What are the most common financial planning issues facing expats?
By Robbie Lawther, 9 Jun 23
Clients need to get advice before they have moved
Question 3: What is the most common mistake clients make when becoming an expat?
Paul said: “The most common mistake is what I call “cul-de-sac planning” for the country they’re living in. So, they might move to the UK or move to the US or move to Portugal, wherever it might be.
“And they will do some wealth planning in that country, which makes perfect sense for people living in that country whatever it might be, retirement planning, school planning, etc.
“But, given that the nature of expat families tends to be transient, most families are not able to tell me when I talked to them at the first instance, where they are ultimately going to end up. Typically, they’ve moved for jobs or for family or for lifestyle or for children or grandchildren or wherever it might be, and their current location may not be something that will stay the same for the rest of their lifetime.
“So, the biggest mistake people tend to make is that they do planning which is great for the country they’re currently living in, and makes perfect sense, and it’s great advice for people living in that country. But if they move to a different country, it has unintended painful consequences financially down the line.
“So, whenever we’re meeting international families, or people who have moved around, which obviously, is an increasing number because wealth is becoming more transient. We will say that the single most valuable trait you can have for any of your financial affairs is flexibility.
“Because you want to make sure that you have the flexibility to move your assets with you or to rearrange your assets to make sense for your next jurisdiction. And to the rules which may have changed. We’ve seen huge amounts of negative change in the UK in the US in Europe over the last 10-to-15 years.
“In summary, unless you are certain where you’re going to end up, and certain that the rules aren’t going to change, and you understand exactly how your final country will view that planning from a tax or reporting standpoint, it almost always ends in tears and tears is expense.”
Tags: London & Capital
