Holdings in offshore mutual funds and foreign private investment companies are often not suitable for U.S. persons, as they will attract the potential application of the U.S. Controlled Foreign Corporation (CFC) and Passive Foreign Investment Company (PFIC) rules.
The tax consequences and considerations are different for settlors and beneficiaries of foreign grantor trusts. Understanding these differences is critical to protecting assets both in the present and for future generations.
If worldwide assets are expected to exceed the $11.18 million gift and estate tax exemption afforded to U.S. citizens and permanent residents, outright gifts can be made prior to immigrating in order to reduce the overall taxable estate.
It may be beneficial to try to accelerate the recognition of income before immigration (or hold off on realizing losses until the emigrant becomes a U.S. taxpayer). This will depend on whether the tax rates in the home country are lower than those in the U.S.
Whether it is a traditional whole-life policy or a private placement life insurance policy (PPLI), insurance can enjoy the benefits of tax-free growth and distributions if properly titled and funded.
1 As of 2015.“Frequently Requested Statistics on Immigrants and Immigration in the United States", Migration Policy Institute, www.migrationpolicy.org
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