Asset Protection Tax Compliance

The 7-Point Legal Checklist for Americans Implementing a Global Plan B in 2025

For high-net-worth Americans, establishing a global “Plan B” has become increasingly important in today’s uncertain world. Whether motivated by geopolitical concerns, taxation issues, or simply a desire for greater flexibility, a properly structured international diversification strategy offers critical protection for your wealth and freedom.

11 min read

Updated April 2025

Key Takeaways

• FBAR and FATCA compliance remains mandatory for Americans regardless of where they live or bank.
• Tax residency establishment in foreign jurisdictions requires specific documentation and physical presence requirements.
• Asset protection structures must be established before creditor claims arise to avoid fraudulent transfer allegations.
• Exit tax consideration is critical for Americans contemplating citizenship renunciation or long-term expatriation.

While there are countless resources discussing the why of implementing a Plan B, far fewer address the critical how — especially regarding the complex legal requirements that Americans face. Unlike citizens of most other nations, Americans carry unique compliance burdens that follow them globally.

One factor determines success or failure more than any other: legal compliance.

This comprehensive legal checklist provides the framework for proper implementation. By following these seven critical areas of focus, you can establish a robust global Plan B while avoiding the pitfalls that can lead to costly penalties, account closures, or worse.

Let’s examine the essential legal considerations every American must address when implementing their global Plan B strategy.

1. FBAR & FATCA Compliance Strategy

The foundation of any successful Plan B implementation for Americans begins with understanding and properly managing foreign account reporting requirements. The Bank Secrecy Act’s Foreign Bank Account Report (FBAR) and the Foreign Account Tax Compliance Act (FATCA) create a comprehensive reporting system that affects virtually all foreign financial relationships.

Unlike many tax filing requirements, FBAR violations can carry both civil and criminal penalties—even for non-willful violations. Meanwhile, FATCA has created a global network of financial institutions that automatically report American account holders to the IRS.

Implementation Checklist

• ✓ Create a comprehensive inventory of all foreign financial accounts and assets, including bank accounts, investment accounts, pension funds, life insurance policies with cash value, and even some real estate structures
• ✓ Document maximum balances for each account throughout the year, not just year-end balances (the FBAR threshold of $10,000 applies to the aggregate maximum value at any point during the year)
• ✓ Track all accounts where you have signatory authority, even if not your personal funds (business accounts, trust accounts, accounts for elderly parents)
• ✓ Implement an annual compliance calendar with reminders for FBAR filing (April 15 with automatic extension to October 15) and Form 8938 filing with your tax return
• ✓ Establish a relationship with FBAR/FATCA-knowledgeable tax professionals before beginning your implementation, not after problems arise

Expert Tip: The most common FBAR violation isn’t from major accounts but from forgotten small accounts or joint signatory situations. Conduct a ‘foreign financial sweep’ that includes business interests, investment partnerships, and family connections. Many Americans are shocked to discover they already have reportable foreign accounts they weren’t aware of.

For complete peace of mind, consider banking services with built-in FBAR/FATCA compliance features that automatically generate the required reporting information and even provide pre-formatted submission templates.

2. Tax Residency Transition Planning

Establishing proper tax residency is perhaps the most nuanced aspect of implementing a global Plan B. The United States’ citizenship-based taxation means Americans remain U.S. taxpayers regardless of where they live. However, proper foreign tax residency can still provide significant benefits through tax treaties, the Foreign Earned Income Exclusion, and the Foreign Tax Credit.

The complexity increases further when considering state taxation, as high-tax states like California and New York are notoriously aggressive in pursuing former residents who maintain ties to the state.

Implementation Checklist

• ✓ Research state-specific exit requirements, especially for high-tax states like California, New York, and New Jersey, which have unique provisions for determining continued tax residency
• ✓ Implement a physical presence tracking system with documentation such as entry/exit stamps, travel records, lease agreements, and utility bills that establish your presence in foreign jurisdictions
• ✓ Establish clear foreign ties through housing contracts, community integration, business activities, and local bank accounts that demonstrate genuine residence rather than tourist presence
• ✓ Strategically manage the timing of income recognition relative to your physical presence in specific tax jurisdictions to optimize treaty benefits
• ✓ Obtain foreign tax identification and file required declarations in your new jurisdiction of residence, creating a documented tax history in that location

Expert Tip: State tax authorities are often more aggressive than the IRS in pursuing former residents. The cleanest breaks include selling property, changing driver’s license, voter registration, and maintaining detailed travel logs. Partial measures almost always fail audit scrutiny. If you maintain any connection to a high-tax state, assume you will need to definitively prove non-residency.

For a seamless transition, consider working with residency planning services with multi-jurisdiction expertise that can provide customized strategies based on your specific state situation and foreign jurisdiction selection.

3. Asset Migration Legal Framework

Moving assets across borders involves navigating a complex web of regulations from both the U.S. and foreign jurisdictions. Each asset class—from simple cash to complex business interests—has specific legal considerations that must be addressed for compliant migration.

Poor planning in this area can trigger unnecessary tax events, reporting requirements, or even restrictions on certain transfers. The legal framework for asset migration must be established before any significant movements occur.

Implementation Checklist

• ✓ Conduct pre-transfer securities regulations review to address potential PFIC (Passive Foreign Investment Company) issues, securities restrictions for U.S. persons, and optimal holding structures for different investment types
• ✓ Structure real estate holdings for optimal jurisdictional protection through appropriate entities, considering both U.S. and foreign tax implications, including potential Foreign Investment in Real Property Tax Act (FIRPTA) issues
• ✓ Implement phased timeline for business interest transfers that maintains business continuity while addressing transfer pricing, intellectual property considerations, and substance requirements
• ✓ Document all transfers with proper legal agreements including contemporaneous valuation support, especially for closely-held business interests and intellectual property
• ✓ Pre-clear major movements with compliance professionals from both U.S. and destination jurisdictions to avoid triggering reporting events or unintended tax consequences

Expert Tip: The sequence of asset migration matters as much as the structure. Begin with simpler assets like cash, build banking relationships, then progress to more complex holdings after establishing your foreign footprint. Many wealth protection strategies fail because assets were transferred in the wrong order, triggering scrutiny before foundation relationships were solidified.

For strategic guidance on optimized asset migration, consider asset structuring services with international transfer expertise that can help design and implement a compliant migration plan tailored to your specific portfolio.

4. Entity Selection & Jurisdiction Matching

The backbone of most successful Plan B strategies involves creating the right legal entities in the right jurisdictions. The entity types (corporation, LLC, foundation, trust) and the jurisdictions where they’re established should align with your specific objectives and asset types.

Creating a mismatch between entity structure and purpose—or selecting a jurisdiction that doesn’t align with your actual activities—creates significant legal exposure and undermines the entire protection framework.

Implementation Checklist

• ✓ Define specific objectives for each entity (asset protection, tax efficiency, privacy, business operations) with clear documentation of purpose to withstand future scrutiny
• ✓ Match entity type to specific asset classes and activities, ensuring the legal characteristics of the entity align with its intended function (e.g., trusts for generational planning, corporations for active business)
• ✓ Verify substance requirements in chosen jurisdictions and implement necessary local presence, management activities, and operational elements to satisfy economic substance tests
• ✓ Implement proper governance and documentation systems including regular board meetings, resolutions, and activity logs that demonstrate genuine entity operation rather than shell structures
• ✓ Establish compliant relationships between entities with proper transfer pricing agreements, service contracts, and intercompany loans that reflect arm’s length transactions

Expert Tip: Empty shell entities create more risk than protection. Each entity should have legitimate business purpose, proper capitalization, and regular documented activity aligned with its stated purpose. The era of paper entities with no substance is over—modern wealth protection requires real operational entities with demonstrable non-tax business purposes.

For properly structured international entities, consider corporate formation services with international expertise that can guide entity selection, assist with establishment, and provide ongoing compliance support to maintain your structure’s integrity.

5. Banking & Investment Account Structure

Establishing robust banking and investment structures abroad has become increasingly challenging for Americans. FATCA implementation has caused many foreign financial institutions to simply refuse American clients rather than comply with extensive reporting requirements. However, with proper planning and approach, viable banking relationships can still be established.

The key is understanding which jurisdictions and institutions remain open to Americans, what documentation will be required, and how to structure your approach to maximize acceptance.

Implementation Checklist

• ✓ Pre-screen institutions for U.S. client acceptance policy before attempting account opening, focusing on banks with established procedures for FATCA compliance and experience with American clients
• ✓ Prepare enhanced documentation package beyond standard KYC (Know Your Customer) requirements, including tax compliance history, source of funds verification, reference letters, and business plans for corporate accounts
• ✓ Implement proper account signatory and access structure that balances control needs with reporting requirements, considering the implications of power of attorney, corporate signatories, and joint account structures
• ✓ Establish clear origin-of-funds documentation traceable through formal banking channels with supporting legal documentation that demonstrates the legitimate source and movement of assets
• ✓ Set up compliant investment vehicle access points that provide international market exposure while avoiding PFIC issues and other tax complications specific to Americans investing abroad

Expert Tip: Don’t lead with your needs for privacy or tax benefits when approaching foreign banks. Focus instead on legitimate business activities, investment diversification, and currency flexibility to increase acceptance rates. The most successful account applications emphasize business expansion, investment opportunities, or lifestyle requirements rather than wealth protection motives.

For assistance with establishing appropriate banking relationships, consider banking introduction services with American client expertise that can match your specific needs with receptive institutions and facilitate the account opening process.

6. The Citizenship Dimension

While residency creates immediate flexibility, citizenship provides deeper and more permanent protection. For Americans implementing a comprehensive Plan B, considering the citizenship dimension—whether through dual citizenship or the more consequential step of renunciation—is an essential component of long-term planning.

This area requires particularly careful consideration given its permanence and the significant legal implications that come with citizenship changes. Unlike other aspects of Plan B implementation, citizenship decisions typically cannot be easily reversed.

Implementation Checklist

• ✓ Conduct passport portfolio analysis for visa-free access to determine which potential second citizenships would provide the greatest travel flexibility and complement your existing U.S. passport or replace its functionality if renunciation is considered
• ✓ Research taxation policies of potential second citizenship countries to understand ongoing obligations, focusing on territorial tax systems that exempt foreign income for their citizens
• ✓ Verify recognition of dual citizenship by both countries by examining nationality laws, treaties, and practical enforcement—some countries technically forbid dual citizenship but don’t actively enforce restrictions
• ✓ Document all sources of funds for citizenship by investment programs with comprehensive paper trails that will satisfy increasingly stringent due diligence requirements imposed by legitimate programs
• ✓ Create clear timeline and qualification tracking system for naturalization requirements if pursuing the residency route to citizenship, monitoring physical presence requirements, language skills, and other qualifying factors

Expert Tip: The strongest second citizenship strategies often involve a stepping-stone approach: obtain residency first, use it to build local ties and history, then progress to citizenship application with demonstrated connection to the country. This approach typically offers more security than pure investment programs and better withstands the increasing scrutiny of citizenship origins.

For guidance on appropriate citizenship strategies, consider citizenship advisory services with legal expertise that can evaluate your specific situation and recommend the most suitable pathways based on your timeline, budget, and long-term objectives.

7. Implementation Timeline & Legal Milestones

The sequencing and timing of your Plan B implementation can be as important as the individual components themselves. Moving too quickly can trigger unnecessary scrutiny, while moving too slowly may leave you exposed to the risks you’re trying to mitigate.

A properly structured timeline with clear legal milestones ensures that each step builds upon the previous one, creating a robust and defensible structure that can withstand scrutiny from any relevant authority.

Implementation Checklist

• ✓ Establish baseline documentation before beginning any changes, including comprehensive financial statements, existing account records, tax filings, and property holdings that will serve as the “before” picture for any future inquiries
• ✓ Sequence steps to avoid triggering unnecessary reporting events by understanding how different actions may create filing requirements and planning the order of operations to minimize complexity
• ✓ Schedule quarterly legal review checkpoints throughout process with professionals who can assess progress, identify emerging compliance issues, and adapt the strategy to regulatory changes
• ✓ Create contingency plans for regulatory changes that may affect your implementation, including alternative jurisdictions, entity structures, or banking relationships that can be activated if primary options become problematic
• ✓ Develop ongoing compliance monitoring system that will maintain the integrity of your structure after implementation, including regular review procedures, testing of protection mechanisms, and adaptation to evolving regulations

Expert Tip: Most Plan B implementation failures occur from moving too quickly rather than too slowly. Allow 18-24 months for full implementation, with each phase building on the legal foundation of the previous steps. A rushed implementation often creates contradictory structures, incomplete documentation, or compliance gaps that undermine the entire strategy when scrutinized.

For comprehensive support throughout the implementation process, consider full-service implementation partners for comprehensive Plan B execution that can manage the entire timeline, coordinate between professional service providers, and ensure all legal milestones are properly achieved.

Conclusion: Your Legal Implementation Roadmap

Implementing a global Plan B strategy as an American requires navigating a complex legal landscape that few truly understand. By focusing on these seven critical compliance areas, you can create a robust international framework that achieves your objectives while maintaining full legal compliance.

Remember that while the principles outlined in this checklist apply broadly, your specific implementation should be tailored to your unique situation, objectives, and risk tolerance. What works for a business owner with international operations may differ significantly from what serves a retired investor seeking asset protection.

Most importantly, recognize that proper implementation is not a DIY project. The legal complexities, cross-border considerations, and potential consequences of mistakes make professional guidance essential. The cost of professional assistance is invariably less than the potential penalties, legal complications, and lost opportunities that can result from improper implementation.

Whether you’re just beginning to explore your Plan B options or are ready to implement a comprehensive strategy, start with getting the legal framework right. Everything else—jurisdictional selection, asset allocation, lifestyle choices—can be optimized within a properly structured legal foundation.