Expert Back-Up Planning for Security & Peace of Mind

My most requested service is the preparation of customized Back-Up Plans. A Back-Up Plan is a comprehensive citizenship, residence and domicile solution that “plans for the worst…and hopes for best”. Here I look at the reasons my clients have for deciding to take the step of formulating a plan with me. 

I’ve recently celebrated three decades of advising HNW clients from around the world. I’ve spoken at numerous immigration and taxation conferences and answered hundreds of complex questions on Quora. It feels like a good time to step back and examine the process that leads a client to my doorstep.

Contrary to reports of others who profess to operate in this field, I have never had a client contact me in search of a second passport or Residence-by-Investment because they were seeking a status symbol. The cost of even the cheapest Citizenship-by-Investment is well over a hundred thousand dollars. In my experience, there is always a very practical reason behind such an inquiry. Specifically, there is always what I refer to as a ‘triggering event’ . This is something that turns an idea into an action.

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What triggers someone to make a Back-up Plan?

Triggering events can be something personal like a recent divorce, a lawsuit or a business liquidity event. They can also be something more general such as political or social unrest. Recently it has been the populist ‘Tax the Rich’ policies aimed at increasing the wealthy’s tax burden or even outright confiscation or nationalization of their assets.

There are three stages that each client goes through when they have a “triggering event”:

  1. Obtain a quote on a Back-Up Plan
  2. Acquire or build their personal Back-Up Plan
  3. Trigger their personal Back-Up Plan

Occasionally the triggering event may be the result of a significant financial opportunity. However, they are usually a type of specific threat to the individual’s family wealth or security. The client realizes that there is a significant ‘cost of failure’ if a particular event were to take place and is ready to take the first step. The event doesn’t have to be a certainty. Indeed, the odds might not be more than 50/50 that the threat will occur. However, if there is enough of a possibility that the event could occur to cause alarm, it can trigger action.

If the risk is low do I still need a Back-up Plan?

Back-Up Plan is like fire insuranceA close analogy is fire insurance. People do not buy fire insurance because they believe their house will probably catch fire. They get insurance because they understand that if a fire does occur, the impact would be catastrophic.

As with insurance, the first step is a conversation with the client to uncover their situation. Here we outline the potential dangers or opportunities that they face. Some of these conversations end with the client concluding that their fears are not worthy of exploring solutions to mitigate or avoid the situation. In other circumstances the clients conclude that the possible cost of failure justifies taking the initial step. Then, we start uncovering a ‘quote’ on the cost and timing of designing and implementing their Back-Up Plan.

The Quotation Phase of a Back-Up Plan

In the Quotation Phase, I examine the family’s situation, goals, fears and aspirations. Based on the client’s feedback, I map out the cost and timing of a Back-Up Plan which will mitigate or negate the impact of a possible future triggering event. Every Back-Up Plan is custom-tailored for each client family. It is based on a solid foundation of immigration and tax regimes. My experience means that fiscal facts are combined with a deep understanding of the human elements of international relocation. You can download a White Paper which I was commissioned to write which gives an excellent explanation of what is involved. This explains how the  creation of an effective BackUp Plan is significantly more complex than buying the cheapest second passport.

Once the quotation is mapped out, the client will have a clear picture of the costs and steps to put a Back-Up Plan in place. They’ll also be aware of the length of time it will take to construct their plan.

Implementing the Back-Up Plan

The actual decision whether or not to go ahead and construct their Back-Up Plan won’t always immediately follow. It sometimes occurs once there is clarity around the cost of failure and the cost and timing determined in the quotation stage. In other cases, where there is an imminent possibility of the triggering event occurring, or possibly even an additional triggering event…the client might proceed immediately.  Sometimes the client takes enough comfort from simply knowing they now have the ability to acquire a Back-Up Plan. They are confident that they know what is required, and so they hold off taking additional steps.

Once a Back-Up Plan is in place, a client is secure in the knowledge that they can decide to execute their Plan if the triggering event either:

  1. Becomes a reality, or
  2. If the possibility of the triggering event increases to the point where it overcomes the ‘life inertia’ of implementation

With fire insurance most people do not end up using their policy. However, for those who experience a fire, having a policy in place is profoundly comforting. Prior to the event they have the peace of mind knowing they and their family are covered. After the event they receive the benefits specified in their policy. Indeed, almost all of my clients have expressed to me at some point that they wished they had organized their Back-Up Plan sooner…even if they had not yet triggered it!

In future blogs, I will explore triggering events which are currently occurring which are motivating specific groups of clients to contact me.

If you are interested in discussing the possibility of organising your own Back-up Plan then get in touch.

Further Reading:

Why The Wealthy are Leaving Mexico. Mexicans are the Latest Group to be Eying the Exit!

UK Election 2019 | UK Non-Dom Status under threat if it’s a Labour win – are you prepared?

Back Up Plans for High Net Worth Americans? Anyone who feels certain about the US political and tax future is just fooling themselves.

 

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