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Globetrotters beware! What to consider when managing your assets across borders

Whether it’s a new lifestyle, professional opportunities or a warmer climate, many factors may influence your decision to relocate or spend part of the year abroad. Whatever the reason, it’s rarely a clean break. A property or business is often left behind, making international wealth planning tricky, particularly for high-net-worth individuals (HNWIs) whose wealth set-up is often complex.

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HNWIs are on the move more than ever before. In 2018, 108’000 HNWIs are reported to have migrated, compared with 95’000 in 2017 according the Global Wealth Migration Review published by AfrAsia Bank and research partner New World Wealth in 2019. Among the top destinations you will find Switzerland, Singapore and Spain, with Australia topping the list as the country with the highest net inflow of HNWIs. While there’s a lot to be gained from an international lifestyle, things can quickly turn sour if proper planning isn’t undertaken.

Family assets are often spread across multiple jurisdictions, each with its own legal and taxation intricacies that must be understood and planned for.

Marco Sella-Rolando, Head of Wealth Planning Advisory International at Julius Baer

“We’ve seen many families and individuals balance their lives between multiple countries. The rewards – professional, financial and personal – can be immense, for example better quality of living, business expansion and improved family dynamics. That said, international wealth planning is not without its difficulties. Family assets are often spread across multiple jurisdictions, each with its own legal and taxation intricacies that must be understood and planned for,” says Marco Sella-Rolando, Head of Wealth Planning Advisory International at Julius Baer.

What to remember before packing your bags:

1 - Familiarise yourself with the map

It helps prepare for the pivotal moments in life, taking into account your family’s personal circumstances and cross-border planning implications. You’ll then need to consider all your asset types, for example real estate, valuable chattels (art and jewellery), business interests (especially family businesses), pension and retirement funds, and insurance and life policies. What worked previously from the perspective of the jurisdiction of residence may need a refresh upon relocating to remain fit for purpose.

2 - Taxation is your constant travel companion

Misunderstandings or lack of research can quickly become an expensive oversight. Each jurisdiction has its own types and rates of taxation and there may even be punitive consequences when exiting one country and entering another. Notably, the taxation of real estate and some other luxury assets often follows their location, so complexities may arise if you are resident in a different jurisdiction to where your asset is located. Be sure to consider the fiscal, legal and succession planning implications in the country where the property is located, not only where you are resident. These might include property ownership taxes, including on acquisition, sale or transfer, on rental income or upon death. Local rules can limit how you pass on your home (and other assets) within the family and liquidity events, such as the sale of a business, can have unexpected tax consequences.

3 - Ensure that the journey is comfortable for the entire family

Particularly where common and civil law jurisdictions are involved, differences in legal approaches might exist, resulting in unanticipated outcomes around contract law, the recognition of certain wealth structuring vehicles, and inheritance of assets upon death. Marriage (and, sadly, separation and divorce) that involves multiple jurisdictions raises questions regarding wealth preservation such as division of assets on separation, pre-nuptial agreements, maintenance orders and matrimonial property regimes. Be realistic about your personal circumstances, engage in timely, regular and open dialogue with family members and your advisors about wealth planning matters, and make adequate provision for the future.

Setting off on the right foot
The first step in planning your move from a fiscal, legal and tax perspective is being aware that international wealth planning is multi-faceted. The more complex your estate, the more complex and lengthy the analysis and planning process will be. 

Early planning and regular review is key.

Marco Sella-Rolando, Head of Wealth Planning Advisory International at Julius Baer

“In our experience, many clients are aware of the planning challenges but don’t always fully grasp what’s at stake, which is understandable as they’re not legal, tax or succession experts. In most cases, they have property in another country and family scattered across the globe. Less common, but equally as challenging, are vulnerable or minor family members who require special care and attention. All of this needs to be considered in the round. Early planning and regular review is key ” explains Marco Sella-Rolando at Julius Baer.

If all of this sounds like a lot of hassle, don’t despair. Most personal circumstances and wishes can be accommodated. By planning well ahead of time, you’ll be giving yourself a head start to avoid pressured decision-making, so all that remains to be done is to enjoy the journey and the next exciting chapter of your life.

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