Transcript www.asglife.com

Estate Planning for Foreign
Nationals–A World of Opportunity
OLA 2026 0314
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Key Trends
Glocalization
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Why Consider
the Foreign National Market?
• Large, growing population
• Foreign Nationals face unique
U.S. planning challenges
• Significant need for
information on strategies
and planning
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Where are Foreign Nationals?
Seattle
Boston
Minneapolis
Philadelphia
Sacramento
Denver
Las Vegas
Los Angeles
New York
Detroit
Washington, DC
Colorado Springs
Phoenix
Atlanta
Dallas – Fort Worth
Orlando
Tampa
Houston
West Palm
Beach
Sarasota
Miami
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Understanding Needs
Foreign Nationals fall into
two categories:
• Resident Aliens
• Non-Resident Aliens
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Resident Aliens
• Foreign National with permanent U.S. home
• Worldwide assets subject
to U.S. estate and gift tax
• Denied certain tax
advantages available
to U.S. citizens
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Non-Resident Aliens
• Foreign National with permanent home
in another country
• Only U.S. assets subject
to U.S. estate
and gift tax
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Residency Factors
• What is your
immigration status?
• Where do you spend
most of your time?
• Where do you consider
home to be?
• Do you own a home
in the United States?
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Planning Issues
• Resident Aliens
with significant
worldwide assets
• Non-Resident Aliens
with U.S.-based assets
• Married couples
with a Foreign
National spouse
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U.S. Estate Tax Comparison
Resident Alien
(RA)
Non-Resident Alien
(NRA)
Lifetime estate
tax exemption
$5,340,000
$60,000
Estate tax rate
40% top tax rate
40% top tax rate
Only if inherited
assets are transferred
to QDOT
Only if inherited
assets are transferred
to QDOT
All worldwide assets
U.S. properties,
including most
intangible properties*
Unlimited
marital deduction
Assets subject
to U.S. estate taxes
*Intangible property includes stock in a U.S. corporation and interest in a U.S. partnership
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Resident Aliens
Worldwide assets subject to U.S. estate tax
• Property in the United States
• Property outside the United States
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What they don’t know…
A survey of immigrants to the U.S. with
a net worth of $10 million or more found:
Survey Question Asked
% Who
Answered Yes
Before emigrating to the U.S. those who sought advice
as to the consequences of acquiring a U.S. residency for
U.S. gift and estate taxes
34.5%
Obtained advice for making gifts of non-U.S. property
prior to coming to the U.S.
10.9%
After emigrating to the U.S., those who sought tax advice
49.6%
Of the above group, those who sought advice on U.S.
estate planning that could minimize estate taxes
6.8%
Source: “Clueless,” Trusts and Estates, December 2003
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Why Is Planning Important?
Meet Carlos, a Peruvian national,
U.S. resident
• $15 million in U.S. assets
• $20 million in Peruvian assets
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Estate Erosion
Gross Estate
$35,000,000
Estate Tax
$11,845,800
Net Estate
$23,154,200
Estate Shrinkage
33.85%
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Solution: Trust owned life insurance
• Create irrevocable life insurance trust
• Trust provides liquidity for estate taxes and
other needs
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Non-Residents
Purchasing U.S. Real Estate
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What They Don’t Know
Resident Alien
Non-Resident Alien
$5.34M
$60,000
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Why Planning Is Important
Niran
• Thai resident and national
• Purchased ski getaway
in Colorado
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U.S. Estate Tax Exposure
$3M
home in Telluride, CO
$1.1M
estate tax liability in 2014
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Nonresident Aliens
U.S. Gift and Estate Situs Rules
Type of
property transferred
Subject to
U.S. Gift tax
Subject to
U.S. Estate tax
Real property located in U.S.
Yes
Yes
U.S. tangible personal property
(i.e., cash, jewelry, paintings, automobiles)
Yes
Yes
U.S. intangible personal property
(i.e., stocks in U.S. corp., interest
in U.S. partnership)
No
Yes
Ownership interest in a U.S. life
insurance policy on oneself
No*
No
*A gift of a life insurance policy on oneself may be subject to the IRC §2035 look back rule, and therefore may be subject to estate taxes if included
within the decedent’s estate.
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Estate Erosion
Death in 2014
Tentative Tax
Less Credit
($1,145,800)
$13,000
Net Taxes
($1,132,800)
Net U.S. Assets
$1,867,200
Estate Erosion = 38%
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Alternative 1
Intangible
Property
Tangible Property
Gift to Heirs
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Alternative 2
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Alternative 2
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Alternative 2
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Alternative 2
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Alternative 3
Life Insurance
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Married Couple with Foreign National
No unlimited marital
estate deduction
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Love knows no boundaries
ENGLAND / 33,877
GERMANY / 92,997
CANADA / 69,887
CHINA / 29,532
JAPAN / 28,964
ITALY / 19,080
CUBA / 14,430
SPAIN / 12,653
KOREA / 39,846
VIETNAM / 20,951
INDIA / 35,092
THAILAND / 13,368
PUERTO RICO / 54,551
PHILIPPINES / 74,180
MEXICO / 390,950
TOP COUNTRIES FOR CROSS-BORDER MARRIAGES TO A U.S. CITIZEN
(TOTAL NUMBER OF COUPLES IN 2010)
Source: "Legal Hassles of Global Love Affairs” Wall Street Journal, Summer 2013
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The Issue
U.S. Citizen
Foreign National
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The Issue
No Deduction
U.S. Citizen
Foreign National
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The Issue
U.S. Citizen
Foreign National
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The Issue
Unlimited Marital
Deduction
U.S. Citizen
Foreign National
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Why Planning Is Important
• Mark, a U.S. citizen
• Anna, a Philippine citizen
and U.S. Resident Alien
• $15 million net worth
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Alternative One: QDOT
Mark
U.S. Citizen
Anna
Philippine Citizen
Resident Alien
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Unlimited Marital
Deduction
QDOT
• No immediate estate taxation
• Assets “stuck” in U.S.
• Distributions limited to income and hardship
OR immediate estate taxation
• Need U.S. trustee, may require bond
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Alternative Two: Life Insurance
Mark
U.S. Citizen
Anna
Philippine Citizen
Resident Alien
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Legacy Trust with
Life Insurance
Why Plan for Foreign Nationals?
• Large, growing demographic
• Special financial planning needs
• Resident Aliens–
worldwide estate
• Non-resident Aliens–
U.S. estate
• No unlimited marital
estate deduction
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Life Insurance
• A simple solution
• Internationally competitive
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Next Steps
• Review your book
of business
• Reach out to contacts
that match the client profile
• Strengthen and build
your referral network
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Look at your existing business
• Immigrant clients?
• Clients with
immigrant spouses?
• Develop a
champion client
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Look at your neighborhood
•
•
•
•
•
Nearby colleges/universities?
Nearby hospitals?
Nearby military bases?
Talk to realty firms for leads
Align with immigration and/or
international tax attorneys and real estate
agents catering to foreign national home sales
• Network with ethnic business associations
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Why Transamerica?
• Dedicated international underwriting team
•
Established in 1998 – deep understanding of landscape
• Access to experts & marketing materials:
•
•
Attorneys and Certified Financial Planners providing
consultative support and case design
Chinese and Spanish language materials
• Foreign Nationals Connection:
•
•
Hub for information, sales ideas, and materials & forms
Viewable across mobile, tablet, laptop, and desktop
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Why Transamerica?
• iPad App
• Clear and engaging animations
• Expand market
• No product limitations
• Guaranteed products available
• Very competitive premiums
• Close more business
• Best underwriting risk class
generally available
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Transamerica’s Available Resources
Marketing Tools
Foreign
Nationals Team
Support
Dedicated International
Underwriting Team
iPad App
Foreign National Connection
web site
Contact
Advanced Marketing
(877) 238-6758
[email protected]
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This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal
Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or
concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should
consult with and rely solely on their own independent advisors regarding their particular situation and the concepts
presented here.
Transamerica Life Insurance Company (“Transamerica”) and its representatives do not give tax or legal advice. This
material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and
other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding
their particular situation and the concepts presented here.
Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax
laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no
guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not
consider the impact of applicable state or foreign laws and regulations or income or estate tax treaties between the U.S.
and other countries upon clients and prospects. Clients should consult with and rely on their own legal and/or tax
advisor to determine the consequences, if any, of owning or receiving proceeds from a Transamerica policy.
Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or
implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information
is current as of March 2014.
OLA 2026 0314
For producer use only. Not for distribution to the public.