Pre-Immigration Tax Planning Via Offshore Trusts

LatourLaw Family Offices 5 Part Series Explaining Pre-Immigration Tax Planning, Options, and Strategies

Part 1: The Importance of Pre-Immigration Tax Planning

[IMPORTANT NOTE: The subject of global taxation is immensely complex and varies from jurisdiction to jurisdiction.  The scope of this article is broad and does not constitute legal advice.  Any individual concerned about global tax implications needs to discuss the subject in detail with qualified tax advisors in both their home country and in the foreign countries in which they are investing and/or considering as a future immigration destination.]

With more and more wealthy families in Vietnam considering the option of international education for their children, programs like the U.S. EB-5 Immigrant Investor visa and E-2 investment through third country passport programs like the Grenada CBI program offered by LatourLaw, most such clients focus on the “immigration” questions and not the bigger picture.  Moreover, migration agents and advisors eager to sell a specific immigration product completely ignore the other tax-related aspects of the migration equation, which are viewed as negative considerations detrimental to “closing the deal”.  This tendency is not just detrimental to the prospective immigrant…it is potentially of huge negative consequence to the whole family.

In reality, before making family migration plans, any high net worth individual or family considering an international relocation needs to fully understand the tax implications of such a move.  Depending on where they are planning to move, the financial ramifications of international relocation can be devastating to long term financial planning.  While specific laws apply to each potential migration destination, let’s look at the U.S. as perhaps the most useful example.  Without proper pre-immigration tax planning BEFORE entering the U.S., a person who becomes a U.S. tax resident (whether or not they are actually a green card holder) is liable for worldwide taxation on:

  • Income taxes (for income generated through employment, companies, or other active investments anywhere in the world)
  • Capital gains taxes (for profits realized through the sale of assets, companies, properties outside the U.S.) and
  • Estate taxes (also called “inheritance taxes” in some jurisdictions

The specific taxable rates are very complex and depend on whether or not there are any tax treaties between the new country of residence and the investor’s original home country and a host of other factors, but it isn’t necessary to examine that here.  The SOLE point is that without advance tax planning before immigrating to a new country, an investor can incur potentially millions of dollars of future tax liabilities which are usually legally avoidable if planned for in advance.

TOMORROW: Part 2: Pre-Immigration Disposition of Assets: Options