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The Complicated Mrs. Markle

Mar 20, 2019 | Investment Concepts

This week’s blog post has to do with Meghan Markle (and not her style tips), but rather how she exemplifies the complications facing Americans who marry non-Americans. In a series of articles in the WSJ, Laura Saunders (who has indicated that she herself faces these complications as she is married to a non-American) has traced how the newly minted Princess is complicating the traditional royal planning, especially as she will soon be the mother of a royal heir (listen here).  

The origin of all of these problems is the United States taxes its citizens wherever they live and we’ve detailed elsewhere how this leads to all sorts of account opening, maintenance, and tax reporting headaches. As Mrs. Saunders summarizes in her article: “Nearly every financial move they make, and other moves they don’t think of as financial, raises a U.S. tax issue.” Ms. Saunders doesn’t note, as we have, increasing European regulation means that the royal family will probably face increased scrutiny from that side of the Atlantic as well.

There are simple paperwork issues, as Saunders notes: “Some experts advise registering the birth as soon as possible with the U.S. consulate or risk horrific record-keeping in the future, such as proving the child’s whereabouts for every year of his or her life.” On the paperwork front, the child will also likely have more than $2,200 of “unearned” income annually and will be required to file tax paperwork with the United States annually and pay the U.S.’s “Kiddie Tax” (which increased as part of the 2017 Tax Reform). It also complicates the traditional tools that Americans and Brits use for estate planning: namely, the trust. Unfortunately, both the United States and the UK tax foreign trusts rather punitively and require additional paperwork (for more information on UK treatment of U.S. trusts or for U.S. treatment of UK trusts).

As the article states, “One British newspaper said the royal family is so concerned about these tax issues that they’ve asked a U.S. consulting firm for advice.” As a Liverpool FC fan, I refuse to link to the aforementioned newspaper, but, more importantly, you (and the Prince and Princess) should reach out to me directly for more advice on these issues… 

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