Cross-Border Planning Complexities
Financial planning is the process of defining your financial needs, focusing on your priorities and creating a plan that will ultimately support you in reaching your life’s financial goals. Cross-border financial planning adds both complexities and opportunities to the process.
In cross-border financial planning we first need to revisit all aspects of your financial life because what worked well at home, doesn’t necessarily work now as an expat. We often find new clients were implementing a plan with their professionals back home who may be managing their wealth incorrectly or aren’t experienced with the complexities of expat tax, global estate planning, business structuring nor insurance solutions. Some of the professionals say they are expat advisors, but they aren’t expats living in Singapore, they don’t really know what you face day to day. We do, we are expats like our clients.
As fiduciaries; we work with and for our clients, providing objective advice that places their best interest ahead of our own. We maintain transparency by charging flat fees for our services. Our team holds multiple industry designations, including CFP®, CFA®, CAIA®, and also Enrolled Agent (US tax designation.).
Each client is unique. How we take apart an existing plan and implement a new plan is driven by financial goals, risk profile, time horizon, family circumstances, and resources available for the journey. We offer international and local perspectives helping clients secure a better tomorrow by bringing clarity to finances.
One complexity related to US taxpayers is global taxation, yet being in a low tax jurisdiction such as Singapore creates opportunities. There may be an opportunity to convert IRAs and old 401Ks into Roth IRAs (make sure your advisor understands the Department of Labor’s paperwork requirements if recommending this!) to take advantage of lower tax rates while abroad, tax-free income in retirement and ease of estate planning especially with a non-US spouse. Using software, we analyze the tax brackets to not push our clients into higher taxation. This strategy is very effective except if you will be retiring in a country that doesn’t recognize the tax-free status of a Roth. Opportunity & complexity!
Contributing to your IRA or Roth IRA is an opportunity but it also adds complexity because of income thresholds that must be met or not exceeded. Should you contribute to an IRA or Roth IRA when not eligible, the contributions need to be recharacterized otherwise IRS penalties accrue on excess contributions.
Investment opportunities exist when one spouse is a US taxpayer, and the other is not. There are ways to alleviate capital gains with spousal transfers when done correctly at the same custodian. Tax efficiency within types of investments can be achieved not only between US/non-US spouses but also location of assets. Often, we’ll see clients holding income producing investments within a retirement account. Depending upon age and each client’s unique circumstances, we’d probably rather see growth investments in a retirement account to take advantage of compounding and time in the markets. Having a non-US spouse own income generating investments is tax efficient versus a US taxpayer if in a high tax bracket.
Estate plans need to consider nationalities, asset types, and location of assets. Our clients may require global estate plans which include multiple wills for their global property. We use revocable trusts to avoid probate, maintain privacy, and ease transfer of assets to loved ones. Irrevocable trusts are used for tax planning purposes including foreign trusts that will ultimately hold assets for US beneficiaries. Leaving investment accounts, pensions, and insurances to named beneficiaries requires careful analysis. Just because you have a beneficiary designation doesn’t mean the funds will pass smoothly to the designated beneficiary. US and non-US taxpayers may be required to file forms with the US IRS in order to receive the proceeds from an estate. We carefully consider how to facilitate cross-border estate settlement with an eye on estate tax efficiency. Complexity & opportunity!
Each client is unique, so how we take apart an existing plan and implement a new plan is driven by financial goals, risk profile, time horizon, family circumstances, and resources available for the journey. We offer international and local perspectives helping clients secure a better tomorrow by bringing clarity to finances.
This material is intended for educational and informational purposes only. It is not intended to provide specific advice or recommendations for any individual. Additionally, you should consult with your Financial Advisor, Tax Advisor, or Attorney on your specific situation. The views expressed in the material are that of the author and do not necessarily reflect those of any market, regulatory body, State or Federal Agency, or Association. All efforts have been made to report or share true and accurate information. However, the information may become materially outdated or otherwise rendered incorrect due to subsequent new research or other changes, without notice. The author nor the firm are able to always verify the content from third-party sources. For additional information about the firm, please visit the MAS Website at https://www.mas.gov.sg/ and the SEC Website at www.adviserinfo.sec.gov. For a copy of the firm's ADV Part 2 Brochure, please contact us at info@avriowealth.com.