As the process of business planning for next year begins, the question surfaces about where marketing opportunities will emerge.
Is it possible the marketing opportunity is GLOBAL in its scope?
Consider the following:
- 211,275 Ultra High Net Worth Individuals in the world
- Family networks of UHNW extend to 1,000,000 individuals worldwide
- Over 2/3 of their wealth is in closely held businesses
- Over 79% own two or more residences often outside their home country
- Secondary residences are typically 45% more valuable than primary residences
All of which results in a growing population of UHNW global citizens with multinational planning issues.
This demographic is growing substantially in the United States and many who regularly visit , own property, or do business here are unaware of the potential planning issues they face.
As an example, non-Resident Aliens who directly own certain U.S. assets are exposed to U.S. estate tax liability and only $60,000 may be exempt. This includes foreign investors who are taking advantage of historically low interest rates to obtain investment properties or second homes in the U.S. These investments are seen by many NRAs as a safety net investment compared to their home countries’ economies. As such, these property acquisitions will only continue to grow and create greater taxable values.
Additionally, these individuals face the familiar issues of funding buy-sell agreements, creating liquidity to pay-off credit liabilities, and paying inheritance taxes in their home country.
The U.S. life insurance product is especially attractive as a liquidity solution as it provides a dollar denominated benefit with design features and pricing superior to that available in the home country.
There are, however, significant complexities in assisting these individuals including:
- Navigating estate and income tax planning laws in multi- national jurisdictions
- Executing on complex underwriting requirements including intense financial justification
- Understanding and complying with solicitation guidelines which can be enforced by both civil and criminal penalties
Clearly, the assistance of experienced insurance professionals with multi-lingual skills, deep understanding and monitoring of country of origin tax and regulatory issues, and rigid adherence to solicitation rules and guidelines in the U.S. and in the client’s country of residence is critical to successfully counseling these clients.
On a regular basis we will be delivering information on this marketplace which will include rapidly evolving changes to tax regimes in many jurisdictions abroad.
We value a conversation with you on this and related planning topics. Please contact Fernando Reategui with questions.