Editor's Note: This article is part of a Financial Advisor series "How I Solved It." Advisors describe a problem client and what they did to help.

Transferring a business or other assets to the next generation can be complicated under ordinary circumstances. When the clients have assets in the U.S. and abroad -- and they are not U.S. citizens or U.S. residents but their children are -- it’s even more perplexing. Poor planning can shrink a transnational family’s legacy by millions of dollars.

Lizzie Dipp Metzger, CFP, founder and president of Crown Wealth Strategies, an El Paso, Texas-based holistic financial advisory and wealth management firm, helped a client figure out how he can leave an extra $18 million to his heirs. The Mexican citizen lives in Mexico and has significant businesses in the U.S. and Mexico. His four children are U.S. citizens who reside here.

Around 10 percent of Metzger’s roughly 250 clients are transnational. Most have business interests in Mexico. The children, unlike their parents, are often U.S. citizens.

“That creates a massive, massive transnational planning dilemma because the exemptions on that are much more limited than if a U.S. person was giving a gift to their U.S. children,” she said.

For U.S. citizens and resident aliens (non-U.S. citizens who live in the U.S.), the basic estate-tax exclusion is $11.4 million for an individual and $22.8 million for a married couple. Nonresident aliens (non-U.S. citizen who don’t live in the U.S.) will only receive a $60,000 exemption from U.S. estate tax for their U.S.-situated assets. In comparison, “it’s almost nonexistent,” said Metzger.

When her client first approached her, he was working with an attorney to get his U.S. visa although he and his wife still planned to live in Mexico. “He had also built a very fancy and complex structure of holding companies, as well as individual LLCs that were in those holding companies,” she said, but he owned it all.

The client mistakenly thought he was protecting his children’s inheritance. Other people take for granted that the Internal Revenue Service won’t notice or pay attention to assets outside the U.S., said Metzger, “but it’s easy for the IRS to discover, audit and come up with taxes or fees on those types of estates or those types of gifts.”

After careful analysis, she and a team of outside professionals decided to structure her client’s succession plan as a sale (rather than as a gift) and to focus on maximizing his estate. They built a life insurance policy on the client and his wife, which is owned by a trust in the U.S. The couple is permitted to gift unlimited amounts to the trust while they’re alive.

The next step was to create four irrevocable trusts (one for each child) that will be funded while their parents are alive. They were established as dynasty trusts -- long-term trusts that pass wealth from generation to generation without incurring transfer taxes. Income streams provided by the trusts will go to the client’s children and then to his grandchildren. “That’s something that was super important to him,” said Metzger.

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