Speaker A:That's kind of been one of the biggest, right, I guess instigators for people to explore right now.
Speaker A:I think also, you know, I do, I think it's.
Speaker A:You mentioned your husband fell in love with Amsterdam.
Speaker A:My husband and I were over in Scotland chasing his family roots last year.
Speaker A:And I just.
Speaker A:The weather concerns me from a long time commitment to be in Scotland, but man, the people there were just extraordinary.
Speaker A:Like everywhere we went.
Speaker A:And it was so, you know, we were there about two sort of sidebar.
Speaker A:But we were there about two weeks and I looked at my husband, I said, you know what's interesting, it's gotta be a us thing.
Speaker A:But not one person has asked me what I do for work.
Speaker A:And the whole time that I was there, not one individual actually asked me.
Speaker A:And it's just so much more about community and taking care of people and watching, at least in my experience with that.
Speaker A:But no, I was there for three and a half weeks.
Speaker A:Is that Truly the culture, I think you have to go and spend six months or a year and actually know what it's truly like.
Speaker A:And, and that's the challenge of the romance that we sometimes develop with other countries when we go and visit.
Speaker A:And I, you know, one of the things that I tell people often now, this is true.
Speaker A:I tell them this when they are talking about relocating in the US as well as internationally, but especially internationally, because if you're relocating here in the United States, okay, you go from New York to Tennessee, let's say.
Speaker A:All right, you know, you, you're here in the United States, you find out that Tennessee isn't the best answer, you can always go back to New York.
Speaker A:Is it a bit of an expense?
Speaker A:Absolutely.
Speaker A:Is it, you know, challenging?
Speaker A:Yeah, a little bit.
Speaker A:But you haven't had to pack everything up that you own and ship it across the ocean.
Speaker A:Yeah.
Speaker B:Or.
Speaker A:Or across borders.
Speaker B:Right.
Speaker A:And now to re.
Speaker A:Evaluate.
Speaker A:Oh, I thought, I love this country and I actually don't.
Speaker A:I've gone through all this work.
Speaker A:I think it's really important.
Speaker A:Important to explore whatever country you think you want to be in.
Speaker A:I mean, do your homework on all these things that we've talked about already, but then also do a little exploring, like get a visas, tourist visa for a little bit and move around and find out what the limited terms are.
Speaker A:I think that's really important.
Speaker A:And, you know, people considering these kinds of big decisions, I think you mentioned there's some really key components, of course, of get your team around you, you know, make sure you, you know, you're getting into.
Speaker A:But if somebody just, you know, calls you and says, oh, I've, you know, I'm.
Speaker A:I have purchased that house in Amsterdam right now.
Speaker B:What?
Speaker A:Like, are there important, big, important decisions that people, I guess, would want to be considering when they make a decision like that previously?
Speaker B:Yeah.
Speaker B:Yes.
Speaker B:And of course, that does happen all the time.
Speaker B:And in fact, it happened over Covid, when people really were kind of moving, you know, geographically, even within the United States.
Speaker B:They were moving to different states, which makes a difference in your estate plan.
Speaker B:But I had a couple of people move to a different country during COVID you know, and they, they didn't tell me.
Speaker B:They told me after they did that.
Speaker B:And so again, you know, here we are with ahead of time is always best.
Speaker B:And yet this is reality and this is life.
Speaker B:And, you know, I'm not going to feel bad because I'm not the first person someone decides to call and tell me that they've decided to move somewhere simply you know, because of all these, these other reasons.
Speaker B:Right.
Speaker B:And Covid was one of them.
Speaker B:I mean, who knew that that was gonna happen?
Speaker A:Yeah, right, right.
Speaker B:And that remote work was gonna, you know, finally kind of find its, its acceptance in mainstream society.
Speaker B:And people realize, oh, I really kind of work remotely.
Speaker B:And how about that?
Speaker B:And so life has changed, you know, life has changed in that way.
Speaker B:So yeah, when I get that call, I say, okay, let's figure this out.
Speaker B:And I reach out to council in the other country and say, how do you view this person?
Speaker B:Do you view them as a resident?
Speaker B:What, what estate plan do they need to put in place?
Speaker B:And then we need to coordinate that with the US plan.
Speaker B:So a really basic kind of example of coordination is most wills, for instance, say that they revoke all previous wills prior to this one.
Speaker B:Well, if you do that and you have a will in another country, you've just revoked that will in the other country and you did not intend on doing that.
Speaker B:So one of the things that we coordinate together with other counsel is we say I revoke all prior wills, except for any that I have done under the laws of the United Kingdom, wherever the state person suddenly moved to.
Speaker B:And my, this is my US will to govern the balance of my worldwide property.
Speaker B:You know, and then you want to make sure that if they have another will or if they're getting one in the UK that it's going to say the same thing.
Speaker B:It's that the will is going to say I govern all of my assets that are in the UK and I have a US will and my US will is governing the balance of my worldwide property.
Speaker A:You know, pretty important.
Speaker B:Yeah, really, really important.
Speaker B:You know, and it is why it's important to get a cross border attorney or an international estate attorney of someone who's used to doing this all day every day.
Speaker B:Because, you know, very capable domestic estate attorneys don't know what they don't know in this area.
Speaker B:And so they may walk into seemingly very simple issues like that and, you know, and cause a problem.
Speaker A:Yeah, not to dabble.
Speaker B:This is, this is one of the things you really, really, really want an.
Speaker A:Expert in this, this is their niche.
Speaker A:Yeah, yeah, right, right.
Speaker B:The other concept is trusts.
Speaker B:And so here in the US we use trusts all the time.
Speaker B:We love our trusts.
Speaker B:We leave things in trust for our children, grandchildren issue, you know, our beneficiaries.
Speaker B:We have, if someone has special needs, we have special needs trusts.
Speaker B:If someone wants to protect their own assets, assets, some states allow us to do self settled asset protection trusts where you Know, we are the beneficiary.
Speaker B:It's our assets.
Speaker B:And yet, no, no judgment can, can get a hold of whatever's in there.
Speaker B:There's, there's a marital trust, you know, for, you know, if we want to benefit our spouse, but then we have our own children that we didn't have with our spouse.
Speaker B:And at our spouse's death, we want anything still in that trust to go back to our children and not to the spouse's children.
Speaker B:So there's a million different types of trusts.
Speaker B:We use them for all different reasons.
Speaker B:And the big issue with other countries is, is many countries simply don't recognize that a trust exists.
Speaker B:They don't, you know, adopt the same concept under their own law.
Speaker B:And so they can look right through them and ignore them and go right to the beneficiary of that trust and determine that that trust person has just received an inheritance.
Speaker B:And they ignore any division between the individual and the trust, you know, which is where a lot of the benefits come from in the United States of an arrangement like that.
Speaker B:Other countries will tax trust to a much greater degree than they would tax an individual.
Speaker B:So the same person has a much lower tax rate if they receive an inheritance out of right than if they receive an inheritance in a trust.
Speaker B:You know, and knowing same person, same assets.
Speaker A:Yeah.
Speaker A:Knowing which countries.
Speaker A:Yeah, that way is really important, really critical from an estate planning perspective.
Speaker A:And switching absolute things all around as a result of that is part of that.
Speaker A:And how often do you recommend that people review their estate plans?
Speaker A:We recommend every three years.
Speaker A:But what is your recommendation?
Speaker B:Yeah, we, we say that too.
Speaker B:We say, you know, you should take a look at things between three to five years or if something significant changes, you know, if you move to another country.
Speaker B:Yes, call me, you know, if you're thinking about moving to another country.
Speaker B:Please call me if you have.
Speaker B:If your group of beneficiaries changes, if your family situation changes, if your asset situation changes, you know, if you've got kind of a bit in the same way that you would call your accountant if you, you sort of have much more income this year or a loss that perhaps needs to be taken in a judicious way, or, you know, you want to do charitable giving or something like that, you know, anything that's kind of out of the ordinary along there, it's always good to kind of check in, check in with your estate attorney and say, does, does this change anything?
Speaker B:And of course, it's our responsibility to check in with the clients when we have changes in law coming down the pike.
Speaker B:Right.
Speaker B:So we just had our change in the tax law.
Speaker B: In July of: Speaker B:So January 1, it's going to be a flat 15 million and then ratchet up a little bit each year, you know, from that point forward.
Speaker B:And there is no end to that law.
Speaker B: hat law and it was the end of: Speaker B: So in the years leading up to: Speaker B:And so for our wealthier clients, we, we were setting up some trusts and moving some things and very similar kind of work with the uk, they just had a huge overhaul of their, of their income tax system in April and in the years prior to that, if someone had a US connection, they were shifting some assets into US trusts so that those assets would be out of the changes that were happening in the uk.
Speaker B:So those are things that are someone's advisor's job to do is to raise the flag for them and say, let's get ahead of this, let's do our planning ahead of time.
Speaker B:And.
Speaker B:Yeah, so we reach out to clients for those kinds of issues.
Speaker A:Yeah.
Speaker A:And even beyond that, and it's not for today's topic for sure, but I think, you know, in the us, one of the things that we talk an awful lot about is planning for transfer of assets to the kids and even asset protection trusts that, you know, start to exist.
Speaker A:And that's a whole nother topic that we're not going to cover.
Speaker A:I just throw it out there because I think it's something that people need to be thinking about.
Speaker A:And if they're, if they're doing this to type of planning, they need to like, if they have some sort of asset protection trust and they're thinking about relocation, they need to be thinking about how does, how is that going to be impacted in the long run?
Speaker A:Because I think people sometimes think, oh, I have an asset protection trust, I'm going to be fine.
Speaker A:You know, it's, it's set in place to protect my assets, but if you relocate or have dual citizenship, it could affect even, you know, that kind of thing.
Speaker A:So I think, again, just, yes, don't assume anything, question everything.
Speaker A:If this is a decision that you're implementing into your life and, you know, I can't say thank you enough, Paula, for your time today.
Speaker A:You are, I think I mentioned in the intro, it's New York and Pennsylvania.
Speaker A:You're right.
Speaker B:And New Jersey.
Speaker A:And New Jersey.
Speaker A:Thank you.
Speaker A:Yep.
Speaker A:So if folks are looking for somebody that they, if you have, if you're in New York, Pennsylvania or New Jersey, you would be able to assist them in that estate planning aspect of things, is that correct?
Speaker A:Yep.
Speaker A:Yeah.
Speaker A:Yeah.
Speaker A:We are going to have some links to your website and to your LinkedIn profile so that people can go out and do some research as well as your contact information.
Speaker A:So if anybody is thinking about doing well, if anybody has started the process and they're very serious and they've worked with an immigration attorney and now we're need, we need to get to the estate planning company component.
Speaker A:This is a great resource.
Speaker A:Paula.
Speaker A:You've been so wonderful in sharing your time with us and the prior time that you spent talking with me.
Speaker A:Thank you so much for being on the show today.
Speaker A:We really, really, really appreciate it.
Speaker A:Thank you.
Speaker B:Thank you.
Speaker B:It's a, like you said, it's a very, very timely topic.
Speaker B:So I'm happy to get as much information out there to people as possible to make it easier.
Speaker A:Well, we appreciate it.
Speaker A:Thanks again.
Speaker A:Thank you.
Speaker A:Thanks for listening.
Speaker A:Listening to Money Roots until next time, keep your finances grounded and your future growing.
