Yesterday I saw a “planning ahead” question relating to taking into account US citizenship of a prospective spouse before your marriage in a country outside the US (and perhaps even within the US if you as a couple or a family would ever plan to live in another country than the US). Due diligence is better before walking down the aisle than finding out about how you will be caught up in matters of US citizenship-based taxation afterwards. A couple planning a wedding will not find this at all romantic or may not think that it would matter, but they will one day be glad they planned ahead — whatever the decision about the actual marriage. Good financial planning is necessary to protect your assets going into a marriage, as well as those resulting from joining financial accounts with your US spouse-to be. That prompted me to remind persons of another important area in which to think and plan ahead:
We would not readily think about what happens as we or a family member age with an unfortunate mental incapacity caused by aging, by stroke or some accident that results in a brain injury. I have often considered how I could possibly cope with the complexity of U.S. tax compliance, to say nothing of the continued and increasing costs for help with that compliance year after year, if I had not renounced my U.S. citizenship.
U.S. Department of State Foreign Affairs Manual Volume 7 Consular Affairs
7 FAM 1290(U)7 FAM 1293 MENTAL COMPETENCY
(CT:CON-407; 06-29-2012)a. Because loss of U.S. nationality occurs only when a would-be renunciant or person signing a statement of voluntary relinquishment has the legal capacity to form the specific intent necessary to lose U.S. nationality, cases involving persons with established or possible mental incapacity require careful review. This includes mental disability, mental illness, developmental impairment, Alzheimer’s disease, and similar conditions. It may also include cases of substance abuse.
b. A formal finding of mental incompetency by a court of competent jurisdiction, whether in the United States or abroad, precludes a finding that an individual has the requisite intent.
c. The requisite intent may also be found lacking if there is evidence that due to mental incapacity or impairment the individual does not understand the seriousness of renunciation, including its irrevocable nature and the major consequences that flow from it.
d. Voluntariness may also be an issue with persons who suffer from mental incapacity or impairment, as such individuals may be especially susceptible to the influence of others.
e. Parents, guardians and trustees cannot renounce or relinquish the U.S. nationality of a citizen lacking full mental capacity: A guardian or trustee cannot renounce on behalf of the incompetent individual because renunciation of one’s citizenship is regarded, like marriage or voting, as a personal elective right that cannot be exercised by another. Should a situation arise of the evident compelling need for an incapacitated person to relinquish citizenship, you are asked to consult CA/OCS/L for guidance.
f. Importance of reporting consular observations and relevant facts: An individual who behaves irrationally, belligerently or otherwise unusually may give you reason to question whether he or she has the mental capacity to formulate the intent required to lose U.S. nationality and/or whether he or she is subject to undue influence. You should document all the person’s actions and behavior and give your impression of his or her ability to understand the nature and consequences of renunciation. You also should observe and document the behavior of any individual who appears to be attempting to influence the individual to renounce.
g. While you are not making a clinical diagnosis, your description of the individual’s demeanor, behavior, statements, and your assessment of the person’s mental and emotional state are very important in making a determination whether the person is capable of formulating the intent to lose U.S. nationality and/or is acting voluntarily. This assessment must be sent to the Department (CA/OCS/ACS) as part of your consular officer opinion.
h. Accepting the renunciation or relinquishment: You may accept the renunciation or voluntary relinquishment of troubled citizens who insist on exercising their right to renounce. Acceptance does not constitute approval which, by statute (INA 358; 8 U.S.C. 1501) can only occur in the Department. If the Department concludes that the facts rebut the presumption of voluntariness, the Department may decline to approve the Certificate of Loss of Nationality. Permitting such a person to attempt to exercise his or her right to renounce may alleviate tension or conflict on the scene, while reporting the circumstances surrounding the act and the person’s demeanor will enable the Department to protect the citizenship of such an individual incapable of forming the requisite intent and voluntariness. The person seeking or claiming loss of citizenship has the burden of establishing knowing intent based on a preponderance of the evidence. Involuntariness may also be established by a preponderance of the evidence.
From: Executive Summary: ASSESSMENT of Older Adults WITH DIMINISHED CAPACITY: A Handbook for Lawyers
With the coming demographic avalanche of Boomers reaching their 60s and the over-80 population swelling, lawyers face a growing challenge: older clients with problems in decision-making capacity.
While most older adults will not have impaired capacity, some will. Clear and relatively obvious dementias will impair capacity, and the prevalence of such dementias increases with age. But what about older adults with an early stage of dementia or with mild central nervous system damage? Such clients may have subtle decisional problems and questionable judgments troubling to a lawyer. This handbook offers a conceptual framework and practice tips for addressing problems of client capacity, in some cases with help from a clinician.Some might argue that without training in mental disorders of aging and methods of formal capacity evaluation, lawyers should not be making determinations about capacity. Yet lawyers necessarily are faced with an assessment or at least a screening of capacity in a rising number of cases involving specific legal transactions and, in some instances, guardianship. Even the belief that “something about a client has changed” or a decision to refer a client for a formal professional capacity evaluation represents a preliminary assessment of capacity.
Difficult Cases – Children, Young Adults, Persons With Diminished Mental Capacity
• Expatriation requires voluntary choice and understanding of consequences
• Parents cannot expatriate child, and guardian cannot expatriate ward
• Expatriation under age 18 is very difficult; young adults may also have problems
• Mental incompetence bars expatriation; mental illness or impairment, Alzheimer’s, dementia or alcohol/drug abuse raise issues
Have you considered this and decided how you and your family will handle such unplanned for life changes, especially as a *deemed* U.S. citizen?
I don’t think you even need foreign accounts to worried about this. With required minimum distribution (RMD) from retirement accounts carrying a 50% penalty for non-compliance the USG has pretty much said they don’t care what they take from those getting older. If you have say a foreign pension it’s going to be hard as you age keeping up with all the crap they enact to catch you out.
The USG wouldn’t stand for a private company trying even some miniscule amount of this stuff on.
Any case where the person renouncing or relinquishing can be proved to have diminished capacity is going to be a problem. I think that is one of the chief reasons the US insists that USC’s present themselves at consulates for “evaluation” of claims because they don’t have the resources to go after anyone they think might not have known what they were doing.
The best reason to continue to push the US to go to a simply form only method of ditching citizenship is that pretty much anyone is now allowed to renounce b/c a consulate officer isn’t there to “make the call” on intent or competency.
I still question the “under 18” thing however because preteens and teens are deemed able to know their own interests in some legal instances – like custody for example. At age 12 a child is allowed input, or even allowed to say yea or nay, in terms of being adopted or not and in situations where custody in divorce cases is concerned. Both situations have long reaching impact and yet, a 12 yr old is allowed to decide for him/herself.
I think there is plenty of wiggle room for teens especially if you do your homework in terms of just what a teen is and isn’t allowed to decide for themselves in your home country and in the US.
But really, it is a good idea to plan ahead. One thing we have done is to decide that my husband will not take any transfers that involve living in the US so that our child will not be able to automatically pass on her citizenship should she have children. So that’s one thing a parent can do – keep their minor kids from living in the US between ages 14 and 18.
The other thing to remember is that if you haven’t gotten your citizenship in your home country yet – do it with intent to relinquish and send a heads up email to your nearest consulate right before you take your oath of citizenship (and have that witnessed and certified even for your minor kids, who can always produce that paper later for banking and other purposes).
How would you even be able to understand all of the latest IRS Bulletins / all the IRS refinements of “Streamlined compliance”? I can’t now. Mind you, I’m 71 so maybe in mental capacity decline.
See: http://isaacbrocksociety.ca/2014/10/07/bulletin-irs-relaxes-reporting-requirements-for-rrsps-and-rrifs/comment-page-2/#comment-3422139
If someone is appointed someone’s legal guardian and handle all their finances, wouldn’t it make sense for the guardian do what’s right in terms of taxation?
The USG could simply exempt people under this category from ‘citizenship based taxation,’ and allow them to keep US citizenship. Thereby protecting their rights, and allowing the guardian the autonomy they need financially.
Most people in these circumstances won’t have a lot of money apart from the odd millionaire with dementia.
Don, yes — it could make sense to me. If there would be special conditions for keeping the US citizenship without penalties, there should be a special condition for expatriating as well. I would not want to give any family member or other guardian or executor upon my death the possibility of the stress, time and significant cost of years to deal with my US citizenship-based taxation matters. What would be the benefit of such a person retaining US citizenship unless they are going to return to the US to be cared for there?
Other very important matters, even life and death decisions, are made by guardians and/or trustees for financial matters (which might be a parent or other relative). For myself, rather than being able to keep US citizenship (which you would in these cases anyway by entrapment), I would want to be able to renounce and be done with all the complexity and the cost of compliance for anyone looking after me or the costs taken from the funds that go for my well-being / care in the country in which I live.
It would be the same as was indicated to me by the Washington, DC immigration/nationality lawyer I hired regarding my son with a developmental disability (and confirmed by Department of State, Legal):
Dementia, stroke, accidents resulting in brain injury don’t likely just happen and complicate matters for persons with higher net worth, much of it sitting in the capital gain of their family home.
Please support / continue to support the Canadian litigation: http://www.adcs-adsc.ca/. We’re almost to the critical payment for November 1st.
As interesting and relevant as it might be, I would be hesitant in using a spoof to lend your topic credibility, Calgary411.
bubblebustin,
I didn’t consider the example of someone looking into what it would mean for marriage to an American just a spoof. I consider that something that, because of all we discuss here, very much needs to be taken into account. We hear of divorces happening with (perhaps not only because of) FATCA and US citizenship-based taxation. Marrying someone deemed a US citizen just might be a very important reason for a pre-nuptial agreement.
Marriage is not always happily ever after — that perfect person, a house with white picket fence and two and a half children, a dog and a cat. The consequences of or planning around how best to handle finances, etc. when marrying someone who is an American, perhaps called US citizenship-based taxation literacy, is as important and maybe part of overall financial literacy for young persons entering adulthood.
@Calgary411
The situation for many is terrifyingly real, but the article you cited is a fictional account.
I know the article is a fictional account, which doesn’t mean those situations are not real. Good as an example as who will be the one to put this question on a blog?.
I’ll take out the link but still refer to the planning aspect in planning for a marriage to a USC.
Why not keep the link, but let people that it’s a hypothetical situation, but due to the realities of the situation, not improbable?
I would hate to see someone try to discredit your argument with the information that the other situation “isn’t real”.
@Bubblebustin
“The situation for many is terrifyingly real”
Well I hope that is not true.
The FATCA, etc, issues are real but the spoof article describes a couple who are unable to discuss together the issues that each of them brings to the marriage. Everyone–FATCA or not–brings challenges to a relationship. An inability to communicate about those challenges is a huge red flag and if it isn’t FATCA it will be something else that drives them apart.
The couple in the spoof article should be discussing their challenges together and deciding as a couple whether renunciation, etc, is the best option. If they can’t do that, she should leave him–but not because of FATCA–but because an inability to communicate is a red flag for any marriage.
More real than you may realize, as I recently heard that half of marriages in the US end in divorce. Evidence that a failure to communicate is very real, and common.
Dash and Bubblebustin,
Best, for sure, to have that good marital communication beforehand on whatever subject. Many here have heard of and/or have experienced the problems that resulted in so many existing marriages when the effect of FATCA was introduced.
Also best to have such a discussion before signing any business partnership deals. US citizenship combined with the big stick of FATCA can be toxic to whatever kind of partnership. Just reported at http://isaacbrocksociety.ca/2014/06/01/its-time/: [A cheque donation in the morning mail came from an innocent Canadian who just gave up his/her signing authority on a business account — so that the partners would not be harmed. And the Government of Canada insists that the FATCA IGA is a good deal for Canada?]
@bubblebustin
Agree–probably more common than one would hope.
Here is the link to the article. I was really complemented to have you spread the spoof question.
http://fbariswrong.wordpress.com/2014/10/13/my-boyfriends-an-american-should-i-dump-him/
The story is only semi-fiction, as the consequences are real, the guy that spends all his time complaining is a reflection of myself, and the girl is an exaggerated and more-informed version of somebody I know very very well.
Blogs are for spreading information in any sense—cartoons, satires, statistics, whatever. The intention of this blog is to give commenters an avenue to blog an original. Submit your story and let the lamestream media read you. For security reasons, the default is that you are anonymous. With a telephone call, we can input your name.
https://fbariswrong.wordpress.com/2014/10/12/post-your-fatcafbarcbt-article-here/
By spreading the article links upon a large quantity of sites, I managed to get the hits up over 400 per day. Since I spread them on as many US political sites as possible, there were as many US hits as Canadian, and the hits are coming in from 30 or more countries.
WE NEED MORE VOICES IN MORE AVENUES. Submit the next article! Spread the links to everything on twitter, facebook, email, whatever!
Create as many blogs and as many articles as you can—with whatever quality level you can give. Link to each other and support each other!
Remember those old archaic sayings “Freedom of Speech” and “Freedom of the Press”
ps, I noted that I started out the blog with one twitter which yielded 2 hits over the course of a day.
I then spent 15-30 minutes flooding facebook with links to various sites—-possibly 20-45 copy/paste jobs on facebook and other locales.
The result was that the hits increased to 400+ per day.
Please, whenever you see something (anything) that is in our interest—-spread it in as many avenues as you can and get the exposure up.
This type of exposure has netted results—it created RNC resolutions to repeal & litigate FATCA/FBAR/CBT.. It puts continuous pressure upon the Democratic party and the media to provide more positive exposure.
The site I created currently has a high demand for reading—-but it currently has zero supply of material in the pipeline. Anybody wanna write something?
I am guessing that Amal Alamuddin knew what she was getting into when she married Clooney and their finances are kept separate as long as she is a resident of England. If one knows about these things ahead of time, maybe one can take precautions? With Tina Turner I could imagine that seeing that she lives in Switzerland, she might like sharing accounts with her husband and not having to deal with these problems anymore. I could even imagine that her husband and advisors talked sense into her. Of course these are assumptions.
But all in all- I think every expat- even those who have always been compliant – would groan a sigh of relief at RBT. Which is why EVERY expat should be investing in the law suits.
Planning ahead? No can do anymore. We planned years ahead for our retirement. Everything looked good on the spreadsheet; the bullet points lined up neatly on the planning document; BUT then along came the oh-my-god-life-sucking-fubar-fatca monster and now we live day to day. Our retirement plans lay in a computer file folder that we may as well delete because it’s so yesterday. There’s simply no certainty to grab hold of and no safe vehicle to take us into our golden years. Guess that’s life though — great to have it but it offers no guarantees. The daily stuffing of my brain with Brock reading and the contents of hundreds of articles I’ve been directed to might be staving off senility or keeping me from slip-sliding into insanity. Time will tell. It’s comforting to know I’m one of many but I’d very much prefer that we could all be living normal lives, like our non-US-tainted friends, relatives and neighbours.
@embee, my screensaver has the image of Isaac Brock and the words “I refuse to live my life subject to the whims of a foreign government.”
I am done, I relinquished, my legal fees to relinquish were five figures. Yes, it was not the run of the mill relinquishment and legal representation was required immediately.
Yes you will get beyond the OMG moment and then just might create your own screen saver.
@EmBee
My family is in the same boat… we live simple lives… we save & invest in straight forward manner… its got to the point we have no clue what to do… if we invest in that…. are we breaking some kind of law? Some family own winter places in Florida for a long time…. they are unloading it… no one in the family wants it… one mis-step by over staying by a day will open a can of worms no one can afford to do.. some are now heading to other countries for the winter… they are true Canadians with no taint so they are welcome anywhere without a noose…
@ George and USFP
Although my husband has a CLN and should be okay, my situation, as far as bank questioning goes, has me clinging to these words from CRA …
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html Information for individuals with accounts with Canadian financial institutions
@ Embee
Interesting words from the CRA. I hope they back that up. The Green Card situation is so stupid, it looks like you can abandon it or have it deemed abandoned and thereby lose your permanent status, Yet they want to tax you because you haven’t filed a piece of paper to confirm the loss. Does anyone know when this piece of paper filing requirement started? I know someone that had a very old green card (well before computers). Like a lot of other things US, this doesn’t make any sense.
Hold those words dear, dear EmBee. You and Mr. EmBee have no plans to cross the border. You are going to be OK. Hold them to their word, with legal representation if it ever comes to that. I don’t think it ever will. Perhaps the green card issue is what one witness for the Canadian challenge could represent. I have sugested to another person to write that on his hand and never to forget it — his remembrance should he be asked by a bank or even the IRS.
FATCA looks for US indicia. And no indicia would be showing.
or, there is no indicia of US personhood