Managing finances across borders? Finding the right collaborators is crucial.

With her father gone, her 85-year-old mother was living alone in Coorg. This meant Diya had to manage her father’s assets in the US while ensuring her mother’s financial security in India and securing her own future in Norway.

Cross-border complexity

The very first challenge she faced was tax non-compliance in the US. She and her parents had not filed taxes in the US for at least the past five years. “As US citizens, they were required to file tax returns annually, regardless of whether taxes were owed. The potential for penalties and back taxes created a pressing need to address compliance issues,” said Lovaii Navlakhi, managing director & CEO of International Money Matters (IMMPL), a Sebi-registered investment advisory firm.

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The second challenge was transferring her inheritance. Diya’s father had left behind a residential property in the US, annuities tied to a US address, and individual retirement accounts (IRAs). “With her mother living in India and receiving US social security benefits, managing these assets while adhering to tax laws across three countries — India, the US and Norway — added layers of complexity,” said Navlakhi.

Finally, Diya had her own tax queries. As a resident of Norway, she was concerned about how inheriting her father’s assets would impact her financial situation, particularly with Norway’s wealth-tax rules..

Before reaching out to IMMPL, she had engaged an American advisory and brokerage firm to help claim her father’s insurance policies and IRAs. However, this firm unexpectedly dropped her case midway and stopped responding to her entirely.

An article on cross-border wealth management and financial planning led Diya to IMMPL’s website and she set up an introductory call with them. “Our role was to guide Diya and her mother through this transition with a comprehensive, thoughtful approach, leveraging a strategic partnership with a chartered accountant (CA) firm that had a presence in all three countries,” said Navlakhi.

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The journey required patience and emotional fortitude. “Balancing emotions while making important financial decisions required sensitivity and clarity, which we as CeFTs (certified financial transitionists) were able to bring. She needed trusted advisors who would listen to her – a personal touch in financial advisory. She also wanted us to help receive her father’s estate and create a sustainable income stream for her mother, ensuring she could live independently in India without financial stress,” said Navlakhi.

Diya’s mother now gets a US pension and withdrawals from investments in India and the US, all of which she receives in her bank account.

Teamwork is all-important

The complexity of Diya’s financial situation required a high degree of collaboration. For instance, IMMPL connected her with SourceIn, a part of ValServe Group, which is well-versed with the tax laws of all three countries. “We used the streamlined foreign offshore procedures to file five years of back taxes and six years of FBARs (foreign bank account reports) for Diya, her mother, and her late father’s estate. This collaborative effort minimised penalties and brought the family into compliance with US tax laws,” said Anand Sanghvi, founding member and managing partner at ValServe Group.

IMMPL also connected her with a US advisory firm that has experience in managing insurance claims, IRAs and annuities. “We were a common link for her to get comfortable with the CA firm and the US-based advisor. We had a couple of joint calls before they handled the operational side of it. She would come back to us for suggestions on their advisory. For example, if the US annuity had five payout options, she would seek our advice about which one to choose,” said Navlakhi.

Work in progress

The family’s finances are still a work in progress. So far all the wealth has been transferred in her mother’s name. IMMPL is crafting a retirement plan and an estate-planning framework for her mother. Diya, meanwhile, requires a comprehensive strategy for her own financial future, which will take shape once the CA firm and the US advisor have done their bit. 

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Her dual citizenship and Norwegian residency may have tax implications due to wealth and inheritance taxes in that country. “Through our partnership with the CA firm, we have analysed and optimised the taxes in India, the US and Norway. This is helping her make informed decisions while avoiding unintentional tax liabilities across jurisdictions,” Navlakhi said.

There is still a long way to go before all things are in order, but thanks to this collaborative approach, Diya is well on her way to achieving her goals. Her story serves as a reminder that such transitions, while complex, can also be opportunities to create a secure and thoughtful financial plan.