Celebrities weren’t the only people who expressed their desire to relocate to a different country if the November election results weren’t to their liking – many ordinary citizens did, too. If your clients are particularly upset by the outcome of the election, or by the three-state recount that might possibly change the result, there are some things they should know before they book a one-way ticket out of the country.
According to Jaime McLemore, a London-based associate at international law firm Withers, under U.S. tax law the rules for wealthy expatriates can be very harsh. U.S. citizens and certain green card holders with a net worth of more than $2 million are “covered expatriates” and are subject to a special tax regime where they are treated as if they have sold all their assets and U.S. taxes are due on the gains from the deemed sales. Further, their children, if U.S. citizens, are subject to tax at the applicable gift or estate tax rate when they receive a gift or bequest from the covered individual. There is an exemption for dual citizens from birth who reside in their other country of citizenship and those who expatriate before age 18 ½.
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