Tips For “Exiteers”: Full “De-U.S.A.ization”

Posted on 08/23/2016 ~ Categorized as Uncategorized
Tips For “Exiteers”: Full “De-U.S.A.ization”

My motto is simple: If you are going to leave, leave. Half measures never suffice. Get outta town, and never look back. That’s good advice for an “exiteer.”

During my 30-year practice, I have engaged in transactions in over 55 countries and helped many folks lawfully find their way to virtually every corner of the globe (for temporary employment, living abroad indefinitely, or as individuals who fully expatriate and give up their U.S. citizenship). The process of moving abroad (in any of the above mentioned categories) as an “exiteer” can be complex, frustrating, fraught with hard decisions, and laden with many IRS compliance requirements which need to be fulfilled. People can therefore become confused about what it is they really want and why they got on the “exiteer” road in the first place. I’m here to remind you of the genesis of your desires.

For folks intending to put the U.S.A in their rear view mirror, I tend to give somewhat uncommon advice on numerous issues which at first can seem counter-intuitive, given certain tax and transaction costs. Say, you call me and list the usual bill of U.S. attainders: FATCA, deficits, fake money, investment diversification needs, IRC disclosure and compliance issues, etc. You further state that you wish to live abroad and never come back. You want “out,” so to speak. Okay, so let’s chat about what “out” really means to me as an advisor. After all, if you are going to take the leap, make it an Olympian effort worthy of a gold medal. But are you truly ready for this cheese, or do you merely want a vacation home on the beach?

Assuming you’re not a member of a crime syndicate, are current in all your U.S. tax obligations, and aren’t seeking to hide from someone or some debt, I’ll probably sign you up as a client, subject to a few other items. Here are my heart-thumping recommendations that leave many clients on tenterhooks:

Sell the house and liquidate all real estate investments into cash. The capital gains taxes you pay never belonged to you anyway. They are built in liens for the federal government, so do not ever let the “payment of taxes” stop you from selling assets. Don’t try to figure a way to keep the ranch in trust in the U.S.A. or to keep the investment office building in your Oklahoma LLC. No...dump, dump it all I say (just like the great Gordon Gekko said in the film Wall Street, when he sold his stock at a loss).

Cash in all retirement plans. Call the county you worked for and take the lump sum cash option on retirement. Pay the tax, my friend. Liquidate that IRA, too. No whining about losses and diversification and timing and taxes and all the blah blah blah from those lovely investment guys who got you into the investment in the first place. Why would you want to live in Honduras and have a U.S. IRA anyway? Think about it, what sense does that really make? You’re gone, outta there. Isn’t that IRA a string to the big nasty U.S.A. after all? Cash, cash, cash is all I’m interested in when relocating.

Liquidate all mutual funds and stocks. Same reasoning here, my friend. Are you serious or not? As we all know, when Cortés came to the New World he burned his ships so there would be no going back. Burn baby, burn. Torch everything you’ve got on Wall Street.

Forget about taking your gold, silver, and collectibles with you. Sell them, get the cash, and replace them overseas. It’s a lot easier and safer.

Trash all personal belongings. The furniture has got to go. It’s mostly crap anyways, right? That collector car? You won’t need it in the hills of Argentina. That boat? Sink it. You’ve spent your life acquiring junk. The idea of hiring an international mover to move your garbage across international boundaries is silly. It’s sentimental. It’s a half measure. Give away everything you can’t turn into cash. Show up to your destination with a check for a local bank or banks and the shirt on your back. That’s all you need to start over.

Create new structures overseas. Some standard items to create overseas would be offshore investment companies to hold newly acquired assets (like real estate), or a foreign trust to maximize creditor protection and to serve as an estate planning vehicle. I call this “platforming.” Destroy the old U.S. platform and replace it with an entirely new and independent offshore platform with no connection of any type to the U.S. (i.e. never put U.S. investments in your foreign trust, as that defeats the whole creditor protection planning point).

New citizenship. Under international conventions, one can’t be a stateless person. In other words, one must have a citizenship somewhere and usually can’t give up their only citizenship until they acquire another one first. This usually means you will start out in a jurisdiction as a resident and then work your way to citizenship there or in another jurisdiction over time. Residency programs and citizenship programs around the world (and there are many good ones) are beyond the scope of this article, but the point remains true: in my opinion, being an expat does not suffice. One should ultimately expatriate to truly garner and enjoy all of the personal freedoms and satisfactions of living abroad. Start your search for second citizenship immediately upon arrival in your new home. Staying a U.S. citizen (and being subject to all the global compliance and reporting that goes with that) while living overseas is inconsistent with the basic goals of most “exiteers.”

What is the point of all this? It is simple: be free to start over. Start over mentally, financially, culturally, and physically with no ties or commitments to anyone, anything, or any country. Be a citizen of the world. This “de-U.S.A.ization” process, as I call it, when employed by clients, leads inevitably to a happier relocation experience. Obtain the freedom you deserve. Leave everything behind. Truly be an escape artist.


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