Navigating Estate Planning: How Expats Can Avoid Unexpected Taxes | Moving to Europe with Paula Jones

What happens if you unexpectedly inherit money from a loved one while living abroad, especially when there’s no formal estate plan in place? As an American expat, both international and US tax laws can take a significant portion of your inheritance. Losing someone is hard enough, and navigating cross-border inheritance shouldn’t make it harder.

Expats should review their estate plans and those of their loved ones before moving internationally and consider how their new country of residence will interact with global regulations because US citizens and green card holders are taxed on their worldwide income and estate, even when living abroad.

In this episode of We’re The Brits In America, Richard Taylor – dual UK/US citizen and Chartered Financial Planner – speaks to Paula Jones – founder of Jones Estate Group, Inc – to talk about the pitfalls of estate planning as an American abroad.

Richard and Paula discuss:

• The intricacies of working globally and the decision-making process involved in potentially claiming residency in another country, like France or Portugal.
• Principles around setting up estate plans both domestically and internationally, focusing on avoiding pitfalls such as adverse tax consequences.
• The severity of exit taxes for expatriates and green card holders.
• How international estate planning can intersect with tax obligations in both the US and prospective European countries.
• The importance of cross-border estate planning and tax professionals to avoid costly DIY mistakes.

 

More about We’re The Brits In America:

With the right financial advice, landmines that threaten expat wealth can be avoided. Often encountered by U.S.-connected expats, these financial landmines are more numerous, more hazardous, and less understood than almost anywhere else in the world. As a result, non-cross border professionals, wealth advisors, and even international advisors are often unaware of them. But don’t worry, We’re The Brits In America has you covered.

We’re The Brits In America is dedicated to helping ambitious U.S.-connected expats and immigrants navigate those challenges — and thrive. Whether you’ve moved to the U.S. for opportunity, or are an American seeking adventure and growth abroad, our job is to equip you with the tools and insights you need to succeed.

If you’re enjoying the show, please consider leaving a 5 star rating and review to help the mission, which is to help expats and immigrants thrive in America. Visit planfirstwealth.com to learn more about our services and connect with Richard Taylor on LinkedIn.

We’re the Brits in America is affiliated with Plan First Wealth LLC, an SEC-registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.

About Richard

Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.

As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).

Connect with Richard on LinkedIn

TRANSCRIPT:

Richard Taylor, Founder of Plan First Wealth:
[00:01:11 – 00:02:04]
Welcome to our Ask an expert show where I invite a fellow professional in the US Expat Cross Border Space to come in and talk to me about the issues we think Americans who are considering moving to Europe need to be aware of if they’re going to thrive there. My guest today is Paula Jones. Paula is the principal and founder of Jones Estate Group, a law firm based in Philadelphia, serving clients across the US and internationally in matters of international and domestic estate law. Paula is an American, although she is now also a Brit, and she helps international people to set up estate plans that protect them and their families in the US without inadvertently triggering adverse consequences outside the US and today we’re going to talk about the kind of estate planning Americans who are moving to Europe need to undertake and what kind of things they need to avoid. So without further ado, let’s get into this. Hi Paula. Welcome to move to Europe.

Paula Jones:
[00:02:04 – 00:02:07]
Hi Richard. Thank you so much for having me. Thrilled to be here.

Richard Taylor, Founder of Plan First Wealth:
[00:02:07 – 00:02:13]
Excellent. So if you wouldn’t mind telling everyone a little bit about yourself, maybe an abridged version of your story.

Paula Jones:
[00:02:14 – 00:02:53]
So I’ve been practicing law for 25 years, and pretty much within the first year of practicing in a traditional, largely domestic estate practice, there was an international issue. An international client who came in and the light bulb went off. And I said, these are my people. These are the situations that I want to work with. So the past 25 years, I’ve built my practice of US people. Anyone with a US plus a non US component. I do estate work for them. And all of it was really just a ruse for me to be able to travel to as many places as possible and to deal with people from all different countries on a daily basis.

Richard Taylor, Founder of Plan First Wealth:
[00:02:53 – 00:03:02]
Right. So I didn’t know that. So listeners won’t know. You and I have done a podcast together before, and I didn’t know it stemmed from someone coming in. An ex pattern coming in is that.

Paula Jones:
[00:03:03 – 00:03:47]
It was a US Person, but a green card holder. Right. So a couple had lived in the US for 30 years. The husband, unfortunately, unexpectedly passed away at a fairly young age. They had not done any estate planning. And what they had learned from, they had been to two attorneys and an accountant who did not realize or know what to do about the fact that there is a very small, negligible marital deduction when someone is not a US citizen and they are leaving things to their spouse. And this poor woman who was going through a terrible grief anyway. And on top of it, at that time, she was looking at a $400,000 federal estate tax bill.

Richard Taylor, Founder of Plan First Wealth:
[00:03:47 – 00:03:48]
Yikes.

Paula Jones:
[00:03:48 – 00:04:15]
And she was running around trying to figure out, can someone do something about this? I was a very new attorney, and one of the partners turned to me and said, go figure this out. And I thought it was a test that because I was a new attorney, he was waiting to find out if I would figure it out. And I thought he knew the answer. I learned very quickly he did not know the answer. And I figured it out and I said, oh, we could do a postmortem Q dot.

Richard Taylor, Founder of Plan First Wealth:
[00:04:15 – 00:04:18]
I didn’t know you could do that. I mean, I’m familiar with QDOTs.

Paula Jones:
[00:04:18 – 00:04:40]
Yes, you can do a postmortem QDOT. She could have also run out and become a citizen if the, you know, immigration lines at the consulate and everything were not so long. She was from India originally. There is not dual citizenship there. So she would have had to have give up the Indian citizenship and all things that go with it in order to be dual. So that was not a good option for her.

Richard Taylor, Founder of Plan First Wealth:
[00:04:40 – 00:04:42]
Is that still the case, do you know, with India?

Paula Jones:
[00:04:42 – 00:04:52]
Yes, from my next door neighbor who’s a very good friend who is from India and who became a citizen within the last 10 years. Yes, within the last 10 years. I know at least that that was still the case.

Richard Taylor, Founder of Plan First Wealth:
[00:04:52 – 00:04:55]
And then made them get. And then they gave up their Indian citizenship.

Paula Jones:
[00:04:55 – 00:04:56]
She did, yes.

Richard Taylor, Founder of Plan First Wealth:
[00:04:57 – 00:05:02]
That’s a brutal, brutal thing to force people to do.

Paula Jones:
[00:05:02 – 00:05:03]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:05:04 – 00:05:17]
And it’s one thing making people do that when they’re going to any Other country with the U.S. yeah. But with the U.S. with its exit tax and things like that make it a perilous situation where you can be caught between giving up your original citizenship.

Paula Jones:
[00:05:17 – 00:05:17]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:05:17 – 00:05:29]
Or living with the risk of being on a green card. And there is a risk of living on a green card. We’ve just identified one. But summarily losing your. Your status and being subject to the exit tax like that.

Paula Jones:
[00:05:29 – 00:05:29]
Right.

Richard Taylor, Founder of Plan First Wealth:
[00:05:29 – 00:05:30]
Bad things can happen.

Paula Jones:
[00:05:30 – 00:07:30]
Bad things can happen. Yes. Yes. Sometimes a change in immigration status is an estate planning technique, you know, and then other times it isn’t, because it can be. Now, in the case of my good friend and neighbor, she. She did it on purpose. You know, she’s been settled here. She’s going to stay here. And so she did that, and she just knew her mother would be upset, so we eventually broke it to her. But. But other people, it’s just a planning choice where they go, okay, here are my choices. Here are the risks. Now, if this client that I’m referring to had. And we had done planning for all of this, then it would have all been okay. Right. But most people don’t do very much planning. And so, you know, it’s normal. Thankfully, we had a solution. I figured out the solution and said, you don’t owe $400,000. You owe zero. That was a really great meeting, a big relief. But what it also did was it made it very apparent to me that she had gone to two attorneys and an accountant, and they did not know that that was an option for her. They knew enough to know that there was a problem, but they didn’t know what to do about it. And that’s an important thing. And there, there isn’t a lot of, you know, focus on this area. Fortunately, there’s been more in the last 25 years, more of a focus on that this is just the way the world is. And it will continue to be that. That we will just have more and more multinationals, you know, that have our. I become one myself. I got my UK citizenship, you know, a few years ago. I am now a dual citizen and all of the things that go with that, you know, so I’m. I’m very like my clients. I also grew up in a family. We had five people from four different countries. And so growing up in a multinational environment was something that I was very used to. That was the norm for me. And it is interesting, you know, that when I meet with other clients, we understand each other. We sort of come from the same place. And so that’s why you Know, I really knew that. Oh, these are. These are the clients that I want to work with.

Richard Taylor, Founder of Plan First Wealth:
[00:07:30 – 00:07:31]
These are my people.

Paula Jones:
[00:07:31 – 00:07:32]
These are my people.

Richard Taylor, Founder of Plan First Wealth:
[00:07:32 – 00:08:03]
Yeah, so true. But you know what I’m also thinking? I think people are people. Which means that no matter what we do, Paula, no matter how many podcasts we do, how many blogs we do, how many events we speak at, there will always be people who try to DIY this, who try to DIY there. But people with plenty of money, who should know better will try to DIY from an immigration perspective, a tax perspective, an estate planning perspective. And eventually we’ll get a call from those people and we’ll have to help them unwind it all. But no matter what we do, however much we put it into the world, it’s still going to happen. It blows my mind.

Paula Jones:
[00:08:03 – 00:08:15]
That is so true. That is so true. So I’m a member of a couple of attorney groups, and there’s a mug and it says, please don’t confuse your Google search with my law degree. Okay. Okay.

Richard Taylor, Founder of Plan First Wealth:
[00:08:15 – 00:08:16]
Yes. Oh, I like that.

Paula Jones:
[00:08:17 – 00:08:32]
Once a month someone posts that and says, I had this client. And here’s what they did. And we all sympathize with it. Yes, they. There will always be people who think that they know better. And some people just insist on learning the hard way, and that’s okay. You can learn the hard way too, you know.

Richard Taylor, Founder of Plan First Wealth:
[00:08:32 – 00:08:56]
Okay. So you set me up beautifully as well. This podcast is about trying to reach those people who are not close minded and who. Who would be interested in adventure abroad. How do you even start considering something like that? Doing anything foreign when you’re US Connected has got serious landmines. There’s opportunities, and I want to help people take advantage of the opportunities, but there’s also serious landmines, expensive landmines.

Paula Jones:
[00:08:57 – 00:12:05]
Absolutely. And so one of the concepts that I think most US People do understand at this point, and they know this because they file their income taxes each year if they have any connection outside the United States. What they have realized is that the US Taxes a US citizen or a US Resident on worldwide income. So most people have already figured that out or will soon figure that out. Right. We file our income taxes once a year. And so it’s kind of the. The most immediate consequence that someone who has gone from just us to us plus something else is going to experience. It’s going to be in the income tax. So what I do is the estate tax and gift tax and basically transferring of assets. So everyone kind of knows the income tax. But one of the landmines Is any estate or gift tax consequences of that? Because even folks who are purely domestic don’t necessarily understand that there’s a federal estate tax, you know, and how does it affect them? And, you know, all of those things. And so that’s one of the things that, you know, hopefully if someone is a planner and they’re not, like, DIYing it and they kind of make a call to at least investigate what they might need to consider, their citizenship is going to follow them wherever they go. So the federal estate tax reaches well beyond its borders, and it taxes any US Citizen on their worldwide assets at the time of their death. So it doesn’t care where the person is, and it doesn’t care where the asset is. It brings it all in. Now, that sounds scary at first, but now I’m gonna say there’s also an extremely high exemption amount. Right now. In 2025, it is 13.99 million per person. Wow. So a lot of people just took a huge sigh of relief and said, oh, well, that doesn’t apply to me. Okay. And they’re right. It doesn’t apply to very many people. It’s kind of a small percentage of the US population who has a net worth of about 14 million. Okay. That number is going down in 2026. It’s an automatic thing. The existing law was around for 10 years. It automatically, automatically sunsets. We call it sunsetting. January 1 to 2026, the new law comes into effect. It essentially goes back to what the law was 10 years prior, and that number is still pretty high. It’s going to be somewhere between 6 and 7 million. And we need to do the math and inflation indexing and blah, blah, blah. But the point is, it’s somewhere between 6 and 7 million. So for a lot of people out there, federal estate tax sort of isn’t necessarily an issue. Okay. But now more people just maybe perked up and said, okay, I don’t have 14 million, but like, yeah, combined we probably have maybe a smidge over six or something like that. So now it’s something that they do need to be aware of that even if they leave, even if they take all their assets with them, like out of the US if you’re a citizen, you’re still pulled into that. Can planning be done? Of course. You know, but that’s a question that. That people need to ask kind of before they make that leap. It’s just something for them to keep in.

Richard Taylor, Founder of Plan First Wealth:
[00:12:06 – 00:12:12]
Do people have state issues as well? I know some states have inheritance taxes and stuff. Can that also follow You.

Paula Jones:
[00:12:13 – 00:13:57]
So state stuff generally does not follow you because states need you to be resident in the state in order for their estate or inheritance tax to apply. So yeah, a smattering of the 50 states have either an estate tax or an inheritance tax at the state level. I’ll give an example. Pennsylvania has an inheritance tax. Anything going to a spouse is zero. Anything going to children is a flat 4.5%. No exemption amounts there. Every state is a little bit different. Some just don’t have any inheritance tax at all. Florida doesn’t. I don’t believe Texas does either. I don’t think New Hampshire does. The best I can say is some states really do like to hang on to people and their residents in the same way that some countries do too. So New York, for instance, is kind of known for. Even if you physically leave and you move to another state, they can sometimes try to make arguments that you’re really still there, that you kind of intended to return or you didn’t completely leave or whatever. So, so New York is kind of one. It’s a high tax state. We know that they kind of like to kind of hang on to people. By contrast, Florida, and I’m not a Florida attorney, but we, you know, kind of deal enough with people here on the east coast who have a connection to Florida. Florida tends to not want someone to be resident because so many people are trying to say that they’re Florida resident. You know, that’s a very, very popular place to go. No state level of income tax, no inheritance or estate tax in Florida. You know, so a lot of people are trying to say that Florida is where they reside and Florida has like this whole checklist. Like you need to be doing all these things and showing all this in order for us to really think that you’re resident.

Richard Taylor, Founder of Plan First Wealth:
[00:13:57 – 00:14:05]
Oh really? And then would, would a state like New York accept that if you completed that checklist and you got accepted into Florida, would New York accept that as.

Paula Jones:
[00:14:05 – 00:14:08]
Proof that New York has their own test under, under New York law?

Richard Taylor, Founder of Plan First Wealth:
[00:14:08 – 00:14:10]
Yeah, of course they do.

Paula Jones:
[00:14:10 – 00:14:37]
We had a matter a few years ago where someone in New York, all they had in New York was a timeshare, because you can get a timeshare in Manhattan, right, For people who like to go to New York and they don’t want to pay the high hotel rates or whatever, and they go enough where they go, okay, yeah, I’ll take this timeshare and we’ll kind of spend, spend our normal amount of time each year there. And. And New York tried to claim that someone Owning a timeshare meant that they were a resident in New York. Now they lost. Okay, but it was a fight, really. But it was a fight. Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:14:37 – 00:14:43]
And did Zach Carino create a precedent then? Or is that. Are you gonna have to. Would that have to fight every time?

Paula Jones:
[00:14:43 – 00:14:59]
It was a case. Yeah, it was a case. And they ruled against New York in that case. And so that, that is good precedent, but it’s also a good example to say, wow, yeah, that’s reaching pretty far to say, oh, no, you’re. You’re still one of us, you know, whereas Florida’s kind of trying to kick people out.

Richard Taylor, Founder of Plan First Wealth:
[00:14:59 – 00:15:04]
I’m gonna take a, well, stab in the dark here, but I presume California is the same.

Paula Jones:
[00:15:04 – 00:17:22]
California is a high tax state, so it’s possible. You know, it’s possible. There’s certainly a motivation for someone to say, you know, you’re us, we get to tax you. They don’t get to tax you. We get to tax you. And, you know, it just reflects the mobility even, you know, certainly between the US and other countries. But even within the states, we have a different kind of society now we have a portion of our society who lives in two states, and that’s normal. Well, we have our main house here and then we have our vacation home there. And now that we can, you know, work remotely and that, that’s more accepted. Covid, sort of, it was on the rise anyway, and Covid really accelerated this concept of working remotely where people who lived in New York said, I am going to go to my house in Florida, and that’s now going to be my primary residence because I’m going to be working from there, you know, and so they have tried to make that switch of saying, I’m no longer New York resident, I’m Florida resident, you know. Well, people on a global scale are doing the same thing in countries. You know, I lived in the US but we also have a home in France, and I can work from anywhere. So maybe it’s better for me to claim that I’m actually living in France. So maybe I’ll go do that. And should I do that? Well, let’s do the math and figure it out, you know, so that’s why, you know, people come to me and they go, I might want to move to Spain. I might want to. I have a couple. Or I have a couple. Certainly taking advantage of the Portugal visa program. You know, Portugal did a great job in attracting a lot of wealthy folks to come and live in Portugal to buy a home there, you know, to kind of settle in there and sort of bring a boost to the economy. That helped out. So I have US Citizens living in Portugal. They’re not entirely sure. You know, they, after I think it’s five years or something, they kind of get to be permanently there or they get residency status and, and a better pace of life for them, as you said, you know, Europe tends to be more attractive as far as just the pace of life and not this rush, rush, rush, rush. Work, work, work, work all the time. And so they are enjoying themselves there. They can work remotely, they’re working less, but they’re working remotely and they’re in Portugal. So their question is, okay, now what do we do as far as our estate plan goes? What do we do? Well, they’re still a US Citizen.

Richard Taylor, Founder of Plan First Wealth:
[00:17:22 – 00:17:23]
Well, actually, Paula, quick question.

Paula Jones:
[00:17:23 – 00:17:24]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:17:24 – 00:17:26]
Should they have done something before they left?

Paula Jones:
[00:17:26 – 00:17:36]
Oh, of course, of course. The general rule in any kind of estate law is you should have done this a year ago.

Richard Taylor, Founder of Plan First Wealth:
[00:17:36 – 00:17:36]
Oh, really?

Paula Jones:
[00:17:36 – 00:18:47]
Just, you should have called me a year ago, whatever it is, you know, even just. And I do, I mean, I do get, I certainly get calls from people who are saying, you know, and I literally just got a call this week from someone who says, we may, you know, in thinking of the next five to ten years of our life, we want to slow down a little bit. Work wise. We want to be spending more time in, you know, in, in another country. And can you run the math on that for us to see what are our most viable options? So just a smattering of the issues that, that we want to think about. If they’re really changing their immigration status, is there going to be an exit tax for them? You know, if they were here on a green card, are they giving up the green card? Will they be deemed to have given up the green card? Even if they don’t want to, what do they need to do on an immigration standpoint? So I don’t do immigration, but I work with immigration attorneys. Like I said, change in immigration can be an estate planning technique. But we want to know from the immigration folks the latest and greatest information of what are our options there and what the consequences might be.

Richard Taylor, Founder of Plan First Wealth:
[00:18:47 – 00:18:49]
Do you get involved in the exit tax side of things?

Paula Jones:
[00:18:50 – 00:18:51]
Yes, absolutely. Sure.

Richard Taylor, Founder of Plan First Wealth:
[00:18:51 – 00:19:22]
Correct me if I’m wrong. I think this issue has the potential to be devastating because this is one that can be planned away. But if you unwittingly lose your green card, you know, you’ve left the country, you’ve thought, I’ll just keep it in case I want to go back, you haven’t spoken to someone like you or me who says, do not do that. And you go to the border and you. You voluntarily relinquish it, which you should never do either. I understand. When you come back in, you are deemed to have exited and the exit tax applies. A day before you. You gave up your green card.

Paula Jones:
[00:19:22 – 00:19:22]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:19:22 – 00:19:28]
They’re going to do a calculation that assumes you sold all your assets, even if you didn’t worldwide. They’re going to apply a phantom tax to that.

Paula Jones:
[00:19:28 – 00:19:29]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:19:29 – 00:19:32]
And you’re gonna get. Yeah, it’s gonna be a huge tax bill. But you haven’t actually sold any of this stuff.

Paula Jones:
[00:19:32 – 00:19:32]
Right.

Richard Taylor, Founder of Plan First Wealth:
[00:19:32 – 00:19:48]
Meanwhile, you’re resident in another country. If you have to sell these assets to pay this bill to the US or you come to sell them later on, you’re not going to get any relief. That phantom tax, as I understand it, you know, there’s no one in the treaty that gives you relief that for the exit tax. So you’re essentially going to get taxed twice without relief.

Paula Jones:
[00:19:49 – 00:20:22]
Yeah, the exit tax absolutely can be planned around, but you’re right. So I had a client that had been wanting to expatriate from the US To Canada, and then during COVID kind of got trapped in Canada. Right. Because of COVID had gone back to Canada, had always kept a home there, you know, and had kind of gone back and forth. Kind of got stuck in the. In the house in Canada because they literally were on lockdown for. In a different way than we were in the U.S. right. Like, they could not leave certain regions.

Richard Taylor, Founder of Plan First Wealth:
[00:20:22 – 00:20:23]
Oh, really?

Paula Jones:
[00:20:23 – 00:20:48]
Yeah. I had some clients in Ireland as well, where they said, like, we literally cannot leave our region. They won’t let us out. And so we are in lockdown here. These are just reports from. From what I’ve heard people say. And I kind of thought, wow, that really is different. You know, we say we’re in lockdown and that you shouldn’t go here or there, but there’s no one actually enforcing that here in the U.S. right. People were driving wherever they wanted to go, as usual.

Richard Taylor, Founder of Plan First Wealth:
[00:20:48 – 00:20:50]
But what a wild time.

Paula Jones:
[00:20:50 – 00:20:54]
Yes. It really was very strange. Very strange.

Richard Taylor, Founder of Plan First Wealth:
[00:20:54 – 00:20:56]
We’re still suffering the aftershock cyber.

Paula Jones:
[00:20:56 – 00:20:56]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:20:56 – 00:20:59]
All around us. Socially, politically.

Paula Jones:
[00:20:59 – 00:20:59]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:20:59 – 00:21:00]
Financially, it’s. It’s still.

Paula Jones:
[00:21:00 – 00:21:01]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:21:01 – 00:21:02]
Maybe for years.

Paula Jones:
[00:21:02 – 00:22:09]
So this Canadian person kind of got caught in Canada and had wanted to. To expatriate. Anyway, the green card was expiring over the time that they could not get back into the US and so they were wondering, am I going to be deemed to have abandoned my green card because I wasn’t back in the US when I should be and if so did my expatriation. And the, and the imposition of the exit tax happened to me right. Without me being able to do anything about it. And so we were planning around this, the sex attack. And this was a client who called two years in advance and said, yeah, I’m, you know, I’m, I want to do this. And had started to put things in place. It all turned out fine. But who would have thought that, you know, this person was actually caught in something where, where they were like physically unable to move from where they were to get back to the United States to renew the green card, you know, so that they could, you know, expatriate exactly when they wanted to after all the planning had been done.

Richard Taylor, Founder of Plan First Wealth:
[00:22:10 – 00:22:17]
So, you know, people don’t think about these things, but that’s one, I mean no one could have foreseen that. But you could be in an accident.

Paula Jones:
[00:22:17 – 00:22:17]
Yeah, right.

Richard Taylor, Founder of Plan First Wealth:
[00:22:18 – 00:22:22]
You could get detained overseas for some reason. You know, who knows? There’s any number of things that could happen.

Paula Jones:
[00:22:22 – 00:24:53]
There’s nervousness now because we have a president who likes to do travel bans from various countries. And you know, we saw it the last time where people got trapped outside and kind of couldn’t make it back. That is can be a very anxiety provoking situation for, for people to be in. So pre planning is good. You never really know, you know, how things are going to wind up. So if someone says, okay, yes, I really do want to go and live in Spain or wherever, they need to take a look at an exit tax and see does this apply? If it does, you know, leave enough time to put the planning in place so that that exit tax does not get triggered. And then once they’re overseas, if you remain a U.S. citizen, that federal estate tax, transferring assets around, things like that, they still apply. So I have clients who, American through and through. Everything has always been American, all the assets, everything. They are both of Italian descent. They love Italy. Who doesn’t love Italy? They have now purchased an apartment in Rome. They love spending more time in Rome. This is, you know, they’re in their late 50s. They’re sort of getting to like, ooh, you know, we spent the entire month of August there. We are just loving it, you know, it’s great. And so now their question is, should we? Italy is offering a flat tax program and I think it’s something like, don’t quote me on it, but something like $200,000 flat tax. These are high, you know, high earners. And so it would be a big savings for them. So they’re asking, should we change our residence to Italy and not be resident in the United States anymore? They’re not giving up the citizenship, they’re just changing the residency. So the question is, we know for estate tax purposes what their life is going to look like as US Citizens. Our question is, we get on with Italian council and we say, tell us what the ramifications are for Italian residents in relation to income, estate, transferring assets around, and then we have to coordinate those two things. You know, so right now, before they’ve made the move while they’re still in us, they absolutely need a separate Italian will for that Rome apartment. And so we’re working with Italian council to do that. We are making sure that the U.S. estate plan recognizes that there is a second will out there in Italy that only governs the Rome apartment and that everything else is governed by the US estate plan. So we coordinate those things. That’s the cross border piece of that.

Richard Taylor, Founder of Plan First Wealth:
[00:24:53 – 00:25:18]
Just to explain to everyone why that’s so important is because it is a standard feature, if I understand it, of wills that they open by revoking all previous wills. Right. And Correct. It’s so easy. I mean, I guess you see this all the time. It’s so easy for someone has a property in the uk, say, orally, say, oh, I’ve got my UK lawyer does that, and the UK lawyer just drafted the general out the box will and it revokes all of the wills and you’ve just unwittingly revoked your U.S. estate plan.

Paula Jones:
[00:25:18 – 00:26:56]
That’s right, that’s right. So, so I say that to clients all the time because they say that, oh, we’ll just go to the, the same attorney who helped us buy the Rome apartment. Yeah. And I go, hang on, you know, and before they sign that will, I need to look at it. And before they sign the US will, the Italian attorney needs to look at it. Is there any kind of provision in there that goes against the law in the other country? So I just worked with a Danish US connection living in Denmark, but one US citizen and one non US citizen and spoke to Danish counsel there who was really good at kind of explaining all the different features. One of the things that came out of it was she said, paula, you can’t give an executor discretion over certain things. You can’t do that in Denmark. Like, you just have to be very clear about what they can do and what they can’t do. Because if they’re seen as having too much discretion and I’m not sure exactly what the comparable explanation of that was. So I had to update certain provisions in the US Will to take away the discretion. Where we’re all about discretion here, you know, we’re all about it and saying, well, you know, pick the right person and they’ll make the right decision. And it depends on the circumstances and the time frame and all that. You we’re like a little bit more loosey goosey when it comes to things like that. Who would have thought, you know, I know what I don’t know and I don’t know what those little details are in Denmark that say we can’t have that in a will. Otherwise there will be an effect here under Danish law, you know, a negative effect under here.

Richard Taylor, Founder of Plan First Wealth:
[00:26:56 – 00:26:59]
This is the thing in cross border, you just can’t know.

Paula Jones:
[00:26:59 – 00:26:59]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:26:59 – 00:27:20]
Even close to everything. And like as cross border professionals we know a lot more than most. But even then there’s just. That’s why you need. It’s a team effort. It’s always a team effort. Back to the Italian couple. So they’re thinking of moving abroad. They’ve first thing is get Italian will set up what next.

Paula Jones:
[00:27:20 – 00:30:47]
So what we do is we would reach out to Italian council and say, okay, if they are going to be resident there, ideally, right. We’re doing this all ahead, which these clients really are doing it ahead. So, so kudos to them. So we say to Italian council, okay, if they become resident there and they are under your program, which is the flat tax, what are the effects for the assets in Italy, the assets outside of Italy, what if they were to move their investment, their US investment account into Italy, for instance, what would that do? How are there qualified retirement plans in the US that you can’t move? Right. That are. They are where they are. I mean they are organized under a provision of the Internal Revenue Code. They must be handled in a very certain way. They’re custodian, you know, must be a financial institution, all of that. So they’re going to stay right where they are. How does Italy view that? So does Italy say for instance, okay, we only for. For their, any kind of inheritance or any kind of estate or even capital gain purposes, do they only tax assets that are within their borders that are considered Italian assets? Do they go beyond those borders? If an asset is coming from the US into Italy, let’s say they take that investment account and they move it into Italy. Is there a trigger of any kind when they do that in the U.S. so this concept of an exit tax is not just for individuals, it can be for assets as well. Hey, you’re taking your asset and it’s going past our border so that this country can no longer tax it, because we have no basis on which to tax it. Well, at the border, guess what? We’re going to tax it. You know, so this concept of an exit tax shows up in a lot of different places. So these are all the questions we’re going to ask Italian council to say, tell us what it looks like from the Italian side, we’ll tell you what it looks like from a US Side. And then we’ll figure out the best way to do this so that things don’t get triggered all over the place. So we’re probably going to have an Italian will. Maybe while they’re not resident, it’s going to stick to that Rome apartment only. However, once they become resident now the Italian will might be taking the lead instead because maybe all residents need to have a will governing all of the assets there. It’s a question we have to ask. So it was either Spain or Portugal, and I don’t remember which one, but one set of clients that I worked with again called up, these were US Citizens living in a, in a, in another country called that council. And that council said, oh, we bring everything into our inheritance tax, not just within our borders, but everything. So we would actually take US Assets and tax those as well. That surprised me because the US Is the only one really with the reputation that does that. And yet once in a while, that concept shows up other places. I’m glad I asked. Right. I would not be doing my job if I didn’t. And so that will, that plan in the other country was the one that was really taking the lead. I’m used to the US Plan taking the lead simply because we just go, you know, smoking past our borders and tax everything and include everything, you know. So that’s generally what I’m used to. Once in a while you bump up into a place that goes, no, no, no, they’re resident here. We’re taxing everything that they own.

Richard Taylor, Founder of Plan First Wealth:
[00:30:47 – 00:30:55]
The sign couple, high earning, obviously thoughtful and conscientious. Because they’re doing this in advance, I’m guessing, therefore they have an existing US Estate plan.

Paula Jones:
[00:30:55 – 00:30:56]
Yes, sure.

Richard Taylor, Founder of Plan First Wealth:
[00:30:57 – 00:31:12]
And maybe they do, maybe they don’t. But certainly a lot of US People that incorporates trusts, especially living trusts. Yeah. And I know if you have trusts in place or you think you’re having trust in. But how do, how do American trusts interact with European countries?

Paula Jones:
[00:31:13 – 00:33:33]
That’s a great question. So the answer is sometimes they interact just fine, but many, many times they don’t interact well at all. So one of the most important questions we have when doing any estate plan for someone with a non US component to it. Look, it could even be US Citizens, US Residents. They have a kid who moved to Germany, you know, and is living in Germany. Right. So it’s not even them. It’s one of their future beneficiaries that has a non US component. The question is, so I’m going to call them a plain vanilla US couple. Right. If they come in, we’re doing a US estate plan. Sure. We love our trusts here. They’re very effective. They are tax planning, you know, mechanisms to them. They are asset protection. If you want to make sure that your child’s future ex spouse never gets a hold of your money, a trust can make sure that that happens. We use them all over the place and for various reasons, they avoid probate. You know, they can protect beneficiaries from themselves. They can make sure that any government benefits or whatever are maintained and that the beneficiary is not rendered ineligible for said benefits. These are all different kinds of trusts that I’m describing. Okay, so plain vanilla US couple comes in, let’s say their daughter lives in Germany. Well, what would happen if we just looked at the US issues and we said, oh, you know, high net worth individuals, when both of you are gone, you’re going to leave everything in a trust for the benefit of your daughter. All kinds of wonderful benefits. As to what this kind of a trust does, they listen to all that they say, great, sign us up. Definitely, you know, put that in our estate plan Problem. And what’s the problem? Germany imposes an inheritance tax on literally an inheritance by someone living in Germany who receives an inheritance from someone. Germany steps in and says, thank you very much, we will take X percent of that. Okay, here’s what makes it worse. Germany doesn’t really recognize trusts. They have something called a usufruct, but they do not really recognize trusts. Okay. So you can wind up losing no lie between 50 and 70% in German taxation.

Richard Taylor, Founder of Plan First Wealth:
[00:33:34 – 00:33:35]
Wait, just German?

Paula Jones:
[00:33:35 – 00:33:39]
Just German. Just German, Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:33:39 – 00:33:39]
Wow.

Paula Jones:
[00:33:39 – 00:34:02]
So if I were to do that for that couple and never, you know, consult German council and I set up a trust and you know, mom and dad pass away and everything goes entrusted daughter resident in Germany, she can lose between depending between 50 and 70% of that trust, it goes away to Germany in the form of tax.

Richard Taylor, Founder of Plan First Wealth:
[00:34:03 – 00:34:41]
This is going to happen so much because more and more kids are moving abroad. It’s less of an issue now with these changes in the uk, but living trusts were a massive problem for Brits. And I can’t tell you the amount of clients who had living trust when they shouldn’t have had living trust, because they walk past a regular state managers attorney’s office and they just throw a living trust at you. It’s just Estate Planning 101. That is. Oh, wow, you need to put that on a billboard somewhere and just like New York or something. Just because that is gonna. Oh, that’s awful. That happens. So this is not just if people are looking to move away. This is. You’ve got anyone connected to your estate plan outside the US And I agree with you.

Paula Jones:
[00:34:41 – 00:36:06]
I would say sort of a new trend also is. So maybe mom and dad aren’t making the move, you know, to Europe, but son and daughter certainly are in a way that previous generations have not. You know, so. So these, you know, mom and dad are now having grandchildren being born abroad who may not be US people, but they’re in another country. Absolutely. This concept of trust really is. It is absolutely us. I mean, when I go to that conference and I’m standing around with attorneys from 40 other countries, they always say, you, you, us people, you love your trust. I go, we do, we do. You know, because there’s all kinds of wonderful benefits for them, you know, but the taxation, I’m going to say Netherlands, same thing. Very, very high taxation on trusts. They, they don’t really. They’ll kind of look through them, but they’ll actually sort of penalize you. If you’re resident in France, you should not be beneficiary of a US trust. You know, that’s another one. Resident in France. You can be a French citizen, but don’t be resident in France. And, you know, I have a client who the children are French citizens. They are all living in Florida right now. And we went ahead and did things on the understanding that they had no plans of being resident in France. They were kind of born and raised in the U.S. you know, they’re not interested in moving to France. But if they change their mind because life changes, we cannot have their trusts, you know, for them, if they’re resident in France.

Richard Taylor, Founder of Plan First Wealth:
[00:36:07 – 00:36:11]
If you have an estate plan and there are trusts, you. You might have to unwind them before you leave.

Paula Jones:
[00:36:12 – 00:37:06]
Yes. So a lot of people are having the estate plan and the trusts are under them, meaning that they’re not necessarily created yet. Right. So if someone has a will or or even a revocable trust. And it says, you know, at my death, do this. And then, you know, at the surviving spouse’s death, that’s when the. The trusts are created. If that’s what you have, then you just need to update your estate plan. Right. Because those trusts for the children or. Or whoever else are not actually in existence yet. The plan to set them up is there, but they’re, however. Yes. We also have clients who they already have. They’ve created a standalone trust. They’ve funded it during their lifetime as part of their estate planning. They’ve made gifts, whether it’s to a spouse in some form or to children. And then a big area of practice is either moving trusts, domestication of trusts, or unwinding of trusts before someone gets to a new jurisdiction.

Richard Taylor, Founder of Plan First Wealth:
[00:37:07 – 00:37:14]
And I’m right in thinking if you, if you don’t do this, if you wake up in one of these countries and you listen to podcasts, you think, oh, crikey, I should have. I’ll find out.

Paula Jones:
[00:37:14 – 00:37:15]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:37:15 – 00:37:20]
You unwinding it as an already resident in this other country, that can have. Presumably that can have consequences.

Paula Jones:
[00:37:20 – 00:38:00]
It can have consequences, yes. But you’re still going to do it. You know, you’re still going to say, all right, I’ve got this trust, I’ve got a resident in another country. What do I do about this? I need to fix it. Yeah. And it could be, you know, unwinding a trust. Sometimes under US Law, you can’t unwind a trust. Right. It’s irrevocable. That was kind of the whole point, you know, of the plan was that you gave something away into a trust entity that no one has control over because it’s the trust. So then you. You’ve got to look at your options. It really depends on what other country are you dealing with at that point. You know, how. How can you minimize the tax in that country? How can you work around it? You know, can you undo it in some way?

Richard Taylor, Founder of Plan First Wealth:
[00:38:00 – 00:38:15]
Could that lead to a situation where, let’s say, someone has an irrevocable trust and they’ve got their heart set on country A? Could it be they have a meeting with you before and you say, look, you can do that, but you just need to know this trust is going to be punitively taxed here. Have you considered country B or country C?

Paula Jones:
[00:38:15 – 00:39:43]
Yes, absolutely. So there’s a reason why there’s lots of trust companies in a lot of what we used to call offshore jurisdictions here in the US but there are jurisdictions throughout the world that their Whole. One of their main sources of revenue is serving as a jurisdiction where people can put their money in trust. Okay, so, you know, like the Caymans or Bahamas or something like that. A lot of it tends to be smaller islands because their. Their revenue is tourism, and they needed something other than tourism, you know, and so they got into the financial services industry, and it. It has been very successful for them. Other states, smaller states, without too. Too much else going on revenue wise, have also got into it. Small state of Delaware, although they always had a good corporate business going. South Dakota, Wyoming, Nevada, you know those things. They are trying to bring money to those jurisdictions to say, well, we have certain trust laws that are kind of very friendly. So let’s talk about the non US Jurisdiction, obviously, because. Because we’re talking on a global scale. But it could be that someone says, okay, look, I’ve got beneficiaries in France. I do. I still want to set up a trust for them. Right. There’s all these reasons to do it, and I just don’t want to give things out. Right. Where else can I put the money? And you might go jurisdiction shopping outside the U.S. yeah, absolutely. Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:39:44 – 00:39:50]
I never occurred to me that an American would intentionally set up a offshore course. Yeah, I don’t know why it never occurred to me.

Paula Jones:
[00:39:50 – 00:40:57]
But yeah, yeah. So you could say, you know, I’m gonna put my. And I’m using these jurisdictions as purely as examples. I’m not saying this is a solution for a French resident, but we would look at that and we would go, okay, US Creator, let’s go to the Channel Islands. Let’s go to Jersey or Guernsey, whatever. These are jurisdictions that specialize in this business. What if I were to set up a trust in Jersey and put the money there? What would the effect be on my French resident? Right. Not a US Trust, but we’re putting it there. What about a Lichtenstein Foundation? Right. So there’s other jurisdictions that they call it foundation here. When we hear foundation, we think it’s a charitable foundation, but that’s not what that means. So Lichtenstein Foundation, Panamanian foundation, these are very similar structures to trusts. They kind of look like a trust and act like a trust, but they’re called foundation in their particular jurisdiction. They serve a lot of the same purposes, and they could be friendlier to the beneficiaries who are living in other countries in Europe that. That would otherwise, like, tax the heck out of them.

Richard Taylor, Founder of Plan First Wealth:
[00:40:57 – 00:41:01]
Is there anything else that you think people should be thinking of, should do in advance?

Paula Jones:
[00:41:01 – 00:42:49]
Let’s say that someone kind of winds up living outside the U.S. they’re not a U.S. resident, they’re not a U.S. citizen. One of the big differences of those people is that if they own any US Citus property, and this includes stock in a US Corporation. So let’s say they sold the house, right? They got rid of the US House, everything. But they, you know, they left their retirement plan because they don’t really have a choice. You know, it kind of has to stay where it is, and they’re not going to withdraw from it. Let’s say they keep their investment account because it’s been doing really well, and in there they have their 100 shares of Disney Corporation. Right? Stock in a US corporation. What a lot of people don’t realize is that when you are a non US Resident, non citizen, you don’t have that huge exemption amount for the federal estate tax. You only have a $60,000 exemption amount, which has been on the books for probably 50 years. It is not indexed for inflation. That number does not change each year. It probably when it was first put on the books, 60,000 was a big number. It’s not now. A lot of what we’re seeing is people die. They are owning US Citus property that is subject to US Federal estate tax, and they have no idea until they try to get, you know, transfer the assets out of that investment account in the US and put it. The beneficiaries try to get it into their own accounts. And that financial institution says, not so fast. You owe federal estate tax on this, and we need a federal transfer certificate. The thing that says that we’re all clear for tax purposes before we let you have access to these funds, you.

Richard Taylor, Founder of Plan First Wealth:
[00:42:49 – 00:42:52]
Can lose 40% of it over $60,000.

Paula Jones:
[00:42:52 – 00:42:53]
40%, that’s right.

Richard Taylor, Founder of Plan First Wealth:
[00:42:53 – 00:43:14]
Paula, this is, this is a big deal because there’s, like, armies of advisors at the White Houses right now who are trying to recruit clients to invest in the US Saying it’s like, it’s more safe, more secure, which it is. Cheaper, more safe, more secure, more options. Yes, yes, yes, yes, yes. Yeah, but I bet you they’re not saying, oh, yeah, by the way, if you die while this money’s here, you can wave goodbye to 40% of it.

Paula Jones:
[00:43:14 – 00:44:58]
That’s right. And I speak to a lot of financial planners on exactly this topic just to wave the flag and be like, again, you can still have your US Investments because they are good. We have a lot of people all over the world that they want to diversify, you know, their funds. And one of the ways People diversify is by investing in different countries, having different investment accounts in different countries of different companies, you know, all good. And that is increasing. Right? That’s just as time goes on, more and more and more and more people are going to do that. But here’s what you need to know. If you have US CITUS property, you only have a 60,000 exemption amount as a non US person. Can planning be done? Absolutely. So right now, this week I’m working with two Australians. They were living in the US for a while, enough to set up a 401k plan through their employer and an investment account and they worked for US companies and they received stock from those companies which they want to hang on to. They worked for the companies. It’s a good investment, they know it, they don’t want to get rid of it. I understand that. They don’t have to, but we need to do some planning because they’re no longer US people and they are going to be subject to federal estate tax if they are still holding those in their own name at the time of their death. Fortunately they’re young. We always check treaty provisions and it just so happens that Australia, there’s a good, a very helpful treaty position but there’s very few treaties out there for this. But if they were someplace else we would be looking at are we setting up an entity of some kind and moving that stock into that entity? They can still keep the investment. There are solutions.

Richard Taylor, Founder of Plan First Wealth:
[00:44:58 – 00:45:06]
Yeah, okay, okay, yeah, because like treaties, there’s loads of income tax treaties but if we’re looking at estate, there’s a fracture, there’s like 18 or something, am I right?

Paula Jones:
[00:45:06 – 00:45:24]
I think there’s 16 in force right now. Yes, 16. And sometimes they sort of give us something different and sometimes they don’t. Australia actually does. There’s some good guineas in there. There’s some good stuff in the German one. Very kind of generous. As far as affording, you know, exemptions amount to non US people or whatever. It’s in the treaty. That’s great.

Richard Taylor, Founder of Plan First Wealth:
[00:45:24 – 00:45:25]
Just don’t do a trust.

Paula Jones:
[00:45:25 – 00:45:28]
Just don’t do a trust. Yeah, no trusts.

Richard Taylor, Founder of Plan First Wealth:
[00:45:32 – 00:45:45]
Paul is using. Great. I think the message here is just don’t do this on your own. Don’t do this with a professional who isn’t in the cross border space because there’s just so much to know and planning is critical.

Paula Jones:
[00:45:45 – 00:45:46]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:45:47 – 00:46:00]
Avoid the landmines, don’t detonate them in the first place. But if you, if you do step on one, extricate yourself. You need a good team around you, you need A good cross border financial tax and estate. And you need them to be communicating.

Paula Jones:
[00:46:00 – 00:46:40]
Yes, yes. Always. Always is that we’re going to bring in when a client comes to me, do they have a good accountant who understands the international. Do they have a financial planner? If they have one who understands the cross border, the immigration attorney. You know, for me, that’s part of the team. We need to know if we’re shifting that around, what are we actually doing, what’s the landscape? Because that changes all the time, you know. Yeah, we absolutely want to weigh in with everyone and say, what are the consequences of anything? It’s a little bit like a Rubik’s cube. Right. If you move one part of the Rubik’s Cube, it moves other things and you need to have those other advisors around to say, what am I moving here?

Richard Taylor, Founder of Plan First Wealth:
[00:46:40 – 00:46:49]
You know, that’s a great analogy. It’s just like that. That’s exactly what it’s like. Yeah, I’m going to use that. It’s been great. Thank you. Thanks so much, Paula. Thank you. Where can people find you?

Paula Jones:
[00:46:49 – 00:47:27]
People can find me. My website is jonesestategroup.com you can email me. Email is the best way to get a hold of me, Paula. Jonesestategroup.com and yeah, just shoot me an email if you need some help or whatever. I’m happy to work with people and if I can’t work with people, I am tapped into a very good network. So I can certainly hand off people if they’re not in a jurisdiction that I work with or if they need, you know, I just had a client ask me, give me a good accountant who knows cross border stuff and I gave out a name there. So. So if we’re in the network, you know, we’ll find the right people.

Richard Taylor, Founder of Plan First Wealth:
[00:47:28 – 00:47:32]
I think that’s one of our most valuable, valuable resources now is our networks.

Paula Jones:
[00:47:32 – 00:47:33]
Yes.

Richard Taylor, Founder of Plan First Wealth:
[00:47:33 – 00:47:37]
Because you and I plug the Venn diagram of our network overlaps somewhat.

Paula Jones:
[00:47:37 – 00:47:37]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:47:37 – 00:47:44]
And the more I do, the longer I do this, the more I value those relationships and just knowing these people and having access to them, it’s invaluable.

Paula Jones:
[00:47:44 – 00:47:45]
Yeah.

Richard Taylor, Founder of Plan First Wealth:
[00:47:45 – 00:47:47]
Paula, thank you so much for being on Move to Europe.

Paula Jones:
[00:47:47 – 00:47:48]
Thank you so much.

Richard Taylor, Founder of Plan First Wealth:
[00:47:49 – 00:47:50]
See you soon. All right.