Why Some Americans Are Giving Up US Citizenship?

While we were recently updating our white paper on American citizens and Green Card holders relinquishing their US status, our team debated what are the most important drivers of the significant uptick in inquiries over the past ten years.

The Drive Behind Americans Relinquishing Citizenship

Rather than rely on anecdotal recollections, we first looked to see if the US government published any meaningful analysis on this subject. Even though it would not be that difficult for the government to prepare such an analysis based on the data collected at the renunciation interviews, the US does not do so for reasons we discuss in our paper.
Instead, we looked at our significant number of client interactions for some insights and were surprised not only by the number…but more interestingly by the range…of motivations and their evolution over the years.

Shifting concerns from Tax Worries to Political Unrest

Ten years ago, the major concern was tax policy that could impact their financial well-being. While tax concerns still exist, an emerging second category now surpasses the first. Specifically, deep and growing concerns about the polarized political and social environment and its direct and potential impact on personal and family security and well-being.
So what exactly are these concerns that are so serious that US citizens are actually taking steps to organize second residences and/or citizenships in order to have the optionality to be able to move out of the US or even relinquish their US citizenship? To answer this question, let us start with the concern labelled

“Political and Social Unrest”

This category includes:

  • Profound divisions in most every aspect of American life – political, economic, social, cultural – that show no sign of resolution;
  • Erosion of confidence in the institutions of government such as state and federal courts, that ignore precedent and take away rights,
  • a dysfunctional “do nothing” Congress that frequently threatens total government shutdown;
  • daily mass shooting events
  • a dramatic increase in political violence;
  • An extremely volatile election season with two polar opposite candidates and the usual October surprise replaced by surprises on days that end with “y”;
  • The steady rise in racism as exemplified by public expressions and acts of antisemitism…even before the attack on Israel by Hamas and ensuing military conflict and humanitarian crisis in Gaza;
  • Threats by certain political leaders of abandonment of NATO – the US creation that resulted in international stability that allowed the US to thrive for past 70+ years.

Economic Anxiety

The next category of concerns relate to “Financial Well-being”. Specifically, the concern is that if the Democrats win the presidency and both houses of Congress, they will tax unrealized capital gains, eliminate or restrict current tax planning strategies (such as GRATs, Private Placement Life Insurance, Carried Interest, basis step up on death) and not extend the gift and estate tax lifetime exemption.

Please keep in mind, we are not agreeing or disagreeing on the validity or reasonableness of any of these voiced concerns. Rather, these are our clients’ perceptions and their realities. Our role is to assist them in being proactive by designing and building…and in some cases executing …their back up plans that give them the optionality to address them.

The Strategic Pursuit of Second Citizenship as Backup Plan

Moreover, most of these clients are highly successful folks who are not just worrying about themselves. Indeed, most of them are focused on making backup plans for their children, and in many cases their grandchildren. They want to secure their futures by giving them options. This is why we are seeing a lot of HNW families whose ancestors came to America decades ago looking to reconnect with their family’s country of origin by way of citizenship.

For those who are unable to use their family lineage to secure a quality second citizenship, there is a selection of second citizenship or residence leading to citizenship through naturalization offerings. For both of these options, we HIGHLY recommend seeking independent legal counsel from someone who is equipped to work closely with your trusted advisors or family offices to produce a plan that will align with personal, family, business and financial needs and imperatives.

So what conclusions can we draw from the motivations of those considering living outside the US or relinquishing their US citizenship or Green Card? They tell us that at this moment in time there is a deep and growing perception of far greater risk to personal and financial well-being…so much so that it is worth the time and investment to prepare a backup plan that will provide security through ready access to smart choices.
Sounds like a plan…yes?

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