A growing number of Americans are embracing opportunities to live and work overseas. While such experiences are, in my view, enriching both professionally and personally, the financial landscape for expatriates is rife with complexities.

From tax implications to retirement planning, the unique challenges faced by Americans abroad underscore the indispensable need for specialist financial advice.

US citizens living overseas grapple with a complex web of tax obligations. They are required to report their worldwide income, even if they reside outside the country.

The Foreign Account Tax Compliance Act (FATCA) – an Obama-era policy - further complicates matters by requiring foreign financial institutions to report assets held by US taxpayers.

Specialist financial advisors, well-versed in international tax laws, play a crucial role in helping expatriates navigate this taxation quagmire.

A survey by Greenback Expat Tax Services revealed that 90% of expats find the US tax system “complex”, emphasizing the need for professional guidance to optimize tax strategies and ensure compliance.

Americans overseas typically find themselves in unfamiliar financial markets with unique investment challenges and opportunities and according to a survey by the Securities and Exchange Commission (SEC), they “encounter limitations” in accessing certain investment products and may be subject to “varying regulatory frameworks.”

Data from Morningstar suggests that globally diversified portfolios managed by professionals with international expertise outperform those with a more limited scope, highlighting the potential benefits of specialized guidance.

Retirement planning realities

Retirement planning for Americans overseas involves going through a complex interplay of U.S. retirement accounts, foreign pension plans, and Social Security considerations.

A report by the Social Security Administration indicates that nearly half a million Americans receive Social Security benefits while residing abroad, posing “unique challenges in terms of eligibility and taxation.”

Focused cross-border retirement planning advice is needed to help expatriates optimize their contributions, understand the implications of foreign pension income, and navigate the intricacies of Social Security benefits as the retirement needs of Americans abroad are likely to differ significantly from those domestically.

Estate planning in a global context

Estate planning also becomes particularly intricate for expatriates with assets both in the US and overseas. Differences in inheritance laws, taxation on bequests, and the treatment of trusts can complicate the process of passing on wealth. According to a study by the American Bar Association, many Americans abroad are unaware of the estate planning implications of living in a foreign jurisdiction.

They’ll need to work on minimizing tax liabilities for beneficiaries, navigating cross-border inheritance laws, and ensuring the seamless transfer of assets in compliance with the laws of multiple jurisdictions.

Specialist financial advisors, familiar with the nuances of global financial systems, can assist expatriates in understanding and adapting to local financial practices generally. This adaptability extends to currency management, helping individuals mitigate exchange rate risks and optimize currency conversions.

As the global workforce continues to evolve, recognizing the value of seeking professional guidance becomes not just a matter of financial prudence, but a critical step in ensuring the long-term financial well-being of Americans facing the complexities of life abroad.
_______________

London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.