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Introduction:

In the current world where globalization has led to the highest levels of mobility, the meaning of the word "home" is no longer fixed. Today, for many high-net-worth individuals, wealth is no longer confined to one zip code. You can have properties in London, investments in the digital world in Singapore, and the family business located in Delaware. 

Although your financial sophistication will show itself in diversification, it can also result in the "legal labyrinth" of succession. When there isn't a solid plan in place for international assets, your estate can be disintegrated by conflicting tax laws, " forced heirship " rules, and international probate. 

The Sophistication of "Situs" :

The very first obstacle in cross-border estate planning has been the comprehension of Situs-the residence of the asset. International jurisprudence forges all assets into two baskets: 

• Unmovable Assets: Property is nearly always subject to the jurisdiction where the land is located. 

• Movable Assets: Accounts in banks and stocks, as well as movable assets like personal property, are usually subject to the law of domicile. 

Nevertheless, the concept of "domicile" is often subjective. You may have one country saying you are domiciled there by birth, and another by residency. This can result in the dollar being taxed twice by two different countries. 

Cross-Border Protection - Strategic Pillars: 

1. The Strategy of Multiple Wills :

An error that may be committed is the one that adheres to "the World Will." Although having a local will that may pass in a foreign country, the red tape is insurmountable. Translations, foreign court seals (apostilles), and local formalities can freeze an inheritance for years. 

• The Solution: Use Situs Wills. The way to solve this problem is to create separate local situs wills for each of the principal jurisdictions (like one for the UK and one for the US). The probate process is thereby made simultaneous rather than sequential. 

• "Warning: These wills must be carefully coordinated. If not drafted carefully, a new will in one country may inadvertently revoke a will in another." 

2. Financial Instruments and Trade Finance: 

For those dealing with international business, asset protection may refer to matters prior to the "estate" level. Global Trade Solutions and Trade Finance Tools are designed as more than simple business solutions ; they serve as asset protection mechanisms. 

• Letters of Credit (LCs): In the context of the family business, a letter of credit facilitates the flow of liquidity and ensures that the payment obligations are satisfied even during a transition in leadership. 

• Trade Credit Insurance: Protects the underlying value of the business estate against non-payment from foreign buyers, so the inherited wealth does not diminish due to non-payment during a time of transition. 

3. Offshore Trusts and Foundations: 

Trusts are recognized as "the gold standard of international protection." In a trust, ownership of property is transferred so that the property ceases to be part of your private estate. Probate, of course, is completely bypassed. 

Feature:

• Legal Nature 

• Best For

• Privacy

Offshore Trust:

• A legal arrangement/contract 

• Common-law countries (US, UK, Hong Kong) 

• High; usually not registered 

Private Foundation:

• A separate legal entity (such as a company) 

• Civil-law countries (EU, Middle East) 

• Moderate; registered as an entity | 

Managing Tax Risk : 

Tax treaties are your best friend when planning globally. Many countries have bilateral Estate Tax Treaties to avoid double taxation. 

To reduce exposure, the following strategies may be employed: 

• Holding Companies: In certain cases, owning foreign real property through an impartial holding company may change the nature of "immovable" property into "movable" shares, thereby altering the country with the primary taxing right over the property. 

• Liquidity Planning: It is likely that international estates find themselves with current tax liabilities denominated in foreign currencies. "Ready cash" to settle foreign tax liabilities may be accessible through a structured life insurance policy with specific payout provisions within a trust. 

Conclusion: 

Global asset estate planning is not a "set it and forget it" process. The more the world changes, the more revisions your global asset estate plan may require due to shifting global climates and changes in tax laws, such as the OECD global initiatives on transparency. 

Your Global Checklist: 

• Make an inventory of assets and assess "Situs." 

• Check the "conflict of laws" rules applicable to your locations for residence and assets. 

• Appoint Executors with the ability to interact within foreign territories. 

• Integrate with financial instruments provider to ensure business liquidity. 

"The purpose of cross-border wealth planning isn't simply the transfer of funds; it's the transfer of certainty." By constructing a cross-border wealth structure, you can ensure that your wealth serves as a "bridge" for your family's future, rather than a "barrier."  For More Information Visit: Oxford Credit Banque