The Truth About Second Passports

Posted on August 24, 2014 by Bill Faiferlick

Bill Faiferlick Financial Strategist on Second PassportsIf we believe articles that are written by “experts”, we’re encouraged to think a second passport is one of those solutions a American citizen could greatly benefit from.

Below is an excerpt of an article published by Bob Bauman, co-founder and legal counsel for the Sovereign Society.

The World’s Best Second Passports

“Acquiring a second passport can expand rights and freedom. For an American, the benefits include freer world travel and fewer problems from officious border guards or nosey customs and immigration officials. A second passport opens doors offshore otherwise closed to Americans. Best of all, dual citizenship and a second passport can be your key to reduced taxes and increased asset protection — and it could even protect your life.

American travelers face the added problem of coming from a country that is not “politically correct” in the opinion of other countries. In some areas of the world, a U.S. passport provides little or no safety. Using another nation’s passport may give you the safety you need.”

This leads the reader to believe that if you travel with a non US passport you’ll be perceived as a non US person. The truth is for US persons who are obligated to file US tax returns, traveling anywhere in the world on a non US passport provides questionable benefits.

Here’s why:

As recently as ten years ago immigration officials and banks only concerned themselves with the physical passport, NOT the country of birth, which has always been listed on ALL foreign passports. You can’t change the country you were born in! At one time foreign passports did open doors, from banks accounts to immigration, but today that’s changed.

Practically every immigration official, and any bank that’s US compliant regardless of the physical passport you present, looks to the nationality were born. If you’re US born, it’ll be stated in your foreign passport that you’re a US citizen even if you’ve been granted citizenship in foreign country. The way to avoid the US designation, and its restrictions worldwide, is to formally renounce your US citizenship (become an expatriate) and acquire the citizenship of a foreign country. Expatriating an extremely serious step, one that may be irreversible, but it can allow you freedoms similar to what most of the rest of the world enjoys.

In truth, relatively few of those who’ve acquired a second passport actually take the final step of expatriating for a host of personal and professional reasons. One reason is that the US may not let you re-enter once you’ve expatriated. Another is that many don’t want to permanently lose access to US medical services if situations arise years in the future. Many have loved ones in the US, sons or daughters, grandchildren, aging parents etc. and don’t want to permanently sever these important relationships, as many friends and family members won’t be able to maintain longer distant relationships requiring constant travel to see loved ones. It’s simply an impractical or imperfect proposition for most people.

What does all this mean?

The vast majority of those who’ve acquired a second passport find it provides few benefits. From my perspective, the cost and effort associated in acquiring a second passport is a questionable opportunity. I rarely encourage my professional clients to pursue a second passport unless they meet specific criteria. In those cases, I’ve helped numerous individuals acquire a “second passport or residency” at little or no cost. In several countries I have professional relationships with respectable law firms that help my clients navigate the immigration residency or citizenship laws without incurring many of the high fees associated with using US experts.

Another key component in your decision to acquire a second passport or establishing a foreign residency is understanding how this effects ALL aspects of your US life and assets. “Foreign experts” are seldom able to design a comprehensive strategy that takes into consideration US tax and investment laws without referring you to several different individuals, each focusing on whatever service they’re marketing. After more than 27 years, it’s this type of disjointed and incomplete approach that lends itself to problems with unforeseen consequences, disappointment and unfulfilled dreams.

The solution lies in creating relationships that last for decades, as I do with my clients. Nothing remains stagnant, solutions and opportunities require periodic review and updating as personal situations, laws and opportunities change. You should never have to start over every four or five years, but you will need to tweak your strategies from time to time.

You’ll also want to work with someone who looks ahead a few years and keeps you informed of changes on the horizon, allowing you to be proactive not reactive, giving you time to make modifications that ensure your needs and objectives continue to be met.

I’m not disgruntled with all advisors and I have good relationships with many in this industry. I take exception with some of the larger organizations or independent advisors who market seminars to sell their wares, or who bring in impressive speakers who seek to accomplish the same. Which is why you continue to pay for and attend these two and three days events, frequently in different countries, becuase your needs weren’t address at the first one.

To expect a different outcome you must do things differently. Contact me to learn what you can do to change your life by first understanding how opportunities balanced against your needs can complement your goals and objectives. Things really can all fit together.