It is not uncommon for individuals to hold a position in company stock within their 401k plans. These shares are often held alongside broader fund investments usually until an individual either leaves employment with the company or retires.
After much anticipation, last week Republicans released their roadmap for revamping the US tax code. Passage of large scale tax reform will almost certainly be met with resistance and this is only the first step in the process but it provides some important insight into the intended direction of the upcoming debate that will take place over the next few months.
We are now firmly post summer holidays and autumn is getting into full swing. With year end fast approaching, it can be a good time to begin thinking about year end planning strategies to help minimise tax.
The topic of money and how it should be saved, spent and invested is often intensely personal. What money means to individuals many times represents an amalgamation of life experiences, outlook and your innate behavioural tendencies. As different people view financial decisions and subsequent planning needs in very different ways, it can be a topic that is avoided among family members so as to maintain privacy, or avoid tense and awkward conversations.
Many people, at one point or another, think about leaving the ranks of conventional employment to start their own business. Sometimes the proposed business venture will be within the same industry and sometimes it will be a complete departure from their career to date. Taking the plunge into the world of self-employment can be scary but also incredibly rewarding. After all, being your own boss allows you to build something meaningful and should provide you with some flexibility that is often difficult to find when working for someone else. Giving credence to some of the important financial considerations can help you properly prepare for the transition.
Historically UK pensions have been a good way to achieve UK tax relief and it is also an opportunity for US persons living in the UK to efficiently use their excess foreign tax credits on their US tax returns. However, with the introduction of the tapered allowance for new pension contributions from tax year 2016/17, high earners are now restricted in their ability to make sizeable contributions and have fewer opportunities to seek tax relief.
There are many different considerations that come into play regarding trusts, depending on the type of trust you own and the tax status of the individuals who settle the trust and retain an ongoing benefit from the trust. As such, it is often important to review some of the basic rules associated with what makes a trust a US trust as opposed to a non-US ‘foreign’ trust.
As an American living in the UK, almost nothing related to your financial affairs is easy. The consequences of seemingly simple decisions – such as how to pay for a new home or purchase a mutual fund – may create unnecessary tax charges and complexities. There are a number of key milestones that occur, from the time you arrive in the UK to the time you approach retirement. Many of these changes will impact the appropriate wealth management strategies for American expats. Understanding how rules will change for you over time will allow you to plan ahead and make prudent financial decisions. We begin these series of articles with some initial considerations for your first three years in the UK.
There can be some great planning advantages in the case of a bi-national couple where one spouse is American. Opportunities often abound, for example, in choosing to own certain assets in either spouse’s name to optimise the tax implications for either US or UK purposes. For instance, the non-US spouse could take advantage of some of the UK tax-advantaged accounts and asset ownership structures in the UK that are generally not beneficial for a US person, whilst the US spouse could focus on utilising US tax-efficient vehicles.
Many people don’t like to think about what will happen in the event of their death. For US persons living in the UK, the subject of inheritance tax is one that can be very important due to the large differential in the nil rate inheritance tax bands available in the UK as compared to the US. A lack of understanding about how inheritance tax works can end up costing loved ones hundreds of thousands, if not millions, of dollars. However, proper planning can help minimise the amount of inheritance tax payable and help ensure that loved ones are left with an estate that will provide for their needs after death. Proper strategies will largely depend on whether an individual is deemed to be UK domicile or non-UK domicile at the time of death.