I’m no stranger to international moves – in addition to watching both my parents navigate the process, I experienced it firsthand moving to the United States from my childhood home in South Africa years ago. Even now, most of my family lives halfway across the world in Australia.
When families live in different countries, they often meet new obstacles. Financial planning takes on new meaning, as you have to learn entirely new systems of money management and estate planning.
In today’s blog, we’re exploring a few of the challenges that global families face, as well as solutions to help you navigate them successfully.
Stepping into Unknown (Financial) Territory
Families with members living in a different country face unique challenges, especially since each country has a different set of financial and tax regulations. Relatively “simple” things like gifting investments, leaving an inheritance or setting up a trust can become much more complicated when the recipients live in another country.
And whether all your family members are living under one roof or you’re spread out over several continents, it’s important to have a financial plan in place that covers all the “what ifs.” That includes ensuring your money and assets are protected, building a budget that accounts for currency exchange rates, paying taxes correctly, developing estate plans and so on.
Cross-border finances can get so complicated that there are even special certifications for advisors who have enough experience and education on the subject. Known as a Global Financial Planner, these advisors can help you research and find out what you need to know to move forward with confidence.
So how can you set yourself up for success as a global family? Here are a few foundational tips that we’ve seen that can make a huge difference.
3 Financial Tips for Global Families
1. Understand where obstacles may arise
In the US, certain taxes vary from state to state. As an example, the estate tax in Oregon ranges from 10 to 16%, while right next door in Idaho they have no estate tax at all.
But when you are navigating financial challenges between countries, that’s a whole different story. Some of the most common financial obstacles global families run into include:
Estate planning – When a family member who lives in another country passes away, inheriting their assets across borders can be very complicated as you move from one sovereign nation to another. Trusts can be especially tricky if you are a trustee or beneficiary on a foreign trust.
Emergencies – Caring for your aging parents is a stressful endeavor, no matter how much you love them. If your parents live halfway across the world and a medical emergency comes up, you’ll want to be there. Buying an international plane ticket at a moment’s notice can get very expensive, so we recommend setting aside the cost of a plane ticket just in case.
Sending money between family members – If your parents want to send money as a gift (or loan or just to help out), make sure to check on the tax implications and reporting requirements before proceeding.
US citizens with children living abroad – If your children were born in the US and then moved away, they are considered a “US Person” by the IRS, which means they must file tax returns every year.
2. Speak with your global family members
Touch base with your family and make sure they know of the complications that could arise when sending money from their home to yours. Chances are your family members are aware of the laws in their own country, but they may not know the laws in yours.
Keep in mind: Just because it’s complicated doesn’t mean you shouldn’t do it. Your parents probably love being able to help you and/or spoil their grandkids. Complications are easy to overcome, it’s simply a matter of identifying obstacles and figuring out how to work around them.
3. Enlist a Global Financial Planner™
When it comes to global finances, the old rule applies for most people: You don’t know what you don’t know. Having a professional on hand to help who knows the ins and outs of international finance is always a good thing.
Global Financial Planners are specially trained in cross-border financial planning. They know which questions to ask, common problem areas to avoid, as well as how to navigate issues like work visas, immigration rules and more. And GFPs tend to be very well-connected due to the nature of their work, giving them a referral network that can help you navigate global issues outside the realm of finances as well.
Work with a Global Financial Planner™ Today
At Clarity Wealth Development, we are proud to help global families navigate complicated financial issues so you can stay connected – even when you’re a world apart. Click here to reach out to our team today.