Dealing with the loss of a loved one can be an intensely emotional journey. These feelings are often intensified by the realities of today’s interconnected world, where families frequently find themselves scattered across the globe. Regardless of distance, however, parents often still hold their children close in their hearts, leading them to leave inheritances for their offspring. This transaction can unfortunately become a complicated process for those already steeped in grief, with money being lost in the stress and confusion.
Without a strong understanding of finance, the process of repatriating inherited funds can result in significant losses. Below, we delve into the intricacies of international money transfers and suggest ways to conserve as much of your inheritance as possible.
As the world continues to globalize, more of us are venturing overseas in search of opportunities. A United Nations study in 2013 found that 3.2% of the world population, or 232 million people, no longer lived in their birth country, a dramatic increase from the 154 million in 1990. Americans, historically known for their reluctance to move abroad, have also begun warming up to overseas life, with State Department figures recording 2.8% of the population living abroad in 2016.
This globalization trend shows no signs of slowing down, opening up opportunities for more professionals to leave their home country while also leaving assets behind. These assets can range from retirement accounts to investment real estate and will eventually need to be accessed from abroad.
Inheritances become tricky when the benefactors pass away. While the impact of the American estate tax is often negligible, those inexperienced in international law and money transfers can find themselves facing unexpected challenges.
The process of repatriating an inheritance can be problematic due to unforeseen tax implications. Certain countries may levy taxes on estates, and your home nation may follow suit when you repatriate these funds. Tax laws vary depending on the country involved, making it essential to familiarize yourself with laws of both nations.
Another potential issue comes from your home government interpreting your repatriated funds as taxable income. For instance, in Canada, funds from non-resident estates are generally non-taxable. However, if the government deems your relative a Canadian tax resident, you might face a hefty tax bill.
Missteps often occur when beneficiaries attempt to transfer inheritance funds through their usual banks, a practice that can result in significant losses. Besides, if regulations governing cash transfers are broken inadvertently, recipients may face financial penalties.
While transferring money, always take extreme care to avoid falling into common pitfalls. Traditional financial institutions may often give unfavorable exchange rates, and you may considerably lose out in the transfer.
Thankfully, online money transfer providers offer more favorable rates compared to banks. By harnessing the benefits of the internet, these new competitors can offer low or no fees and very competitive exchange rates, enabling you to keep a larger portion of your inheritance.
Despite the modern era’s complexities, vigilance and an understanding of financial regulations can help you keep the maximum portion of your inherited funds when moving them across international borders, as your loved ones likely intended.
