We are quickly becoming a single, global community thanks to the 24-hour international media, the spread of the Internet, the immediacy of shared environmental challenges, and the availability of swift and reliable international transportation.
At the center of this vast blurring of traditional boundaries is the family. Most of us are experiencing more of the world than previous generations, traveling internationally for business, education, and pleasure. As such, a new kind of family is emerging, the “international family.”
What is an international family? You probably either know or are part of an international family. Such families have one or more of these characteristics:
o Parents have traveled internationally and experienced other cultures
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o Children have traveled abroad for vacation, education, or employment
o Family members currently are living abroad
o Friendships have formed among people of different countries
o Citizens of different countries have married and formed families
The Issues Involved
As families straddle various countries and jurisdictions, they also encounter a range of new issues that may threaten their financial security and their control over important family decisions. Let’s explore some of these issues.
Running a Business Overseas. When we own a business venture in a foreign country, we are subject to that country’s asset and property laws. These laws are often unfamiliar, different from those in the U.S., and typically are not designed to favor “foreigners.” As such, it’s critical for such a family to secure the advice of experts who fully understand the foreign country’s asset and property laws. These families need experienced advisors to help them navigate the legal and political landscape so they can make good business decisions. Without good help, it’s easy to lose money.
Working or Studying Abroad. Sometimes members of international families choose to live abroad for employment or to attend college, spending years overseas. Even with today’s technologies, these long-term separations from the rest of the family may weaken family ties. This may become an issue if family decisions of a strategic or legal nature arise and the separated family member’s different priorities suddenly complicate matters.
Marrying Internationally. If family members marry people they meet abroad, their stays in the foreign country may be extended or become permanent. This can weaken nuclear family bonds and, if children come into the picture later, preclude strong relationships between grandparents and the new generation from forming. These weakened bonds become particularly important if the marriage ever has problems. The laws of the foreign country may determine future distribution of the assets of both partners. These legal systems may do little to protect foreigners or even may be structured to work against them. For example, these systems may not recognize pre-nuptial property agreements or may have ways to supersede them.
Assets and money make up just one part of a divorce. If there are children, custody and visitation rights come into play. When these rights are decided in a foreign court, the laws again may not favor the foreigner. A court’s decision to deny or limit custody or visitation rights can disconnect a family forever.
The GST Safety Net
How can international families protect themselves from these issues? The best approach is to anticipate potential problems and make concrete plans to avoid them. Family leaders may discover it makes sense to create “a financial safety net” by placing some family assets into an account so they will be available to family members who suffer financial emergencies. Such accounts may be designed to provide some or all of the following:
o Make distributions as necessary to protect family members
o Accumulate and distribute funds with as little taxation as possible
o Avoid favoring one family member or group unnecessarily