The headlines about George and Amal Clooney acquiring French citizenship may not be shocking to many, particularly monetary advisors, who’re having extra consumer conversations about residing past U.S. borders. Such superstar strikes mirror a broader shift amongst Individuals exploring a daring transfer overseas, with some even contemplating renouncing their citizenship. Political polarization, distant work flexibility and life-style aspirations are fueling the intrigue.
Intrigue is popping into motion. American expatriation surged over the previous 5 years, with the variety of U.S. residents expatriating rising 102% in early 2025 from the earlier quarter.
Ada Okay. Colomb, a world property tax legal professional at Vacovec, Mayotte & Singer who makes a speciality of pre-immigration and expatriation planning and cross-border inheritance, has seen an uptick in inquiries from shoppers trying to depart. However what many Individuals underestimate, she says, are the authorized and monetary challenges beneath the glamour of worldwide residing: a thicket of tax guidelines, reporting obligations and long-term estate-planning penalties. Her insights may help advisors information shoppers by these conversations.
Residing Overseas vs. Expatriation
A typical false impression is that transferring overseas reduces or eliminates U.S. taxes. In actuality, america (together with just one different nation: Eritrea) taxes based mostly on citizenship, not residency. A U.S. citizen who lives abroad, whether or not for 5 years or 50, stays topic to U.S. federal earnings tax on worldwide earnings and U.S. property and reward taxes on worldwide property.
As Colomb explains, true expatriation happens solely when a U.S. citizen formally renounces citizenship or a inexperienced card holder provides up everlasting residency after which additionally information the mandatory paperwork with the U.S. Inner Income Service. Advisors ought to make clear this distinction early to keep away from pricey misunderstandings.
What’s Expatriation Planning?
Expatriation planning entails advance tax and authorized work earlier than relinquishing U.S. citizenship or a inexperienced card. The goal is to grasp, and as a lot as attainable, scale back the tax implications of exiting the U.S. tax system.
A key a part of this course of, says Colomb, is IRS Kind 8854, which formally notifies the IRS of expatriation. Till that type is submitted, the IRS nonetheless considers the person a U.S. taxpayer, even when immigration paperwork has been completed. For top-net-worth people, expatriation may also activate the exit tax, which could be an sudden and vital monetary burden.
Understanding the Exit Tax
The exit tax is finest described as a “deemed sale” of property. On the day earlier than the expatriation, the IRS considers the person as in the event that they bought all their property, akin to actual property, funding accounts, enterprise pursuits and extra, at honest market worth. The distinction between the asset’s value foundation and its present worth is thought to be taxable achieve, regardless that no precise sale happens. “It’s successfully the IRS’s final likelihood to tax amassed appreciation earlier than the person leaves the U.S. tax system,” Colomb explains. The tax usually applies provided that property exceed $2 million. Money is excluded, however actual property, companies, particular person retirement accounts and trusts, relying on their construction, are all topic to taxation.
Tax Legislation: Part 2801
Even after expatriation, U.S. tax publicity might persist for the subsequent technology, notably for U.S. heirs when items and bequests from “coated expatriates” to U.S. individuals are concerned. Underneath Part 2801, items or bequests from “coated expatriates” to U.S. individuals may set off extra property tax. Remaining laws had been issued in January 2025, and in January 2026, the IRS launched Kind 708, which U.S. recipients should use to file and pay the relevant tax at a 40% tax fee. Advisors ought to alert shoppers with U.S.-based heirs about this, Colomb recommends.
Extra Passports Means Extra Complexity
Twin citizenship is changing into extra frequent and, by itself, isn’t a taxable occasion. Points come up when citizenship overlaps with tax residency. Purchasers owe tax to the second nation normally provided that they turn out to be a tax resident there or have earnings from that nation. However they continue to be full U.S. taxpayers until they formally expatriate.
Colomb gives this instance: A U.S. citizen residing in Spain could possibly be topic to taxation in each nations. Including a trip house in Greece may result in extra tax liabilities if that property is bought or if Greek residency thresholds are unintentionally crossed.
Nation-Particular Nuances Matter
Some nations additionally impose a “tax tail,” persevering with to tax former residents for years after they depart. As an example, former residents of Germany may stay topic to German taxes for as much as 5 years after departure. The UK is one other well-known instance, she says, including complication as a result of its tax yr runs from April 6 to April 5, and new residents could be taxed retroactively. A sole trustee transferring to the UK may even trigger a U.S. belief to turn out to be taxable in the UK and to be handled as a overseas belief for U.S. tax functions. Given this, advisors ought to suggest that shoppers seek the advice of native tax counsel earlier than and after relocating to grasp these ongoing obligations, Colomb provides.
France, she says, is notoriously unfriendly towards trusts, together with revocable trusts generally utilized in U.S. property planning. Trusts could also be topic to tax if the grantor, beneficiary or trustee resides in France, and inheritance taxes can attain as much as 60%. “Anybody contemplating France should first speak to attorneys in each the U.S. and France,” Colomb insists.
Quarterbacking the Staff
Purchasers hardly ever grasp the complete image once they first elevate the concept of transferring overseas or giving up U.S. standing. Advisors are positioned to border the fitting questions after which assist shoppers coordinate with tax, authorized and property professionals throughout jurisdictions. This quarterbacking is important in what Colomb calls “a crew sport.”
At minimal, shoppers want “a U.S. trusts-and-estates legal professional in addition to a trusts-and-estates legal professional within the vacation spot nation,” she says. They need to even have a CPA or equal in each nations and extra advisors in any nation the place they maintain property.
Even when shoppers finally determine to not expatriate, the readability gained by proactive planning could be invaluable. As international mobility grows, monetary advisors who perceive expatriation planning, at the very least at a excessive degree, shall be much better outfitted to information shoppers by what could possibly be one of the consequential monetary selections they might ever make.
