Members of wealthy Latin American families are flocking to the U.S. for a variety of reasons, and they’re likely to need more financial planning assistance than they realize. Planning gets tricky when families own assets in multiple countries and when parents living south of the border want their children who are U.S. citizens to inherit their wealth.

Individuals automatically become U.S. residents for tax purposes if they remain in the U.S. more than 183 days over a three-year period. Families straddling multiple countries can be caught off guard by these and other financial complexities.

“Our book of business has become very multijurisdictional given what has been happening in the world, specifically in Latin America, for the last 10 years,” says Ignacio Pakciarz, CEO and co-founder of BigSur Partners LLC, a Miami-based holding company that includes the RIA firm BigSur Wealth Management. He’s referring to the rising security, economic and political concerns that have driven more wealthy families to the U.S.

A new economic crisis has surfaced in Argentina, while “Venezuela is getting uglier,” he says, noting that its political and economic problems have caused it to plunge into a humanitarian crisis. Florida is seeing an enormous influx of people from Argentina and Brazil who worry about the security in those countries, as well as their economies, which are plagued by stagnation and a need for huge structural reforms, Pakciarz says. He doesn’t expect to see these reforms implemented because voters are unlikely to support their steep price tags.

In many cases, wealthy Latin American families don’t have time to do proper planning before moving to the U.S. “They feel they have to leave their countries now because they could get kidnapped or killed tomorrow,” Pakciarz says. Some have told him, “I don’t see prospects for my kids,” he says. People may not be able to return to their home country down the road if they have health problems and need medical care, he adds.

Most of the 18 core families that BigSur works with have Latin American roots and members spread out over more than one country. They hail from Brazil, Argentina, Uruguay, Venezuela, Colombia and Caribbean countries. Some of the families’ members reside in different parts of the world, beyond the U.S. and their native countries, which adds planning complexities, he says.

Working with families who straddle different countries was always part of the plan for BigSur, which was founded in late 2007 by Pakciarz and CFO Rafael Iribarren. Pakciarz, born and raised in Uruguay, worked in wealth management with international high-net-worth clients (many from Latin America) at Guggenheim Investment Advisors, Deutsche Bank and J.P. Morgan. Iribarren, who’s from Argentina, worked with Latin American ultra-high-net-worth clients at Deutsche Bank and J.P. Morgan.

The firm initially represented five families from three different Latin American countries. It spent its first five years developing its business model and building its platform before opening its doors to additional families and advisors. Its business model has created a multifamily office mainly for international clients who “have a holistic and global view of their stay-rich money,” says Pakciarz. BigSur knows many of its clients through past relationships, and it has grown through referrals and the hiring of new advisors.

According to Pakciarz, BigSur views its relationships with clients as long-term partnerships and assists them with money management, family governance and fiduciary structure. The firm also acts as “interlocutor”—coordinating clients’ CPAs, trust attorneys, immigration attorneys and other stakeholders, he says. “We understand the age and stage of clients and their priorities,” he says. “It’s like being a bit of a psychologist.”

BigSur typically communicates with one main point person in each family. “It doesn’t matter where they live—it relates to their understanding of finance and their skill set relative to their siblings,” says Pakciarz. “It could be that one sister has an MBA from NYU Stern and understands our world.” Each family decides who will serve in this role. BigSur generates monthly performance reports and conducts client calls once a month or once a quarter, depending on family preferences. (Pakciarz serves on the Board of Overseers of the NYU Stern School of Business.)

At BigSur, “much of what we do is generating income and preserving existing wealth,” he says. BigSur also does a lot of investing for clients in alternatives, including real estate, private equity, private debt and venture capital, among other asset classes. The team also looks closely at the potential tax consequences for its domestic and offshore clients.

Pakciarz, who thinks the U.S. stock market is a little overextended in the short term, could sell and trim down positions for offshore investors without triggering a tax event for long-term or short-term capital gains, he says. But to minimize the tax impact for U.S. investors, he might instead buy protected puts or short an index that’s highly correlated to their long equity exposure, while also working with clients’ tax advisors to determine further tax consequences and tax considerations.

“The strategy for two brothers with the same return objectives, risk profile and portfolio holdings can be very different if one lives in the U.S. and the other lives in Brazil,” he says.

Mexican Moves

Lizzie Dipp Metzger, the founder and president of Crown Wealth Strategies in El Paso, Texas, describes working with multinational clients as “a natural situation.” Her financial advisory and wealth management firm is just over the border from Mexico. (Her own mother is from Mexico while all her cousins are U.S citizens.) People started referring Metzger to other Mexicans who have homes in the U.S. or children living here. Approximately 10% of her 250 clients live on both sides of the border.

Referrals are important for reaching Mexican clients because she isn’t permitted to market outside the U.S. and because it’s harder to establish trust with them, she says. “There’s a very big distrust against advisors, females and insurance,” she says. “All three of those things are set up against you when it comes to working with clients from Mexico.” Life insurance policies from Mexico often fail to pay out, she says.

Most of Metzger’s Mexican clients speak English fluently, but she often conducts meetings in Spanish because many are more comfortable communicating that way. All documents are created in English.

Metzger stresses planning now to avoid big tax liabilities in the future. Should investors who have moved from other countries decide to become U.S. citizens, it could create an estate tax problem, she says. If they don’t become U.S. citizens, transferring assets to heirs who live in the U.S. also can be problematic.

Years ago, Metzger’s mother inherited a farm in Mexico from Metzger’s grandfather. “We’re not talking about a $10 million inheritance,” she says, but transferring the money to the U.S. (about $70,000) was still very difficult. “Maybe that’s one of the reasons why I really wanted to help transnational clients,” she says. 

Foreigners often think in $10,000 increments because that’s the maximum amount that can be brought to the U.S. without getting attorneys or other people involved, she says. She has also noticed that Mexican clients, particularly older ones, are often very secretive about their assets and goals. “Even though we’re super comprehensive with most clients,” she says, Mexican clients typically just want to focus on specific objectives they hire her for—so she does.

Metzger studies IRS regulations to see how they impact people with different visas. She also seeks involvement from estate planning attorneys and CPAs who work with clients that live and work in more than one country. 

“You may know all the laws and trends in the U.S.,” she says, “but if you really don’t have the familiarity with both countries, it’s going to disadvantage you.”