International & Domestic Estate, Tax & Asset Management Planning
We assist families with structuring the ownership of their assets and planning for the transfer of assets from one generation to the next, in a manner that accomplishes their personal goals in the most tax-efficient manner.
We advise individuals and families - typically multiple generations of extended families who have international interests - regarding the ownership structure and transfer of their assets. This takes place during their lifetime and at death, with a focus on fulfilling their personal legacy and wishes in a tax-efficient manner. Much of our advice takes the form of assisting clients in determining what their personal legacy goals are as they evolve over time, helping them understand the broad range of possibilities, and advising them regarding the planning techniques and transactions available to achieve those goals. Many of our clients are families with assets and family members both inside the United States (US) and in multiple jurisdictions abroad. This requires careful coordination and a thorough understanding of cross-border transfer, tax, compliance and disclosure complexities. International families face very complex and ever-changing issues as the nations of the world struggle with right balance of disclosure and taxation. We have particular expertise in assisting non US clients navigate the maze of US tax, compliance and disclosure requirements for expending and investing foreign wealth in the United States.
While many of our clients have international interests that require a multi-jurisdictional perspective and planning process, others have entirely US-based interests. This is either because they have formally immigrated and domesticated their assets to the United States or because they are American citizen families whose wealth is purely US based.
Domestication & Reorganization of Foreign Trusts
Families whose wealth arose outside of the United States often have one or more non-US trusts, established at a time when the family had no US contacts. When changing circumstances introduce US contacts to the family landscape the impact of those changes on the taxation of the non-US trusts must be carefully considered.
United States persons who are beneficiaries of foreign trusts and foreign trusts holding income sourced or assets located in the United States can face punitive tax consequences and at times crippling disclosure obligations. We advise grantors, beneficiaries and fiduciaries on the domestication and reorganization of foreign trusts and foreign business entities in order to mitigate these consequences and obligations.
International Tax, Reporting and Disclosure Compliance
Effective wealth transfer planning, particularly in the international context, typically triggers substantial tax compliance and other reporting obligations. This dimension of the plan must not be overlooked because there are significant traps for the unwary.
The world has transitioned to an unprecedented level of tax compliance and disclosure obligations. We are experienced in assisting clients fulfill their reporting and tax obligations in ordinary circumstances but we have particular expertise in dealing with extraordinary circumstances such as a diverse array of submissions to the United States Internal Revenue Service as part of its various voluntary disclosure programs. We prepare all necessary US Federal and state tax forms for individuals, trusts and entities in a wide range of unique and challenging tax and compliance situations.
We assist individuals and families in restructuring their businesses and personal assets in anticipation of their immigration to the United States.
Many wealthy foreigners organize their businesses and personal assets in a manner that, while beneficial to them in non-US jurisdictions, will become detrimental once they become US taxpayers. Viewed from the United States perspective, the wealth that these clients created and organized in perfectly legitimate structures in other jurisdictions become “foreign” and “offshore” once they are US taxpayers. Certain foreign and offshore structures and assets become subject to punitive US anti-deferral tax regimes and burdensome reporting requirements designed to discourage Americans from using such structures to avoid their US tax obligations. In addition to unintended negative consequences like this, there are a number of extremely advantageous planning opportunities for these clients—opportunities that cease to be available to them the moment they become US taxpayers.
We provide comprehensive pre-immigration advice designed to help clients avoid extremely adverse US tax consequences while taking advantage of uniquely favorable US planning opportunities. In doing so, we work with clients’ other advisors so that clients can maximize the time and effort they need to start their new lives in the United States and at the same time have peace of mind that their financial and tax affairs are in order.
Fiduciary & Family Office Services
The firm’s experience and its alliance with Stonehage Fleming enables us to draw on almost 150 years of practical wisdom in serving our clients with family office needs.
After developing an effective estate and tax plan it is important to put the best team in place to implement and manage it. Selecting the right persons and entities to serve in fiduciary, coordinator, administrative and other representative and family office roles is an important part of the overall process.
Clients need trusted advisors to help them develop effective plans and make sound decisions. They also need competent, reliable and trusted fiduciaries, managers, agents and administrators as part of their family office team. This is particularly true for clients who live predominantly outside of the United States but have one or more family members in the United States.
We serve in those trusted positions for individuals, other family offices, trusts, estates and business entities, for both domestic and international clients. We coordinate the services of Stonehage Fleming US and other providers, including tax accountants, fiduciaries and investment managers. We also directly provide some of those services if required.
Through our alliance with Stonehage Fleming and its alliance with The Glenmede Trust Company, N.A., we can assist in arranging corporate fiduciary and investment management services both inside and outside the United States. Similarly, we can assist in arranging other more specialized family offices services, including the management of art collections and the acquisition of homes and other real property abroad.
Services we provide directly or through our affiliation with Stonehage Fleming US include the following:
- Cash flow management, helping clients arrange and track both receivables and payables;
- Customized reporting, tailored to the needs and preferences of each client, for use by their tax accountants, fiduciaries, investment managers and family offices;
- Arranging and conducting meetings with clients and their other service providers in order to receive periodic and comprehensive updates on all aspects of their wealth planning;
- Opening and administering bank accounts;
- Overseeing the purchase, leasing and management of real property; and
- Implementing and maintaining payroll and related services for household employees.
Inbound & Outbound Investment Planning
Cross border investment is increasingly common and the tax and compliance landscape has become increasingly complex. Special care must be taken to avoid pitfalls.
Whether in the context of lifetime or testamentary estate planning or entrepreneurial spirit, cross border transactions are increasingly common and often unavoidable in a global business world. Our firm assists clients in navigating the tax, practical and legal issues that can ruin a plan or dampen a spirit. We provide the advice needed to chart the right course and also have a team of professionals focused on tackling the considerable administrative burdens attendant to cross border transactions.
Lifetime Wealth Transfer Planning
The most effective estate planning for families with substantial wealth often takes place in the form of lifetime transfers and not just transfers taking place at death. This is particularly true in the context of wealth transfer tax planning.
While the transfer of wealth from one generation to another is often focused on transfers taking place at death, the most effective wealth transfer planning for families with significant wealth also involves considerable planning during lifetime.
Domestically in the United States this involves the design and implementation of a lifetime gifting program, making maximum use of annual exclusion and other non-taxable gifts, as well as more sophisticated strategies designed to ensure that future growth occurs outside of the Federal estate and gift tax system. While much of this planning is oriented toward tax reduction, care must be taken to structure the planning with sufficient flexibility to change with a client’s changing testamentary plan.
Internationally, we assist clients in achieving the same or similar goals but with an eye toward avoiding pitfalls and taking advantage of opportunities that exist due to the multinational nature of their asset and family connections. Foreign benefactors have good intentions but gifts and trust distributions entail starkly different consequences for their US beneficiaries and there are many traps for the unwary. At the same time there are many extraordinarily advantageous opportunities for foreign transferors with US beneficiaries.
Testamentary planning involves planning for the transfer of ones assets at his or her death. For clients with substantial wealth this often involves careful coordination among multiple documents including wills in multiple jurisdictions, revocable trusts, beneficiary designations and business-related agreements.
Individuals with substantial wealth must plan carefully for the transfer of their assets upon death. This typically takes place through the United States of wills and other testamentary documents such as revocable trusts. It must also be addressed in a broader range of documents for many clients, such as shareholder agreements and partnership agreements for clients with closely held businesses and beneficiary designations for retirement assets, life insurance and certain types of investments. For individuals with international asset structures this often involves multiple wills and careful consideration of applicable death tax treaties.
We have substantial experience in developing sophisticated testamentary plans to achieve clients’ planning goals while minimizing and deferring US Federal estate and generation skipping transfer taxes, as well as US state death taxes. While we are not licensed to practice law in other countries, we are familiar with the laws of many overseas jurisdictions and have extensive professional networks in locations such as the United Kingdom, Western Europe, Israel and Sub-Saharan Africa with whom we often collaborate on the creation and implementation of international testamentary estate plans.
Effective estate planning for families with closely held businesses must carefully consider the transfer of both ownership and control of the business and business related agreements.
Many of our clients derive a large part of their wealth through a family or closely-held operating business which they intend to pass on to future generations. We advise these clients in developing estate tax liquidity strategies, including those designed to limit the growth of the taxable estate by shifting future growth outside of the taxable estate. We also advise these clients regarding the transfer of ownership and control of the business through the United States of shareholder agreements, partnership agreements and operating agreements.
Effective lifetime and testamentary estate and tax planning often involves the creation of business entities such as corporations, partnerships and limited liability companies that are not intended to act as operating entities but rather to achieve a particular tax, asset protection or control result. This is particularly true in the international context. We assist clients with the creation and administration of these business entities and a variety of equity and debt transactions to accomplish their estate and asset-planning goals.
Estate administration is the process of implementing a person’s testamentary estate plan upon his or her death.
We assist clients with the many challenges that arise with the death of a family member, often beginning with the mourning of the loss of their loved one, having become trusted advisors over the course of years of lifetime planning and collaboration. We have substantial experience administering the estate plans we helped devise as well as those created by other advisors. This includes all aspects of the probate process, the preparation and filing of US Federal estate tax returns, State death tax returns, State and Federal estate income tax returns to the transfer of legal title to all types of property. We also represent executors before the IRS and State taxing authorities in death tax return audits, as well as taking advantage of applicable US death tax treaties with other nations.
The United States imposes a special tax regime on certain US citizens and long-term residents who voluntarily terminate their status as a US taxpayer by relinquishing their citizenship or their status as long-term residents. Although this tax regime is intended to discourage individuals from taking such steps for tax avoidance purposes, it nevertheless applies to a broad range of individuals for whom taxation is not a motivating factor.
Some individuals become US taxpayers as a result of intentional immigration planning while others achieve that status unintentionally, such as by virtue of their parents’ planning or simply by staying in the United States long enough to trigger US taxpayer status without intending to do so. Still others, who may be nationals of a foreign country and may have lived their entire lives abroad with no contacts in the United States, are US taxpayers solely because they happened to be born in the United States, thus becoming citizens at birth.
Because the United States tax regime applies to taxpayers on worldwide income and assets, often in unanticipated and intrusive ways, terminating US tax residency is a logical and integral part of the broader financial plan for some individuals, particularly individuals who have little or no contacts with the United States. For these individuals, the consequences of citizenship or residency can be dramatically disproportionate to the benefits they derive from such status. In the international context, it is important for people to understand how they can avoid or minimize such consequences, regardless of whether they achieved U.S. taxpayer status intentionally or unintentionally.
Individuals terminating their status as US taxpayers (“expatriates”) must carefully consider the tax consequences of doing so, particularly if they have income or assets in excess of certain threshold amounts or if they have not been compliant with their U.S. tax obligations. For individuals who fall into one of these three categories (“covered expatriates”), a punitive “exit-tax” regime may apply.
We work with individuals and their other advisors to plan for the cessation of US taxpayer status as part of an overall international tax and immigration plan. For those individuals who cannot avoid covered-expatriate status, we work with them and their other advisors to minimize the impact of the exit tax regime. In many instances, this requires an analysis of their assets and ownership structures and working with their tax compliance advisors to ensure that all necessary disclosures are made and taxes are paid as they sever ties with the United States.