IMAGE © ASHLEY KINGSTON
Love and Marriage go together like ...financial considerations for a bi-national couple
s an American living in the UK, almost nothing related to your financial affairs is easy. The consequences of seemingly simple decisions - such as how to pay for a new home or purchase a mutual fund - may create unnecessary tax charges and complexities. There are a number of key milestones that occur, from the time you arrive in the UK to the time you potentially approach and eventually reach retirement. Many of these changes will impact the appropriate wealth management strategies for American expats. Understanding how rules will change for you over time will allow you to plan ahead and make prudent financial decisions. In this edition we will address some of the important financial considerations that a US person should be aware of when their spouse is a non-US citizen.
14 September - October 2015
There can be some great planning advantages in the case of a bi-national couple. Opportunities often abound for example in choosing to own certain assets in either spouse name to optimise the tax implications for either US or UK purposes. For instance, the non-US spouse could take advantage of some of the UK tax-advantaged accounts and asset ownership structures in the UK that are generally not beneficial for a US person, whilst the US spouse could focus on utilising US tax-efficient vehicles. In order to take advantage of some of those planning opportunities, one must also be aware of how the US gift and estate tax rules work. The US imposes a tax on transfers of property both during a person’s life and at death. A US person has a current lifetime allowance of $5.43 million before being
By Andrea Solana subject to estate or gift tax. Gifts given during one’s lifetime above the annual allowance will reduce an individual’s lifetime allowance. Where a married couple are both US citizens they have the ability to pass assets freely between them without any implications. This is called the unlimited marital deduction. However when one spouse is not a US citizen, the unlimited marital deduction does not apply. During one’s lifetime, gifts to a nonUS citizen spouse carries a current annual exclusion of $147,000 before reducing the lifetime allowance. By taking advantage of the annual exclusion, one could gradually transfer wealth out of the US and, given a particular set of facts and circumstances, look at ways to optimise the structure of the family
Published on Aug 25, 2015
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