(Bloomberg News) Debra Treyz said she may save one family millions in taxes on assets the Hong Kong-based parents are leaving to their U.S. children.
Treyz, managing director of global wealth advisory for JPMorgan Chase & Co.'s private bank in New York, is helping her clients maximize a transfer of $40 million by setting up an offshore trust that will convert to a U.S. vehicle once they die. That may ensure the money won't be subject to U.S. estate taxes when their children in the U.S. die.
Multinational families increasingly are turning to high-end estate and tax planners to reduce tax bills when they shift money to children living in the U.S., whether or not their kids are U.S. citizens. They're doing so as countries step up information sharing in an effort to flush out tax dodgers, including a new round of a voluntary disclosure program by the U.S. Internal Revenue Service that brought in more than $4.4 billion from American taxpayers hiding assets offshore.
"Over the past 10 years there's been an explosion" in the number of clients seeking advice on cross-border tax issues, Treyz said. "The minute you get these multijurisdictional families, you're really playing three-dimensional chess."
The dollars at stake are large. Treyz said the trust she's working on could be worth as much as $137 million by the time it reaches her clients' grandchildren, assuming the children don't need to take out any money.
Global wealth is increasing. There were 3.3 million high- net-worth individuals in the Asia-Pacific region in 2010, an increase of about 10 percent from 2009, and 10.9 million worldwide, according to the 2011 World Wealth Report by Capgemini SA and Merrill Lynch Global Wealth Management, which defined such individuals as those with at least $1 million in investable assets.
Citigroup Inc.'s private bank this year formed a group of wealth planners to focus on the issues of multinational clients, said Art Giacosa, head of cross border advisory services for Citi Trust North America.
"The number of clients has grown exponentially," Giacosa said.
Property located in the U.S. and held by foreigners, including real estate, art, jewelry and stock in U.S. companies, is generally taxable at death under U.S. estate tax law, said James Marion, national fiduciary advisor executive for U.S. Trust, the private wealth management unit of Charlotte, North Carolina-based Bank of America Corp.
People who aren't U.S. citizens or residents generally have an estate-tax exemption of just $60,000, he said. U.S. citizens currently have about a $5 million exemption or $10 million for a married couple through 2012.