Expert Back-Up Planning for Security & Peace of Mind

Case Studies

Today’s savvy high-net-worth individuals and their advisors must continually monitor potential threats to their families, wealth and businesses. Since many such events occur with little warning, being properly prepared with the appropriate response is a huge advantage.

A robust and flexible Back-Up Plan© from Lesperance & Associates allows high-net-worth individuals to react instantly should an adverse event arise. A well thought out Back-Up Plan also helps wealthy families take advantage of global opportunities for study, lifestyle, and investments without the worry of being denied access because they are not considered “locals”. 

The following case studies are based on Back-Up Plans prepared, executed and monitored by Lesperance & Associates.

Case Study 1: Silicon Valley Venture Capitalist Seeks Solutions and Flexibility

Situation

  • The client, a California-based venture capitalist, was concerned with risks stemming from the economic and political climate—especially since the 2016 presidential election.
  • As a California resident, he was also worried that a (long overdue) major earthquake in addition to other disasters such as wildfires (or even North Korean missiles!) could present additional potential threats.
  • Finally, as a senior partner in a venture capital fund, he was acutely aware that changes in the taxation of Carried Interest could double his annual tax bill.

Solution

  • Using a combination of lineage citizenship and residence-by-investment programs, Lesperance & Associates developed a Back-Up Plan that will seamlessly allow him to temporarily or permanently move his family and business overnight should an adverse event occur.
  • His customized Back-up Plan also allows his family to work, study, or live in several foreign countries should they wish.

To find out how this was accomplished read about this case in “An SFO Backup Plan: A Second Passport & Foreign-Home?”

Case Study 2: Multi-generation NYC Family Looks to Leverage its History and Business Expertise

Situation

  • A Sephardic Jewish family (the matriarch having immigrated to the US from Poland in 1939) in the real estate business had recently diversified their holdings throughout the US and internationally.
  • Given their history in Europe and a family ethos of pessimism, the need to plan ahead was ingrained.
  • The family wanted a flexible, effective and efficient Back-Up Plan in case of an adverse event such as a hurricane, terrorist attack, negative tax changes relating to Carried Interest or estate tax, the fresh financial crisis affecting real estate, or something totally unforeseen.

Solution

  • Lesperance & Associates developed a Back-Up Plan employing a combination of lineage citizenship (through both religious background and national heritage), while also leveraging the family’s international real estate diversification strategy.
  • The plan allows any family member to immediately and seamlessly deal with any type of adverse event.

To find out how this was developed and executed read more about this family in “An SFO Backup Plan: A Second Passport & Foreign-Home?”

Case Study 3: High Net Worth Hong Kong Family Worries About Potential High Risk Environment

Situation

  • This family acquired significant wealth in China’s booming real estate and investment markets over the last few decades. While this wealth is new for the family, survival in changing circumstances is not.
  • Having successfully survived centuries under various Chinese Emperors, the Japanese, Nationalists, Communists, and the “New Communists”, this family understood all too well the critical need for a Back-Up Plan to deal with a potential adverse event.
  • In particular, the family was concerned about natural adverse events (air pollution, typhoon, mudslide) or a man-made adverse event (dirty bomb or major power outage) that might render high-rise Hong Kong uninhabitable.
  • In addition, as their wealth and prominence grew they became increasingly concerned about being wrongly targeted for alleged “wrongdoing”, aware that a number of Hong Kong business-people had been suddenly detained by authorities and accused of vague offenses.

Solution

  • In developing their customized Back-Up Plan, Lesperance & Associates used a combination of student visas, residence-by-investment, and citizenship-by-investment programs to allow the family to place members in various countries for education and future family diversification.
  • The family’s Back-Up Plan also includes early warning and contingency planning to ensure the family can defend themselves from the unwarranted attack on their reputation, person or wealth.

To find out how this holistic strategy was devised and implemented for this family, read “An SFO Backup Plan: A Second Passport & Foreign-Home?”

Case Study 4: Houston Oil Executive Ensures Continuity for His Business…and Family

Situation

  • Our client is an American oil investor who was working and living in Houston, Texas with his young family.
  • About 6 years ago he set up his family’s Back-up Plan through L&A. He is risk-averse and wanted to be prepared should there be a natural, political or business event that would disrupt his business or endanger himself or his family’s safety.

Solution

  • Their Back-Up Plan had two major components. First, it included economic citizenship in a European Union country for him, his wife and their children. This gave them the immediate ability to expatriate from the US should tax reform negatively impact his tax burden. In particular, he was concerned about increased tax rates, changes in the taxation of Carried Interest (which was a major portion of his compensation) and estate taxation. As an added advantage, this second citizenship also gave their children and future generations the option to live, study and work anywhere in Europe.
  • Second, we secured Canadian work permits for both our client and his wife. This would allow both of them to live and work in Canada while their children would be able to accompany them and go to school. This was inexpensive, easy and fast to do. While the work permit gave them the right to live and work in Canada for the entire time of the renewable permit, it did not automatically make them tax resident in Canada. They would only become tax resident in Canada if or until they ever started to spend more than 6 months per year physically in Canada. They then purchased a condo in Toronto and started to rent it out through Airbnb. They also arranged a serviced shared office space with back-up computer services.

We then monitored their Back-Up Plan on a regular basis and kept it up-to-date to ensure it would do its job if any of the potential catastrophic events happened … and one did!

Their Back-up Plan in Action

In August 2017 weather forecasts started to identify Houston as the highly-probable landfall location for a Category 4 Hurricane Harvey.   My clients then put their Back Up Plan into effect:

  • They cancelled future reservations for their condo on Airbnb and had it cleaned and stocked
  • They flew to Toronto … and moved into the condo
  • They contacted a pre-selected private school and enrolled their children to start in September
  • He started to run his business – without any interruption – from his Canadian office

 

The net result was business and family / lifestyle continuity…and peace of mind.

 

From a longer-term perspective, our client and his family have the option of either returning to their previous lives in the US or selling their US home and using the proceeds and the insurance monies to make their permanent home back in Canada or in Europe. As it is not necessary for tax planning that all family members renounce their US citizenship, one of the adults could choose this path and realize a significant reduction in the family’s global tax burden. Depending on where the family was going to live in the future, the appropriate tax planning would be undertaken to make sure that the family did not jump out of the US tax pot and into a foreign country’s tax fire.

To find out how this was accomplished read about this case in

“An SFO Backup Plan: A Second Passport & Foreign-Home?”