Case study - an everyday situation?
Tim Butler is a US citizen who has lived in Zurich since the late 1980s having moved there following graduation from university in the US. Now aged 52, Tim is a pharmaceuticals executive based in Switzerland.
Tim is married to Anna, aged 38, who is a Swiss citizen, born and raised in Zurich. They met in Switzerland and have been married for about 10 years. They have two young children, Alexander and Alina, aged six and eight respectively, who were both born in Switzerland.
Now that Anna is caring for the children, she no longer works. She has never held a green card. Tim and Anna are happily settled in Zurich and plan to continue living in Switzerland for the foreseeable future. Tim is considering whether he should give up his US citizenship.
Tim has investments worth approximately CHF 15m, including an investment portfolio which is run out of the US. Anna and Tim are the co-owners of their Zurich home, which they purchased with a mortgage of CHF 3m. After a little renovation the house is now worth about CHF 6m. They also own an apartment in New York City, with a value of about US$ 5m, as joint tenants with right of survivorship.
Anna's parents are comfortably well off. Or at least they were until they gifted the bulk of their CHF 10m of assets to Alexander and Alina, subject to a usufruct retained by them. Tim's parents are both still alive and are living in the US. They have assets in the region of US$ 2m that they intend to leave to Tim and his two brothers.
Both Tim and Anna have low-value term life insurance policies - taken out when they took out their mortgage. Tim has recently taken out some whole life policies to provide for Anna and the children should something happen to him. Neither of them have made a will. They both considered doing so when the children were born but have never managed to get around to it.
For Tim and Anna, the overriding priority is to secure the financial well-being of their family - as tax-efficiently as possible. They have heard about the ways in which US tax and regulation can impact the finances of people in their situation, including the drive by the US government to ensure that it receives the correct amount of tax from US persons living overseas. Tim has already considered expatriating from the US as a possible course of action, but the issues seem so complex that they have repeatedly postponed seeking advice.
Tim and Anna will need to focus on the following:
- Swiss matrimonial property regimes
- Ownership of real estate
- US federal gift tax
- US federal estate tax
- Expatriating from the United States
- Leaving assets to US heirs
If you believe that any of the issues we have identified in this brochure apply to your situation, or those of your clients, we recommend an early consultation with us where we can establish your circumstances and make recommendations for your future.