Cross-border investment and pension planning can be very complicated, and wrong decisions can cost you extra in taxes. Recently, I participated in a meeting with a pension advisor and a shared client. The pension advisor suggested certain programs for the client that would save him Israeli tax and build up his pension in Israel. Although the programs sounded good, I suspected that there were going to be tax problems because the client was a dual citizen in both the United States and Israel.
Common Mistakes
In the middle of the meeting, I suggested that we call the client’s U.S. accountant (I help people make investment decisions and am not a tax professional and do not provide tax advice). After reviewing the situation, the American accountant said that all of the ideas the Israel pension advisor suggested would not be appropriate for the client. The IRS would tax the programs, and that would make them lose most of their Israeli tax advantages.
Cross-border investment and pension planning can be tricky. Here are three of the common mistakes that cross-border investors make.
- Not accounting for differences in tax laws: Different countries have different tax laws, and it is important to be aware of the tax implications of your investments in each country.
- Ignoring estate planning: Estate planning is especially important for cross-border investors as it is necessary to understand the inheritance laws of both countries.
- Not seeking expert advice: Investing with dual citizenship can be complex, and it is important to seek out advice from experts who have experience in both countries.
The Benefits of Working with a Trained Global Financial Planner
Cross-border investment and pension planning are complex and nuanced. A global financial planner can help you navigate the complexities of cross-border investing and ensure that you are compliant in both jurisdictions.
If you live outside the United States and have investments in the U.S., please feel free to email me to discuss your situation and how I may be able to help (doug@profile-financial.com).
Douglas Goldstein, CFP®, GFP® is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published March 14, 2023.