New Pre-Immigration Planning Guide for EB-5 Investors and Other Wealthy Immigrants

New Pre-Immigration Planning Guide for EB-5 Investors and Other Wealthy Immigrants

2018/07/07 1:23pm

The recent influx of high-net-worth individuals immigrating to the United States affirms that pre-immigration tax planning is an important move for prospective wealthy immigrants, who ultimately become subject to U.S. tax law upon entry.

Jacob Stein from Aliant Law has recently written a 2nd edition of his book Asset Protection for California Residents. This book is typically a must read for any Californian who has assets that he wants to keep. Jacob’s real-life experience as an asset protection attorney goes far beyond just helping California residents.

Heightened tension surrounding the state of U.S immigration may be making national headlines, but high-net-worth individuals immigrating to the United States face a unique challenge. The U.S. uses a citizen-based tax system, and residence-based tax system. A citizen-based tax system taxes all income earned by a citizen, in the U.S. or outside the U.S. The residence-based system taxes worldwide income of those individuals who are residents in the U.S. In addition, the U.S. imposes a 40% estate tax on worldwide property. This comes as a shock to foreign investors immigrating to the U.S.

For a wealthy foreigner moving to the United States, failure to consider the impact of residency on an individual’s taxes could be disastrous. At Aliant Law, our California based wealth management, tax management, asset protection and immigration oriented law firm can help people take the appropriate preemptive measures that can also yield insight into what to expect.

For EB-5 investors, careful, advanced planning can help avoid certain U.S. tax rules that apply to regular U.S. taxpayers. This can be done in a variety of ways within the law, including shifting assets into new legal entities, accelerating income, and funding foreign trusts.

Prior to the resident start date, an individual should aim to recognize capital gains and step-up basis, accelerate his or her income, defer deductible expenses, and transfer his or her assets to foreign trusts. Starting with these objectives can ensure that EB-5 investors and other wealthy immigrants are able to minimize the U.S. income and estate tax.