Client Matters



Multinational individuals are one of the most misunderstood segments of the estate planning advisor community.  Planning for multinationals is not only applicable to the super-wealthy and in recent years, the media has exacerbated the inaccurate stereotype that anyone holding assets “offshore” must be a tax cheat.  The real issues that face multinationals are usually far less dramatic.  More and more multinational individuals and families are created by the significant increase in international travel to and from the United States, the creation of cross-border businesses, and the migration of employees to and from the U.S.  As a result, the seemingly average client may turn out to have personal, business or financial connections to more than one country.

The following are a sample list of representative matters:

1. A U.S. citizen resident in France is considering giving up his U.S. citizenship.  He seeks advice on the most tax-efficient way to accomplish this, in light of the exit tax on worldwide capital gain that may be triggered.

2. A wealthy individual from Vietnam is establishing ties with the U.S.  Before those ties are established, she seeks counsel on the most efficient way to transfer assets to the U.S. for the ultimate benefit of her heirs.

3. An executive with German citizenship but resident in the U.S. owns most of her assets in her own name.  She is married to a German citizen who is also a U.S. resident but the couple may move back to Germany upon her retirement – or not.  They need an estate plan that minimizes exposure to the U.S. federal estate tax and also takes into account the German transfer tax system.  They also need a plan that is flexible enough to accommodate every possible living arrangement they may settle on in the future.

4. A couple left the U.S. several years ago without formally giving up their green cards.  They also stopped filing U.S. income tax returns. The clients want to see if they are considered non-compliant with the IRS and if so, they want to weigh all of their options in order to become compliant and avoid significant penalties.

5. A multinational couple, both born in India, are citizens of the United Kingdom.  They own U.S. property and spending a good portion of their time here. The U.K. law deems them domiciled in India but the U.S. law deems them domiciled in the U.K.  They look for advice on planning their estate in the U.S. under this scenario

6. A Swiss national is a high level executive for a Swiss pharmaceutical company at its U.S. headquarters.  We work with this client to determine his ability to escape the U.S. exit tax upon his return to Switzerland. We work with the client to adjust the executive’s restricted stock and stock options to shift them to a foreign entity, thereby avoiding U.S. federal estate tax in the future.

7. When working with an executive from Greece, it is discovered that income from foreign accounts was never reported on his U.S. income tax returns. We work with this client to determine if he should enter into the IRS’s Offshore Voluntary Disclosure Initiative.  We determine the liability involved and work with the client to become compliant with all IRS income tax reporting requirements.

8. A wealthy business owner in Hong Kong dies owning U.S. real property.  Ancillary probate needs to be filed in U.S. in order to change title to the real estate.  In addition, all relevant U.S. federal and state tax filings are prepared and filed.

9. A wealthy U.S. person has been spending more and more time at her home in the U.K.  It is possible she may decide to become a resident there.  She has some assets in the U.S. and some in the U.K., including real estate.  We work with her to determine the tax consequences of being resident in either jurisdiction and then pick a jurisdiction and plan her estate to minimize transfer taxes.

10. A business owner is a citizen and resident of Germany.  The owner is considering relocating to the U.S. on a permanent basis.  Before the owner is considered a U.S. person for U.S. estate tax purposes, we create and fund a U.S. dynasty trust for the benefit of the business owner’s heirs, avoiding U.S. estate and gift tax.

11. A wealthy foreign investor wishes to purchase U.S. real estate.  If the property is purchased using an entity rather than individually, it can be treated as an intangible for U.S. estate tax purposes, thereby avoiding U.S. estate tax at the death of the client.  However, ownership in an entity may trigger corporate taxes, branch profits tax and personal income tax consequences to the investor that can outweigh savings in estate tax. We consider the client’s intended use of the property, the time horizon for owning the property and resulting taxes to determine the best form of ownership.

12. A business owner wonders how to begin transferring wealth to heirs.  We create a grantor-retained annuity trust (“GRAT”) and fund it with shares of the business.  The value of the shares are discounted due to their lack of marketability and minority interest at the time of the transfer.  Later, upon a sale of the business, the appreciated value of the shares passes to the business owner’s heirs free of transfer tax.

13.The executor of a high net worth individual’s estate needs representation in gathering information on all assets, including many real estate development projects and an insurance business, reporting and file all relevant tax returns, including the U.S. federal estate tax return, arranging for payment of federal estate tax with illiquidity in the estate, defense of all lifetime gifts of business interests with discounts, setting up and funding trusts dictated by estate plan, informing trustees of fiduciary duties, charting the best way to report fiduciary income with deductions available and reporting and accounting to beneficiaries.