A Financial Checklist for Moving Abroad

A recent Wall Street Journal report found that Americans are moving abroad at historic levels. Modern expatriates are driven to other countries by career opportunities, lifestyle changes and the cost of living, among other factors.

As with other life goals, moving to another country requires extensive planning to avoid problems and maintain financial security. Because an international move affects everything from taxes and retirement to investments and estate planning, working with a CFP® professional can help you build a holistic financial plan before you relocate. Here are some key considerations:

1. Immigration

Americans must identify a viable legal path to live in another country. Foreign governments offer a variety of visas with their own eligibility requirements, application processes, costs, timelines and limitations. Some visas also require applicants to demonstrate a minimum level of income, savings or assets. Understanding these requirements is the cornerstone of a successful relocation plan.

2. Taxes and Reporting

The U.S. taxes its citizens and permanent residents on worldwide income, regardless of geographic location, and generally requires them to file annual tax returns. State tax requirements may also apply when moving abroad.

Americans must understand the tax system in their new home country to comply with it. Taxation in foreign countries can be drastically different from what U.S. income taxpayers have experienced. Some countries impose unfamiliar taxes, such as wealth and inheritance taxes, that affect worldwide assets. Tax rates will likely differ from U.S. rates. For Americans abroad, there is a risk of double taxation, and careful planning may help mitigate it.

Report of Foreign Bank and Financial Accounts (FBAR) and Foreign Account Tax Compliance Act (FATCA) reporting rules also require disclosure of foreign bank accounts and overseas assets once they exceed specific thresholds. Failure to file properly can lead to significant penalties.

3. Banking, Investments and Retirement

Relocating abroad can affect access to U.S.-based banking, investment and retirement accounts. Some providers will stop supporting Americans who relocate, while others may limit services. Inquiring about how relocating abroad will affect your current financial relationships before you move is crucial. Americans abroad should also consider currency risk, as fluctuations in exchange rates can significantly affect purchasing power, investment values and living expenses over time. Maintaining an appropriate cash reserve in the local currency can help manage day-to-day expenses and reduce exposure to short-term currency volatility.

4. Social Security

Retirees should carefully research the rules and logistics for how their Social Security benefits can continue uninterrupted when they move abroad. The requirements will vary by country of relocation, and in some cases, benefits may be affected.

5. Healthcare Coverage

Healthcare systems vary widely from country to country. Some provide access to public healthcare once residency is established, while others require private insurance as a condition of obtaining a visa. Americans abroad should also plan for health coverage in the U.S. if they will spend part of the year back home. Medicare does not provide coverage in foreign countries, except in limited emergency situations.

6. Estate Planning

Living abroad can create complex cross-border issues involving inheritance laws, property ownership, beneficiary designations and the coordination of legal documents across multiple countries. Without proper planning, families may face delays, frozen assets, unexpected taxes, or conflicts between U.S. and foreign legal systems. An estate plan that considers both jurisdictions can help protect loved ones and assets and ensure that wishes are carried out.

Living abroad can be rewarding, offering new experiences and opportunities, but it involves financial complexities that need preparation. For Americans, careful planning makes the difference between stress and success.