High-net-worth individuals and families contemplating diversifying their wealth beyond U.S. borders, also known as outbound wealth planning, may be motivated by concerns about domestic political developments, economic policy shifts, or market volatility, or they may simply be seeking greater financial privacy or expanded access to their wealth across different jurisdictions. Read on to learn more about how to create a strategy that aligns with both your immediate and long-term objectives.
Mapping Your Options: From Simple to Complex
The spectrum of outbound wealth planning ranges from relatively straightforward international investment diversification to full expatriation. Here is how to think about your options:
Diversifying investments is the most basic approach, in which you simply expand your portfolio to include international assets. You may already accomplish this through domestic investment vehicles that hold foreign securities.
Diversifying custody takes the next step by transferring assets to non-U.S. custodians, providing geographic separation of your holdings while maintaining U.S.-based investment management.
Diversifying both custody and management involves engaging foreign custodians and foreign investment managers, creating a fully international financial infrastructure for a portion of your wealth.
Establishing separate ownership typically involves self-settled trusts with non-U.S. corporate trustees, often combined with foreign custody and management. This approach can enhance privacy and asset protection while creating distance between you and legal ownership of assets.
Accessing foreign residence requires purchasing or securing long-term rental arrangements for residential property abroad, providing lifestyle flexibility and potential safe-haven options.
Residing outside the U.S. while maintaining citizenship involves establishing a primary residence abroad, with all the attendant considerations regarding local residency requirements, healthcare access, and foreign tax obligations, without revoking U.S. citizenship.
Full Expatriation represents the most extreme option — relinquishing U.S. citizenship entirely, typically accompanied by permanent relocation and no intention of returning to live in the United States.
Critical Considerations for International Financial Presence
If you are contemplating placing assets outside the U.S., several key factors deserve careful evaluation:
Geographic and Legal Framework: Consider the physical security of your chosen jurisdiction and whether business hours align with your access needs. Equally important is understanding whether the country operates under common law (like the U.S.) or civil law systems (like Switzerland), as this affects asset titling options and trust recognition.
Account Structure and Trust Recognition: Investigate available titling options, including whether joint tenancy with survivorship rights exists and how it functions. If you are considering trusts, determine whether the jurisdiction recognizes foreign trusts and how trust provisions interact with local forced heirship rules in civil law countries.
Judicial and Tax Environment: Ensure the country maintains established courts capable of resolving financial disputes. Understand the foreign tax consequences of your investments and how they will be treated locally.
U.S. Compliance Requirements: Perhaps most critically, recognize that U.S. persons with foreign assets face extensive reporting obligations. These include reporting requirements for foreign bank accounts, foreign trusts, and foreign entities, plus special rules for gifts from foreign sources and distributions from foreign trusts. The complexity and penalties for non-compliance are substantial.
Privacy and Information Sharing: While you may seek enhanced privacy through foreign arrangements, understand that many countries now participate in robust international information-sharing agreements. Some jurisdictions require more extensive customer due diligence than U.S. institutions, potentially lengthening account opening processes. And some jurisdictions require the registration of trusts with varying levels of access to registries.
Practical Management Issues: Consider how assets will be accessed if you become disabled. Foreign jurisdictions may not recognize U.S. powers of attorney. Similarly, understand succession rules and whether your preferred asset titling or trust structures will be respected upon your death.
Personal Presence: Beyond Financial Considerations
Establishing residence abroad introduces additional lifestyle factors:
Healthcare and Insurance: Evaluate medical care quality and availability, plus how your existing insurance coverage translates internationally. Consider the impact on existing life insurance policies.
Professional Services: You will need local attorneys, tax advisors, and other professionals, plus U.S. advisors experienced in international matters.
Risk Management: Property and casualty insurance needs may differ significantly from U.S. norms, requiring careful evaluation of available coverage.
Regulatory Compliance: Countries vary widely in their requirements for foreign property ownership, residency permits, and ongoing reporting. Canada, for example, requires foreign residential property owners to file annual returns and potentially pay underutilized housing taxes.
The Expatriation Option: Proceed with Extreme Caution
Full expatriation triggers the most complex tax considerations. You may face an “exit tax” if your net worth exceeds $2 million, your average income tax over the past five years exceeded $206,000 (for 2025), or you have not maintained full tax compliance.
The exit tax essentially treats expatriation as if you sold all your assets, imposing tax on gains exceeding $890,000 (for 2025). Beyond the immediate tax hit, expatriation affects any trusts you control, potentially converting domestic trusts to foreign trust status with significant consequences for U.S. beneficiaries.
Pre-expatriation gift planning becomes crucial since non-U.S. persons lose access to the $13.9 million (in 2025) lifetime gift and estate tax exclusion, receiving only lifetime annual gift exclusions ($19,000 in 2025) and a $60,000 estate tax exclusion. Additionally, future gifts or bequests to U.S. family members may trigger a 40% tax on recipients if you become a “covered expatriate.”
Moving Forward Strategically
The complexity of outbound wealth planning demands careful professional guidance. Start by clearly defining your objectives — whether driven by investment diversification, privacy concerns, tax optimization, or lifestyle preferences. Then work with a team of experienced advisors to evaluate jurisdiction-specific opportunities and requirements.
Remember that implementing international strategies often takes longer than domestic planning, particularly given enhanced due diligence requirements and the need to coordinate across multiple legal and tax systems. The key is thorough advance planning that addresses both your immediate objectives and long-term family wealth preservation goals.
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