While it is true that the ideal time for legal planning may have been prior to the coronavirus outbreak, those that have not yet tended to these affairs need not look at the past with regret. First, to do so is pointless. Second, the best time to plan ahead from this point forward is actually right now. Many of us may have a bit more time on our hands through working from home and being in isolation of one sort or another. This presents a great opportunity to ask ourselves whether we have sufficiently structured our business and personal affairs correctly, or whether we have even done any type of planning at all. Taking a critical look at the quality of one’s business, investment, and estate planning can be gratifying for some, terrifying for others, and confusing for many. But we really have to ask ourselves — if we don’t use this time now to take care of planning for both the inevitable and the plausible, then when will that time be? Regardless of age, income, or health, no better opportunity has ever presented itself.
How Does One Go About Sound Legal Planning?
All aspects of legal planning can basically fall into one of three categories, which I like to call The Three S’s: Structures, Strategies, and Self. No one of these categories is any more important than the others, and they can be reviewed in any order that one likes.
To build good financial structures, I would first suggest starting by taking stock of what you have already done. Go over your wills and living trusts as well as your corporate and partnership structures. Ask yourself whether these structures still serve their purpose. Has anything changed in your life since they were originally created? Perhaps you now have more children or grandchildren, for example. Do these structures still reflect your business, personal, and estate-planning goals? If they do not, examine how they may be changed to better reflect your current reality. Once the old structures have been reviewed, do any gaps remain that need to be addressed?
Some planning tools that you may not have known about or did not have sufficient assets to pursue since the last time you took the time to do any personal planning may include family limited partnerships, an IRA/LLC, or an international trust. In addition, if you have a business, it may be operating out of an outdated legal structure that does not take into account variables such as foreign sales, intellectual property, or ever-changing currency exchange rates. Getting these structures in order and having them conform to your personal situation can go a long way towards maximizing your tax and income efficiency as well as minimizing your exposure to lawsuits and death taxes.
Strategies mostly deal with one’s investments. Many people are often perplexed about what investments to make or how to properly hold those investments. Consequently, the investments that they do end up making sometimes do not have any coherent strategy in place. Such a strategy should contain a clear map of objectives. Some of these may be the length of time it should take to reach one’s financial goals, the income one would like to receive from such investments, and the rate of growth that the investments should have. Other factors to take into consideration is whether one is willing to accept having such investments taxed or whether the investments should be restricted to ways that make them tax deferred or even tax free. Questions that should be asked here include whether one should make investments from an IRA/LLC or a trust and whether one’s income will decrease at retirement or stay the same.
After reviewing those elements of strategy, which I would consider fundamental, I would then recommend moving forward to other instruments that you could include in your portfolio. Have you integrated precious metals, real estate, investment-grade bonds, foreign currencies, agricultural investments, insurance products, and other non-correlating assets along with traditional stocks, bonds, and mutual funds?
A further step to give greater depth to your portfolio may also be to at least see how you feel about bitcoin and other cryptocurrencies. If you are one to be less averse to them, this would be the right point at which to look at ways to buy and hold these types of investments.
These are many of the ways that you can design a solid, tax-efficient financial model while taking the least amount of investment risk.
We have now approached the sphere where one’s personal life preferences can be placed at the center. This is the place for you to think about where you love living most and how you like to spend quality time with your family. In the past, many of us may have taken international mobility for granted, until the start of the coronavirus crisis when borders were quickly closed to non-citizens and non-legal residents of many countries. Countries did not care about how much time you spent “vacationing” there or even whether you owned property. Without citizenship or residency, the doors became abruptly shut. Instead, having a second residence or citizenship became key to moving from point A to point B during the pandemic. It is important to keep in mind that borders did stay open and, for the most part, continue to remain open for those who are returning citizens and residents.
Many are beginning to realize the real power of having multiple passports and residencies and how it equates to freedom of movement and freedom in general. Besides being attained through ancestry or by living full-time for the requisite period in a certain country, another way that citizenship can be obtained is through investment.
Citizenship-by-investment programs have been around for a very long time. (It is even referred to by a Roman commander in a story involving Paul in the New Testament.) In such a program, an individual either pays a specified some of money directly to the government or makes a corresponding large financial investment into a country in exchange for an expedited citizenship process.
Countries actively promoting residency by investment include the US, Belize, Panama, Spain, and Portugal, just to name a few. Countries that have direct citizenship programs include Austria, Cyprus, Saint Kitts, Grenada, and Dominica. In reality, however, nearly all countries have some sort of incentive program designed to facilitate investment by providing expedited residency and citizenship to investors. I believe that when the coronavirus dust eventually settles, such programs will be even more prevalent, as countries seek to restore revenue and regain financial stability.
Have No Regrets and Resolve to Move Forward
The novel coronavirus pandemic is something that can be learned from and used as a starting point for action. This is the time, more than ever, to make a plan B for yourself and for those that you love. The key to such a plan is to place a focus on structures, strategy, and self so as to address most any legal, financial, and lifestyle issue.
Besides one’s health and family, there really are few things in life more precious that one’s freedom. The current crisis has shown how situations sometimes thought to be too extreme for consideration can actually become a reality. It has also given many a taste of how things that we take for granted all too often, such as freedom of movement and the freedom to diversify, can actually be quite fleeting. The development of a plan to ensure that sort of freedom remains in your pocket is crucial before any other global crises in the future become a reality.