Find out how to develop a coherent mobility strategy for your family, the challenges you may face along the way, and why you should think beyond a second passport.
Flying overseas. Visiting family on other continents. Taking care of business, or getting medical care when you need it. Once, these were considered everyday affairs. Now, thanks to 2020, they seem sheer luxuries.
The current pandemic, combined with growing political interventions, has made our individual mobility more limited and uncertain.
Pre-pandemic, discussions around residency, citizenship, jurisdictional risk and mobility revolved around topics like fiscal arrangements, real estate prices, plus the cost (and availability) of visas.
Now, the pandemic has made it clearer than ever: the issue of mobility affects a much broader range of topics. And, more importantly, those topics are inextricably tied up with the lives and safety of our families.
So, then: how can you live in peace and safety, while maintaining your international mobility and protecting your wealth, businesses, and wellbeing?
The question can feel an overwhelming one – particularly in a complex, fast-changing political, legal and economic landscape.
To help answer this question, we held a roundtable discussion with three of our experts:
Together, they hold decades of experience on wealth planning and international mobility.
"Your first step should be to ask: where do I want to live, do business, and spend my time?"
Stefan Liniger, Chief Executive at Kaiser Partner Wealth Advisors
How did 2020 change the way we look at mobility and residency?
Philip Marcovici: The exceptional circumstances of last year revealed how quickly your ability to travel can change. And how easily we can find ourselves ‘trapped’ in the wrong place.
No one really anticipated the pandemic, of course, but it shows us the importance of a plan B in these times.
Stefan Liniger: What’s more, last year uncovered hostility on a political level, which not only affected international business, but also wealthy families and entrepreneurs around the world.
Plus, the pandemic reminded us of our vulnerability, and created a sense of urgency around wealth, health, and other planning.
Why is it important to align residence and citizenship strategies with wealth planning?
Stefan Liniger: Global mobility is essential to living and doing business internationally.
To make it work, families (and their advisors) should assess the regulatory, fiscal and legal implications of their mobility. They should also prepare to adjust and restructure financial flows and existing planning arrangements.
You may also need to keep track of the movement of your family members. For example: you may need to make sure you don’t spend too much time in a particular location.
Therefore, your first step should be to ask: where do I want to live, do business, and spend my time? Once you have the answer, you can start to align the practicalities of your planning.
Philip Marcovici: Typically, when family members are encouraged to ‘come home’, it is because the family does not appreciate the strength that diversity of residences, citizenships and ownership structures can bring.
After all, you only need to look at history to see how families that failed to navigate the challenges of expropriations and other forms of political upheaval suffered massive personal and economic losses – all too often in sudden and dramatic ways.
As with all wealth planning, I believe wealth owners should hope for the best, but plan for the worst.
There are many planning opportunities available today that I am sure won’t be available in the future. Just think about how many countries are currently considering increasing trade restrictions and exit taxes, for example.
"Complexity can be your friend, so long as you have guidance on how to manage and tame it."
Philip Marcovici, Member of the Board
Don’t more jurisdictions lead to even more complexity?
Philip Marcovici: Yes, and no. Life is by nature complex, yet minimising political risks may end up saving your family and business in the long run.
The part people tend to miss is taking advantage of complexity. Because complexity can be your friend, so long as you have guidance on how to manage and tame it.
Critically, family members need to prepare for their roles in helping protect family wealth.
There are investment protection agreements between countries that can be critical in protecting assets. But, it’s important to note that ownership approaches of the past may not provide access to these.
Stefan Liniger: The technical side of planning can be a puzzle – and one where the pieces need to be continuously adapted and moved.
That’s why off-the-shelf solutions are no longer an option. Your legal and succession planning should serve your purpose, not a service provider’s.
Your plan should consider (and balance) your business, investment, and family needs – as well as cover both technical and non-technical aspects.
What are issues that are often overlooked when it comes to residency and citizenship?
Benedikt Kaiser: Global mobility is not just about the mobility of people, but the mobility of assets too.
In most cases, advisors only focus on personal mobility, overlooking huge issues related to family assets. (For example: diversification and protection of family wealth, and transfers and ownership structuring.)
But those aren’t the only issues. Social and political acceptance, personal and mental health, philanthropy, risk of litigation and divorce: all of these issues should be considered.
Philip Marcovici: Besides, it’s not just multi-generational families who are affected.
First-generation wealth builders should be innovative with their planning, and learn from history. (This is particularly important given their lower diversification and greater exposure.)
It’s not just those connected to emerging markets that need to understand the current risks.
Countries all over the world will need to pay for the cost of the pandemic, in an environment where the issue of wealth and inequality need to be addressed. And in a world where, sadly, these issues are often hijacked by populist leaders, who do not always have the best interests of wealth owners (or those in need) at heart.
How do you approach client requests regarding strategic residency and citizenship?
Stefan Liniger: The approach needs to be tailored to the needs of your family and its members.
We believe answering life’s biggest and most strategic questions calls for a holistic approach. We call this the Kaiser Partner Wealth Table: your hand-picked network of wealth specialists and experts.
For some of your questions, we will bring in our in-house specialists. For others, we gather a network of specialist partners across a range of areas, where we carefully select each partner to match your and your family’s needs and responsibilities.
Once your table is assembled, we stay on hand to implement and manage it. Together, we learn, develop, and create new synergies. And most importantly, we work hard to ensure family members actually understand their own asset protection and succession structures.
After all, everyone needs advisors, but it’s critical that the family doesn’t become over reliant on them.
Benedikt Kaiser: Whatever approach you take, it’s important to realise mobility planning is much more than applying for a second passport. Likewise a relocation is also not a 100% solution.
If you think of this process as a world map, it appears very strategic and tactical. Instead, it’s more like playing chess. There is a game to be won, but to do that sometimes someone has to sacrifice a pawn.
We know so many who have fallen into the trap of working with advisors who are merely selling passports. This is not what holistic mobility planning advice is about.
"Building up a strategy is like playing chess. There is a game to be won, but to do that sometimes someone has to sacrifice a pawn."
Benedikt Kaiser, Member of the Executive Board
Finally: doesn’t relocation usually involve a lot of organisation and bureaucracy?
Benedikt Kaiser: Relocation, or the creation of a second residence, can be quite a challenge – especially for a family or entrepreneur with significant assets.
As an established multi-client Family Office, we can support you along the way.
We not only advise you on these matters, but also help implement the advice you have received. Our dedicated team can assist, for example, with finding suitable real estate, scouting excellent schools and universities, structuring and maintaining your classic car or art collection, and finding legal advice on your settlement status.
Contact us to learn more about mobility, residency and citizenship (and its implications for your wealth planning).