When considering retiring abroad or investing in foreign real estate, financial planning issues, including taxes, insurance, investments and estate plans must be approached before leaving the shores of America.
Here are some things to consider when thinking of retiring from home and abroad:
ADVICE FROM EXPERT: The first thing to do is to look for experts who can help you with the questions you ask yourself and the questions you need to ask yourself. To protect yourself and your spouse and your most important years, you must speak with an experienced real estate and tax expert for expatriates.
Taxes can be complicated, so it is wise to meet with an experienced tax advisor in the field of foreign tax matters. This is particularly true if the person intends to work part-time and is potentially liable to pay taxes both in the United States and in his new country of residence. "
TAXES: Assuming you have not renounced your US citizenship, there will always be two certainties in your life: death and taxes. No matter where you live, as long as you are an American citizen, you still have to pay taxes on all earned income. However, the good news is that some tax treaties and exclusions and deductions of income earned abroad are available, but for the most part, it is difficult to decipher and use these deductions and correctly without help.
The United States provides a foreign tax credit to at least partially mitigate the double taxation burden of paying taxes to a foreign government and the United States. However, you will probably still have to pay taxes in the United States. Even if you retire abroad, you may still have to pay taxes to the state. But if you have established a residence in an untaxed state before you move abroad, you can position yourself to save thousands of people. Also check if interest paid on foreign property is tax deductible in the United States.
HEALTH CARE INSURANCE: How you are going to pay for health care is also a concern. Most employer-provided retiree health plans do not have or have very limited coverage abroad and Medicare does not cover US citizens living abroad.
It only means that you will have to self-insure, buy insurance in your new country or take out an international policy. Also good news: on many destinations, you can take out health insurance as good or better than your current provider and get it for a fraction of what you pay now.
For example, in many destinations, Americans will have access to excellent health services provided by trained doctors in the United States or Europe. Your health care could cost you about half or less of what you pay today. In addition, as a visit to the doctor, for example in Panama or Ecuador, will cost you only 25 to 50 dollars, many will simply choose to pay out of pocket.
In less developed countries, the quality of your health care will obviously have to be taken into account. Even though expatriates are entitled to social security benefits that can be deposited directly into a US bank account, retirees may incur certain fees for transferring money to a foreign bank account and converting US dollars into local currency. There are costs, but in most cases you can have your social security transferred abroad.
INVESTMENTS: Because the taxation of investments in a foreign country can be complicated and some countries totally forbid ownership to foreigners, retirees who are considering investing in property or securities in a foreign country should consider to work with a reputable lawyer and other financial professionals.
Most countries do not have strong regulatory agencies like ours in the United States. Agencies such as "the Financial Regulatory Authority" and the "Securities & Exchange Commission" … so you have to be very careful if you plan to invest in the country in which you reside:
IMMOVABLE: A problem that seems to surprise many Americans is the difference between the ownership rules of foreign countries. Many Americans incorrectly assume that the right to property is the same everywhere else than in the United States. This is not true. For example, in Central America, what people can think of real estate can actually be shares in a company. In this case, there is no real estate. Therefore, if the company fails, the entire investment may be lost.
A good rule for those wishing to retire abroad is to determine how easy it is for an American to sell a property abroad. Some governments are happy that the Americans are investing, but they are not willing to allow the profits to be "exported". They therefore impose restrictions on the transfer of cash and other assets of the country. Investing abroad can be a pleasant experience. Basically, it is to know the rules, laws and regulations of the foreign country.
Real estate planning: US courts generally do not have jurisdiction to transfer the transmission to the next generation of a foreign asset held by a US citizen. Trusts established in the United States generally can not contain foreign assets. Retirees should consider working with a local estate lawyer for appropriate transfer assets, as well as for estate planning. It must be understood whether existing wills, durable powers of attorney and advance health care directives are recognized by the foreign government.
To allow the distribution of all US goods and your foreign property. An update of your wills is a good idea, especially if you own foreign real estate. You may even need a foreign will to manage your foreign assets, or simply adjust your US will to dispose of your foreign property. Have your "proxies" checked by a local lawyer, especially since it will be the local hospital who will examine the medical power of attorney if you become unfit.
ALTERNATIVES: For those who want to move into an exotic location but do not deal with tax issues or potential estate planning issues, you may want to consider Panama, Ecuador, Guam, Puerto Rico and the US Virgin Islands. Things are less complicated for people considering retirement here and a growing number of other countries are offering incentives to retirees aged 65 and over, including from Asia.
Panama offers discounts on doctors&39; bills and cheaper mortgages. Ecuador treats its retiree community with great respect by offering sales tax refunds, half-price bus and plane tickets, and front-line privileges in places like the bank, customs airports, etc. Some governments, such as the Philippines, have simplified their visa application process and introduced low-income monthly requirements to facilitate their move to their country.
Panama offers a "friendly country" visa granting complete residence to foreigners from other countries, as well as many other financial incentives.
It&39;s a symbiotic relationship. Seniors can use their living and health care costs lower, and developing countries benefit from an economic boost through retiree spending.
The programs appear to work with 50,000 retired workers and their spouses receiving social security benefits in South and Central America, as well as in the Caribbean. At the same time, out of 100,000 pensioners and their spouses enjoyed social security in Asian countries … an increase of more than 200% since 2003.