Globalization has been an incredible force for a number of reasons, some good and some not so good. For instance, for the first time there are individuals and families that are, first and foremost, citizens of the world before they are citizens of any given country or tax authority. How can you be both?
As a recent Bloomberg article points out, this is a growing concern. For many families hoping to pass on wealth, the solution is a careful system of offshore and U.S. based trusts or entities. As far as wealth transfer and taxation laws are concerned, there are two junctures. The first is the point at which wealth leaves one individual. The second is the point when wealth is accepted by another. Interestingly, at each of these points of wealth transfer, taxation is triggered when both occur under the same set of laws.
In the U.S. this means the transferor gets a gift tax or an inheritance tax on whatever falls under U.S. jurisdiction, and the transferee may get hit with anything from income to capital gains to real estate taxes, and even their own estate taxes down the line once they bequeath the assets.
Being a citizen of the world often means that a failure to plan will subject you and yours to any number of taxes, perhaps in multiple jurisdictions. However, careful planning also can yield some serious advantages.
Determining what is best from a tax standpoint for you, your family and your international assets can be a high-wire act.
Be sure to read the original article for additional information and ideas.
Ultimately, as is usually the case, it really boils down to your unique situation and the various borders you, your family, and your assets casually touch and cross. If you are not careful, those borders (and their taxing authorities) can come back to bite you.
Understanding the complexities of Tax Planning is just a part of successful estate planning. To ensure a successful plan, we at Idaho Estate Planning will: 1) educate you and your helpers; 2) take the time to get to know you, your family, your desires, your concerns, your goals, and your potential problems; 3) gladly and patiently answer questions until you understand the concept or issue; and, 4) based on experience with the problems and results caused by poor planning, help you design and implement the plan that fits your concerns and goals. Remember, good planning is no accident.