Hypothetical Success Story *
The American Dream
Swiss family relocating
to the USA
Primary Goal
Make a smooth financial transition from Switzerland
The Background
Andreas, 45, is a hypothetical client*. He has accepted a transfer to Austin, Texas, to run the American unit recently acquired by his Swiss employer. The business opportunity for his firm is very promising. This transfer is also a promotion for Andreas and gives him provides an opportunity to show his worth to the firm. It could be a path to the C-suite in Switzerland after his US assignment. The job offer includes generous deferred compensation incentives that could provide significant financial rewards for his family.
Andreas is married to Helen, 42, and they have three school-aged children. Helen is a teacher and would like to explore teaching German once the family is settled in Austin. Helen’s top priority is to make sure their children feel safe and supported during the transition and that they adjust well to their new American life.
Andreas and Helen hope to take advantage of the financial opportunity this transfer provides and build up their wealth before returning to Switzerland. They also want to set aside time and money for travel through the USA and neighboring countries during their stay. They need to therefore understand the overall financial impact of moving expenses, international travel and the cost of private schooling for their children, who previously attended public schools in Switzerland.
The Challenges
- Andreas and Helen are four months away from their move and feel overwhelmed by all the decisions they need to make.
- They need a plan for their Swiss assets, including their Swiss home, Swiss pensions, and bank and investment accounts.
- Andreas is concerned about not making the best possible US employee benefit decisions and would like assistance understanding his options.
- Andreas and Helen have heard horror stories from fellow US-based Swiss expats about US tax complexity and IRS problems with foreign asset reporting. They want to make sure their tax matters are in good hands from the start.
- Andreas and Helen would like help with a family budget that takes into consideration their expected travel and education related expenses, in addition to their longer term savings goals.
Approach & Results
Andreas and Helen were understandably eager to go straight to tactical recommendations when they first met with us. They felt the urgency of the situation and the weight of having to make many important decisions in a very short timeframe.
We sat with them and explained how, like doctors, we could not prescribe a treatment without making a diagnosis first. We streamlined our discovery process to account for the timeframe limitations and focused on to understanding the critical facts that needed to be addressed first. During this process we discovered issues that Helen and Andreas didn’t realize needed to be addressed, and we helped them develop a strategy to prioritize their needs based on an importance and urgency scale. Helen took the role of project and budget manager, allowing Andreas to delegate financial decisions to her and free-up his time to focus on the demands of the new job.
With their roadmap in hand, Helen and Andreas understood how to prioritize decisions and actions during the critical four months before their move, and who would be responsible for what. They regained control over the relocation process despite the challenging schedule. Helen realized she had a natural talent for project management and felt empowered to take a more active financial role in the family than she had up to that point. We helped Helen and Andreas:
- Implement a mixed personal use, short-term rental plan for their Swiss home that allowed them to keep the home for their expected return to Switzerland in five years.
- Review their Swiss financial assets, and structure them in a US tax compliant manner.
- Avoid paying income tax on the transfer of Andreas’ Swiss employer’s Pillar 2 pension to a Freizügigkeitskonto.
- Understand Andreas’ executive compensation and make appropriate and tax efficient selections for healthcare, dependent care, retirement contributions and other benefits.
- Create a budget allocating reasonable cash resources to their different short-term goals, including private schooling for the kids and for travel, and maximizing deferred compensation to build long-term wealth.
- Take advantage of US tax laws and tax treaties between the USA and Switzerland to minimize their taxes and increase their after-tax income.
- Organized their finances by aggregating their accounts into a consolidated secure online dashboard that allowed them to have a comprehensive view of their wealth and keep track of their progress.
- Understand Helen’s options for US employment and plan for her return to work in the USA on the second year of their US assignment.
Andreas and Helen continue to work with Swiss American Wealth Advisors although they are now back in Switzerland. We continue to provide US-Swiss crossborder professional guidance, including during their relocation back to Switzerland and ongoing management of their US retirement accounts. We manage Andreas and Helen’s IRAs in a cost and global tax efficient manner the complements their more conservative Swiss investments.
