In my three decades of helping wealthy Americans obtain second Citizenships and Residences, I’ve never cease to be surprised at how few of them, or their advisors, understand the numerous advantages of acquiring that second passport, or fixing an alternative country of residence.
There are numerous rewards to both routes. More importantly, however, there are potential disadvantages of inaction. This is particularly prevalent in the ‘interesting’ times that we are currently living through.
The trap of life inertia
I understand that the concept of chasing alternative citizenships feels prohibitively complex to many. It suggests huge life change, and unravelling esoteric areas such as taxation, inheritance and succession planning. The inertia of maintaining the status quo has traditionally felt easier to most.
A turning tide…
Over the last few years I have seen more and more contact from wealthy Americans considering alternative citizenships and residences. It seems that the inertia has turned to curiosity for many.
There are several reasons for this change… here are a few:
- “Tax the Rich” policies that have been lurking on the fringes for innumerable years and now becoming mainstream. In the USA there is a strong possibility of an imminent Wealth Tax. There has also been the recent announcement of an intention to increase capital gains tax;
- Covid 19 travel restrictions have made it abundantly clear that Americans can not always expect the privilege of free travel. It has shown that US citizenship can come with substantial travel restrictions.
- The global pandemic and general fear of Covid 19 has been life changing. It has motivated many wealthy Americans to overcome their “life inertia” and make a big life move. Many are relocating from traditional centres such as New York City and Silicon Valley. This initial change can make a move abroad feel more possible.
- American politics continues to feel divisive and dysfunctional. This political uncertainty makes many other aspects of life and work feel unstable and at risk.
The Power of Myth
It is true that for many the tide has turned. They have made some initial careful steps into thinking about how they and their family may be better served outside of America.
However, this is not true for all. Many Wealthy Americans still harbor serious myths and misunderstandings about alternative residences and second citizenships.
In an upcoming series of blogs I will look closely at six widely-held myths and misconceptions about alternative residences and second citizenships…
Whatsmore, I will bust them!
I believe, and logic agrees with me, that a Backup Plan that includes an alternative country of residence and/or a second citizenship can be an essential strategy for many Wealthy Americans.
I will show that through replacing these myths with a practical strategy, we can develop a framework to help Americans overcome any emotional resistance they might feel about the idea of an alternative residence or second citizenship. This will ultimately allow for clear, rational, unemotional thinking that will allow them to make the best decisions for their families’ futures.
Logical vs Emotional
Geographically I’m a Canadian by birth; I grew up in the border city of Windsor. My father, siblings and neighbours all worked in the auto industry in Detroit. For me dual citizenship (Canadian-American) was the norm. This experience also has helped me concerned the deep emotional commitment that Americans have to their US Citizenship.
Pledging allegiance to the flag is instilled into every school going child. The media is dominated by stories of American exceptionalism and the virtues of patriotism. The ‘shining city on a hill’ is still a belief that is close to many Americans’ hearts. Shifting away from this established thinking is no small ask.
However America is changing, fast. With these changes we are seeing a big shift in how some are considering their citizenship. I have personally witnessed how the events of just the past few years have accelerated this sea change in how Americans are viewing their previously unquestioned beliefs.
Many are looking into the idea of acquiring an alternative citizenship and residence for the first time.
I have had countless first conversations with such Americans and it has become clear that, despite looking past their ingrained sense of nationalism, they are still hampered by pre-existing misconceptions about some very important issues. These common misconceptions are what I will addressing in this series, and include:
- The US does not allow dual citizenship.
- Lineage citizenships can be acquired quickly and easily.
- Acquisition of another citizenship automatically means tax liability in that country.
- The acquisition of another citizenship or residence is considered “dodgy” or “unpatriotic”.
- The whole family needs to expatriate in order to legally shelter the family wealth from US taxation.
- An expatriate cannot ever come back to the US
Keep posted to discover more about the impact of these misconceptions.
Want to know more?
And of course if you wish to discuss your own situation and consider possible second citizenship and residence options contact us for a confidential and no obligation first conversation.