Backup Plan – timing is key

The Election Countdowns Have Started… Time to Get Your Backup Plan in Place

Are you a HNW American or UK Non-Dom? And if so, are you worried about the increasing levels of risk arising from your respective upcoming elections?

The rapidly approaching US election is being widely described as “existential”. The reasons range from the type of administration Donald Trump would deliver in a second term, to a fear that numerous “Tax the Rich” proposals would become law should the Democrats win both houses of Congress and the Presidency.

Across the pond, the next UK election will most certainly see a Labour majority government and the end of the Non-Dom tax regime. There is even significant pressure within the Labour Party to bring in a new wealth tax.

Urgency in preparation, limited time to mitigate wealth and well-being threats

These two elections aren’t very far away…indeed they will be held very soon! The US election is less than 11 months from now, and the next UK election must be held no later than Jan 28, 2025, but could happen at any time before….with only  5 weeks’ notice! That’s not a lot of time if you sincerely want to mitigate the threats to your wealth and well-being that either of these elections represent.

Mitigating election threats with Short-Term Strategies

Is it too late to prepare? The simple answer is NO. To start with, this is plenty of time to develop a plan that will address your unique circumstances in terms of wealth, business and, most importantly, family. It will likely also be enough time to put in place one or two short-term solutions while you work on the longer-term ones. Indeed it is the short-term solutions that can begin to mitigate the upcoming election threats. The Backup Plans for many of our clients start with a short-term solution in the form of an alternative residence or work permit.

This will be replaced once a longer-term solution is put in place – such as a second citizenship and/or domicile of choice.

Navigating short-term options from Nomad Visas to Entrepreneurial Solutions

There are a wide variety of short-term solution options available in a variety of countries. They range from nomad or retirement visas to intra-corporate transfers to entrepreneur or start-up visas. To chose the right jurisdiction and the most appropriate path requires a detailed examination of your and your family’s situation, needs, and  immediate and long-term goals. Tax and financial reporting elements must also be taken into account when developing an integrated immigration/citizenship and tax strategy.

Managing Citizenship Acquisition Expectations

Citizenship-By-Descent realities

We receive requests from many new clients to help them acquire a new citizenship “quickly”…often based on their family lineage. Unfortunately they do not appreciate that acquiring a citizenship-by-descent is not simply a matter of “calling up the embassy”. Rather, most countries take a year and a half to two years to process a lineage citizenship application….and this is AFTER they have gathered all the required documentation to prove their eligibility.

Citizenship-By-Investment realities

Similarly, citizenship-by-investment is not as simple as wiring money and accepting a courier package containing their new passport the following week. Our current estimate is that a second citizenship-by-investment can be secured in 7 to 12 months from the date of submission of the application. Add to this the time for you and us to work together to organize your documents and prepare your application, and you could have your short-term solution in place in between 9 and 14 months.

The impact of a well-designed Backup Plan

What will having a properly designed and executed Backup Plan accomplish? On the positive side, alternative residences and citizenships will give you, your family and future generations the right to travel, study, live and work in multiple jurisdictions. You, your parents or more distant ancestors’ decision to move to the US or the UK had a profound life changing impact on their lives and those of their descendants. Your choices today will have a similar impact for generations to come.

Other incidental but important benefits of a Backup Plan include ease of travel, continuing mobility despite pandemic or other travel restrictions and low-cost quality healthcare and education.

On a more immediate front, a Backup Plan can provide the comfort of protection from growing concerns about economic, political, social and environmental “wildfire” risks. In the context of the upcoming US and UK elections these risks include new “Tax the Rich” proposals, increased political polarization resulting in violence and social unrest, the mass shooting epidemic and the increasing frequency and severity of natural disasters.

Increasingly our clients are turning to acquiring the ”Fire Insurance” of a second residence and/or citizenship. This insurance is then integrated into their “Fire Escape Plan” which considers the tax and practical aspects. We call the combination of these two elements a Backup Plan that is designed to address the wide range of unique needs and goals of you and your family.

Family-centric approach, involving everyone in Backup Plan development

You may have noticed that I have made several mentions about the inclusion of the family in the development of a Backup Plan. I have done so because we have found over our decades of practice that this is what often holds back the decision-making process is trying to meet everyone’s needs from Day One. Our remedy is to propose starting with the short-term solution of an alternative residency before completing the long-term plan of citizenship. This helps get all the family members on-board and thinking about the various benefits and options…and how they might apply to them specifically. This helps them hone their requirements and expectations and ultimately leads to their clearer inputs into a better final Backup Plan.

Risks of delay, the growing demand for residences

Another mistake we frequently encounter is clients ignoring the risks of delay. As we already noted, elections are coming and demand for residences and citizenships is exploding. The result is that  while COVID-related backlog has largely been dealt with…the queues of new applications are growing. Furthermore, bureaucrats expect that the queues will only get much longer as these two elections dates get closer. This means that for long-term solutions like a second citizenship could easily take 18 months to 24 months to finalise. This situation underlines the importance of short term residence as the risks we listed earlier could develop into threats before you have the citizenship element of your Backup Plan in place.

This processing reality highlights the importance of immediately starting to work on your Backup Plan. You could then have a short- term residence permit solution in place within a few months, and also have begun the process to acquire the long-term solution of a second citizenship.

The clock is ticking…..

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