How To Weigh U.S. Financial Decisions When You Have Assets Abroad

I was recently speaking with an investor who is retiring in the United States but worked for many years in England. She has as an array of both investment accounts and retirement accounts abroad. The investor wanted to know what she should be doing if she plans to continue to live in the United States but plans to travel throughout Europe during her retirement years.

She’s not alone in this. Many investors move to the United States with assets abroad and are unsure of how to incorporate those assets into their financial plan. As with anything, the answer depends on your goals and a variety of external factors. Here is how to weigh U.S. financial decisions when you have assets abroad.

Your Financial Goals

The first step to understanding what to do with assets abroad is to understand your financial goals, with an emphasis on where you want those financial goals to happen.

Life Transitions

I have a friend who moved to the United States and had a house and a few bank accounts abroad. She was on a two-year work visa and thought she might be moving back to her origin country after the visa expired. Because of that, when she asked me what she should do, I told her to hang tight. When the short-term future is uncertain, moving foreign assets can be burdensome.

However, it’s now five years later. She received multiple promotions, extended her work visa, has an extensive network of friends and business associates, and is now engaged to a man she loves dearly. Now, her goals include staying in the United States for the foreseeable future and even potentially purchasing a home and starting a family. Her assessment will be much different now than five years ago.

Conversely, I work with a U.S. citizen living abroad who plans to purchase a home in the United States in the next 10 years and then retire 25 years later. In this case, it makes sense for her to invest assets in the United States while living abroad.

Gifting Abroad

I also know a family who moved to the United States and has assets and extensive family in their country of origin. Currently in high-paying roles, they feel compelled to take care of their family as much as they possibly can. They keep the property and assets they held prior to moving to the United States so that they can take care of loved ones and so that they have spending money and a place to stay whenever they go visit their family.

If you are spending in your country of origin, keeping asset there could help to mitigate currency risk, exchange risk, and extra taxation.

Retirement

If you have assets both abroad and in the United States and you plan to retire while living in the United States, you’ll want to think critically about how much money you will realistically need, between living expenses, travel, and medical expenses.

Next, you’ll want to research if the U.S. have any sort of tax treaty in place with the country your assets are located in. Here is a full list of countries the United States has treaties with to mitigate impacts of double taxation. Iran is an example country that is not on the list. So, if you lived in the U.S. and had a capital gain or retirement income in Iran, you could be taxed in the United States in full, regardless of taxes paid in Iran.

Additionally, if you hold a qualified retirement plan abroad, you may be eligible to roll those assets into a qualified retirement plan in the United States without triggering taxation. Unfortunately, pensions abroad are often not considered qualified plans for this purpose, but the income generated from them could be considered tax-free or generate very minimal taxation depending on the size.

Administration And Taxation

Holding accounts in both the United States and another country can be an administrative hassle. Any investment abroad worth over $10,000 requires that individual to report that asset in the United States along with filing their taxes in the country where the asset is located.

Depending on the state you live in, even with a tax treaty in place, you may end up paying higher taxes by maintaining assets abroad. For instance, capital gains taxation in the UK is 24% as of October 2024 whereas the maximum capital gains bracket in the United States is 20%. The maximum income tax rate in the UK is also 45% versus the United States’ 37%.

Potential Charges From Transferring

In addition to taxation, you may receive unfavorable conversion rates or fees associated with the wire or automatic clearing house transaction. If you’re making a transfer, it’s worth researching and comparing conversion rates instead of just accepting your current bank’s rate.

Getting Professional Help

When facing any major financial decisions that impact your long-term investment goals and taxation, working with professionals can ease the process. If it ends up making sense to leave assets in multiple countries, you may choose to engage financial, tax, and estate planning professionals in multiple countries.

Many U.S.-based tax and financial professionals can only manage assets located in the United States. Additionally, an estate plan created in one country, like the United States, is often not enforceable in another country. You will need to have a plan in place for each country your assets are located.

Conclusion

When managing U.S. financial decisions with assets abroad, it’s crucial to align your strategy with your personal goals, consider tax implications, and seek professional advice. Balancing foreign and domestic assets requires understanding potential tax treaties, administrative burdens, and currency risks. Tailor your approach to your unique circumstances and future plans to optimize financial outcomes.

This informational and educational article does not offer or constitute, and should not be relied upon as, tax or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.

Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. Any compensation that Ms. Jones may receive for the publication of this article is earned separate from, and entirely outside of her capacities with, Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-7863817.1 (4/25)(exp. 4/29)