5 Tips to Help Ensure a Smooth Move Overseas
While it’s relatively easy for most Americans to travel the globe, moving overseas can be more complex. If you’re hoping to move abroad, it’s important to have a plan in place before you go. The following tips can help you prepare.
#1 – Research your new country of residence.
It’s important to gain a thorough understanding of your new country before you pack up and move. Take time to research:
- The cost of living, including housing, transportation, food, entertainment, utilities, etc.
- The quality, availability and cost of healthcare
- Safety and security
- Visa requirements
- Tax regulations and whether your new country has a tax treaty with the United States
- The quality and cost of education (if you have children)
- Job opportunities (if you plan to continue working)
#2 – Consider how you’ll fund your lifestyle abroad.
Do you plan on working overseas, or are you retiring abroad? Both situations have their own unique considerations:
- Working abroad – If you have a job lined up in your new country of residence, make sure you have the necessary work visa in place. This process is generally initiated by your employer but can take some time. Be sure to provide any necessary documentation and applications in a timely manner.
It’s also important to remember that, as a U.S. citizen, you are taxed on your worldwide income, regardless of where you live. Before moving abroad, make sure you’re prepared to take advantage of any existing tax treaties between the United States and your country of residence, as well as applicable exclusions, such as the foreign earned income exclusion (FEIE).
- Retiring abroad – Fortunately, U.S. retirees eligible for Social Security benefits can receive payments virtually anywhere in the world. The monthly payments are even able to be deposited into your local bank account in your local currency. In many cases, U.S. Social Security is only taxed by the United States, but there are key exemptions. Your international wealth manager can offer country-specific guidance.
Before retiring overseas, be prepared to navigate various Social Security reporting requirements and make decisions regarding practical matters, such as whether it makes more sense to receive benefit payments via international wire transfer or direct deposit.
It’s also important to note that not all countries recognize the after-tax nature of Roth IRA contributions. As a U.S. expat living abroad, you may be taxed on Roth IRA distributions, resulting in double taxation. Your international wealth manager can offer strategies to help you avoid this costly situation.
#3 – Find a place to live.
It’s important to understand your new country’s residency rules before making a move abroad. Some countries allow foreigners to establish residency by purchasing local real estate, while others have restrictions on where foreigners can live or what type of property they can own. For example, in Mexico foreigners aren’t permitted to own property within a certain distance from the coast unless a specific trust structure is used.
Many U.S. expats decide it makes more sense to rent while they’re living abroad. The main benefit of renting is that it provides you with flexibility, should your plans or circumstances change. Another benefit is that you can avoid paying a large upfront down payment and the costs associated with closing on a home purchase.
On the other hand, owning a home abroad can be a beneficial long-term investment and provide you with a sense of stability while living overseas. You’d also have the flexibility to renovate your home according to your lifestyle and preferences.
#4 – Decide which possessions to ship, store, donate or purge.
You probably won’t be able to bring all your furniture and possessions with you when you move abroad. Take time to go through your belongings to decide which items you plan to take with you, which ones you’ll store for the future and which ones you’ll get rid of.
If you plan to move back to the United States at some point in the future, you may want to store the majority of your items in a temperature-controlled storage unit. It may make sense to sell some items, either online or by holding a physical sale. Sentimental items can be given to friends and family members.
#5 – Update your estate plan.
Your U.S.-based estate plan may not be valid once you move abroad. That’s why it’s important to work with a qualified estate planning attorney to establish a plan that meets your needs and protects your loved ones while you’re living overseas.
You may need to establish a “situs” will to govern the distribution of any property you hold overseas. The “situs” will should be designed to work alongside your primary will to cover all your assets. Coordination of the multiple wills is critical in such circumstances. As an alternative to creating two separate wills, it may make sense to implement a multi-jurisdictional or “geographic” will to cover your assets held in multiple countries. Your international wealth manager and estate planning attorney can help you decide on the best option, based on your particular situation.
Before moving overseas, it’s also important to evaluate your potential estate and inheritance tax liabilities, as well as the effectiveness of any existing trusts, powers of attorney, beneficiary designations and healthcare directives. Work with your international wealth advisor and estate planning attorney to identify any necessary changes.
