International Tax, Reporting and Disclosure Compliance

Effective wealth transfer planning, particularly in the international context, typically triggers substantial tax compliance and other reporting obligations. If this component of the plan is overlooked, there are significant risks 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 also developed particular expertise in dealing with extraordinary circumstances such as a diverse array of submissions to the US Internal Revenue Service as part of its Offshore Voluntary Disclosure Program. 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.

Pre-Immigration Planning

We assist individuals and families in restructuring their businesses and personal assets in anticipation of their immigration to the United States.

Many wealthy foreigners typically 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 US 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. US anti-deferral tax regulations and stringent reporting requirements prevent Americans from using certain foreign and offshore corporations and assets to avoid US tax liabilities. 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 US and at the same time have peace of mind that their financial and tax affairs are in order

Fiduciary Services

After developing an effective estate and tax plan, it is important to put the best team in place to implement it. Selecting the right persons and entities to serve in fiduciary 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 and administrators. This is particularly true for clients who live predominantly outside of the US but have one or more family members in the US. We serve those trusted positions in trusts, estates and business entities for both domestic and international clients. As part of our service in those roles, we prepare customized reports tailored to the needs and preferences of each client with an eye toward the more formal reporting and compliance documentation our reports will inform.

Inbound & Outbound Investment Planning

Cross border, investment is increasingly common and the tax and compliance landscape has become increasingly complex. Extra caution is required 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 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 US 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 should 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

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. Wills and other testamentary documents, such as revocable trusts, are commonly used to do this. It also has to 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.

Business Planning

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 use 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

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.

Expatriation

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 because 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 US, 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 US. Citizenship or residency can have far-reaching repercussions that can outweigh the benefits they provide for these individuals. 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 (so-called “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 (so-called “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 US.