Tax  

Wealth planning needs of internationally mobile clients

  • Describe the growth trends among the high net worth community and their wealth planning needs.
  • List the tax implications for multi-jurisdictional individuals and what they need to know about fund accessibility.
  • Identify what impact regulation will have and the concerns and goals of the next generation of HNWIs.
CPD
Approx.30min
Wealth planning needs of internationally mobile clients

While almost half of today’s high net worth individuals (HNWIs) have lived in one country only, it may surprise people to know that 22 per cent have lived in two countries, 12 per cent have lived in three countries, 4 per cent have lived in four countries and 4 per cent have lived in five or more countries, according to the Barclays Wealth Insights 2018 report.

This report shows that a HNWI community which is increasingly more mobile and younger, impacts on wealth planning needs; flexibility and compliance in multiple jurisdictions is becoming a staple requirement. 

However, these statistics mean little unless we understand the growth trends within this group of individuals.

The global number of HNWIs grew to 18.1 million in 2017 (an increase of almost 8 per cent) and was matched by a growth in HNWI wealth by 10.6 per cent to breach the $70trn mark, according to Capgemini’s 2018 World Wealth Report.

Understanding why HNWIs are more mobile is easy – education, lifestyle, family, international careers, healthcare, marriage, climate, retirement and political security are a few and the list could go on.

However, HNWIs understand that to be globally mobile, they need a solution to preserve the transferability and portability of assets and wealth.

High wealth and high income bring specific challenges in balancing legal or tax compliance, transparency, privacy and – importantly – safety.

For example, the tax and retirement needs, cost of living and possible care costs of HNWIs are different from other investors. These individuals and their advisers understand that dealing with these requirements in a foreign jurisdiction can create additional challenges. 

This has led to competition from offshore structures on how to handle growing mobility in line with tax-related pressures, and intricate global family networks.

Understanding the tax implications of moving jurisdictions and the potential impact on succession planning is an essential exercise for HNWIs looking to move countries or continents. Indeed, expatriates make up 11.4 per cent of the global HNWI population, according to GlobalData, a research consulting firm.

For clients, including HNWIs, chasing new horizons here are some points to consider before they move:

1) Timing

Knowing when a move to a different jurisdiction will happen can help assess when wealth, succession or estate planning needs to begin. But even if precise timing is not known, planning early for what your client wants and needs in the future will allow you to consider how best to meet those needs with the right tools and solutions.

The benefit of a life policy is not being restricted on when it needs to be taken out. However, it can be a tax-efficient solution now and adapt as circumstances change. 

2) Have you taken advice?

Without the right advice, it is difficult to make informed decisions for long-term protection and comfort. The right advice also allows clients to put succession plans in place to reflect their intentions in the event of death.

Although absolute certainty on future tax or regulatory changes is rarely attainable, getting the right advice for a cash and asset portfolio is the best way to understand the risks to it on moving to another jurisdiction. In addition, succession laws differ from country to country, and expatriates may inadvertently get taxed twice.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What percentage of high net worth individuals have lived in three countries?

  2. What did the global number of HNWIs do in 2017?

  3. According to the author, it is worth noting that what will change the nature and delivery of advice and services to HNWIs?

  4. Is the following statement true or false? "Trusts are not recognised in France despite their wide use in the UK."

  5. Generations Y and Z want what type of advice, according to the author?

  6. HNWIs will need to adapt to a world focused increasingly on three things. Which one of the below is not one of the three?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the growth trends among the high net worth community and their wealth planning needs.
  • List the tax implications for multi-jurisdictional individuals and what they need to know about fund accessibility.
  • Identify what impact regulation will have and the concerns and goals of the next generation of HNWIs.

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