Should Clients Move Their Foreign Parents to the U.S.?

Advisors should ask clients these questions to help them determine if such a move is a good idea.

By Luis Strohmeier
Luis Strohmeier
Luis Strohmeier

I work with many clients who emigrated from their country of origin and settled in the United States. As their parents age, these clients may want them to move to the U.S. as well, in order to help take care of them, provide access to the best medical care or just spend more time together as a family.

However, the reality is that I don’t see many parents of clients actually move to the U.S. due to the lifestyle, logistical and financial implications. If your clients are considering it, there are a number of pros and cons to think through related to the potential naturalization of their parents.

How will they spend their time?

More often than not, the paramount consideration for older individuals uprooting from the country where they’ve lived their entire lives is how they will spend their time. For instance, how will they get around if they don’t have a valid driver’s license and have never driven in this country? Completing everyday tasks like going grocery shopping, running errands or visiting the doctor would be that much more difficult.

They may also expect to spend much more time with their children and grandchildren. But unlike when they’ve visited for a week or so in the past and the family made sure to set aside significant time for hosting them, daily life is another matter. Family members are likely to be busy with work, school or other activities, so the newly immigrated parents may not see them as much as they’d like to. As a result, the older generation needs to be independent enough to develop their own identity in the U.S., creating their own life to enjoy. That is often the greatest deterrent to moving from their country of origin.

For example, I have an uncle who lives in Peru, while his children live in Europe. My uncle isn’t necessarily planning to move from Peru, because he has friends, a community and routine there. He doesn’t want to uproot to another country where he won’t know anyone. Such a move would be stressful and there must be a compelling reason to do it. As much as parents love their children, they also have their own lives in their native countries. And at least during non-pandemic times, the older generation can often hop on a plane pretty easily to visit family and spend more time with grandchildren.

What are the logistics?

After a lifetime of living in their native country, if a client’s parents are onboard with the idea of moving to the U.S., the best-case scenario is for them to become official residents. To maintain residency, they’d have to spend at least six months of each year on U.S. soil. Where would they live to satisfy this requirement? With their children? If the plan is to live on their own, would they rent or buy a house? If buying, who would pay the mortgage and how will they title it? These are some of the first questions to address when planning such a move.

Every visitor to the United States is subject to immigration policies. Some residents of some foreign countries need a visa and others may not. The U.S. maintains a list detailing the different requirements, so check with the respective country’s embassy or consulate before traveling to ensure you’re complying with immigration law.

What are the financial implications?

When evaluating a potential move, it’s also important to consider how much money the parents have and who would be paying for their expenses here.

If they’re very wealthy, you should weigh the pros and cons of pursuing naturalization or permanent resident status for them because estate planning issues can arise. If a couple has over $23.4 million or a single person has more than $11.7 million, any amount above those figures is subject to a 40% estate tax in the U.S. upon their death. However, there is no estate tax in some other countries, so you may unnecessarily be creating a large tax bill for the heirs.

“If they’re very wealthy, you should weigh the pros and cons of pursuing naturalization or permanent resident status for them because estate planning issues can arise.”

For example, if a single parent of a client is worth $20 million and lives in Peru (where I’m from), a country without an estate tax, that money is passed down tax-free upon their death. However, if the parent moved here, the $8.3 million over the estate tax threshold would be subject to a 40% tax in the U.S. when they pass away, adding up to a hefty bill of more than $3.32 million.

If parents aren’t worried about estate taxes, they still have to think about what a move would mean for their long-term financial security. They likely aren’t going to receive Social Security benefits, and they would need to pay U.S. taxes, declare income and comply with domestic regulations. Maybe they have a pension from working in their native country, but depending on jurisdictional law, that country might abolish the pension if they become a citizen of another country.

Additionally, some countries subject investment income to little or no taxes. But the United States taxes investment income heavily depending on the tax bracket, so that can be a significant additional expense. Parents can choose to leave assets in their native country but those are still subject to U.S. tax, so it makes sense to just move your assets here too if you become a citizen or resident.

How is their health?

If parents are in their 80s or 90s, it’s pivotal to consider their health care as well. Individuals in this age bracket typically have many doctor’s appointments, so who will they see? If their health is deteriorating, they may need a caregiver depending on whether the children plan to take on that role. And if they never worked here before, they won’t necessarily qualify for Medicare, so it’s important to think about how their health care bills would be paid for.

“If they never worked here before, they won’t necessarily qualify for Medicare, so it’s important to think about how their health care bills would be paid for.”

Why my mother didn’t move to the U.S.

As my mother got older, my siblings (including a brother here and sister in Peru) and I asked her if she wanted to move to the U.S. Her answer was no. She had been a dialysis patient for many years, and for that reason alone, it would have been a very difficult move. As it was, we needed to pay out of pocket for her treatments every time she came to visit, so those expenses would have become even more challenging if she lived here.

But more important than that was her quality of life. My mother was social in her community and church in Peru. She had friends and extended family who she enjoyed spending time with. Essentially, her whole life was in Peru, so to uproot her just didn’t make sense. She was happy to stay there, and her happiness was our ultimate goal.

While children want to do what’s best for their parents and may think that they know best, the financial, social and logistical concerns of moving to the United States from another country are not to be taken lightly. It’s critical to take each parent’s wishes into account and work to come up with a plan that makes the most sense for their lives.

Luis Strohmeier is a partner and wealth advisor at Octavia Wealth Advisors.

Latest news

Black Swan Fears Drive Caution, Plus 60/40 Three-Decade Performance

VIX sees record trading as looming economic and geopolitical risks keep investors cautious about a potential return of volatility.

Carson Group: Still Too Few Women in Wealth Management

Its latest report confirms the industry has made little progress in gender diversity despite a lot of talk.

Supreme Court Seems Wary of SEC’s In-House Tribunals Without Juries

The Supreme Court discussed a case involving a hedge fund manager in which the SEC brought a civil enforcement proceeding that charged he mislead investors.

Annuity Sales Continue March Upward

Annuity sales are set to have another record-breaking year, based on results in the third quarter.

Humana, Cigna in Talks to Merge

A deal would give Cigna a much greater foothold in the fast-growing market for managing federal Medicare plans for older Americans.

Aretha Franklin’s Sons Awarded Late Singer’s Real Estate

They now own the late singer's real estate after a judge ruled that a handwritten will found hidden in her sofa was the correct document.