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Why Highly Paid Professionals Need A Second Residency In 2024

6 min read

Why Highly Paid Professionals Need A Second Residency In 2024

Imagine building a successful career for decades, only to find yourself hit by a lawsuit that your insurance cannot cover. Even your domestic LLC, trust or foundation is not enough.

For example, 59.3% of general surgeons have dealt with lawsuits in their careers. This data, extracted from a press release from the American Medical Association itself, illustrates how risky these professions can get. Lawyers, doctors, dentists and other professionals face similar challenges as well…

The thought of getting sued is likely to send shivers down your spine. Your wealth might be at stake, no matter how hard you’ve worked for it. Hoping you won’t get sued or your domestic wealth protection vehicle will shield the fruits of your labour? That’s not a valid option anymore.

But no worries, there’s a better way to preserve what’s yours: a proactive strategy that mitigates this risk and even protects your lifestyle and financial future. This strategy, acquiring a second residency, can offer a haven from the fiscal reach of your home country and offer a higher degree of privacy and asset protection. 

In this article, we’ll delve into how a second residency can help licensed professionals achieve their career, financial and lifestyle goals. Let’s begin.  

 

In this article, you will understand why you need a second residency and how it can help you to achieve your financial security

In this article, you will understand why you need a second residency and how it can help you to achieve your financial security

THE CONVENTIONAL APPROACH

In a world where many professionals adhere to the conventional path of staying rooted within the confines of their home countries, this section challenges the norm by shedding light on the potential pitfalls of this traditional approach.

 

ONLY RELYING ON YOUR HOME COUNTRY

The conventional approach many professionals adopt is to live and work within the confines of their home countries, sticking to them no matter what. This route implies you only deal with your own nation’s economic, tax and social systems and rely on local markets for employment, business and investment opportunities. However, what if your country undergoes a massive recession like the financial crisis of 2008? 

Though apparently straightforward, this approach comes with lots of pitfalls. For example, high tax burdens reduce your net income, not allowing you to save and invest as much as you want. 

Apart from income taxes, depending on a single country limits your scope of investment opportunities and hinders wealth accumulation as it leaves you exposed to domestic market fluctuations. Furthermore, this approach constrains lifestyle choices and exposure to diverse cultures and experiences. 

 

HIGH TAX BURDENS 

High tax rates in many countries negatively impact your income and prospects of wealth accumulation. As a high earner, a significant part of your earnings goes towards taxes, affecting your ability to save and invest. Now, let me ask you:

  • Have you ever thought about what you would do with the money the government takes away from you every month?

  • Would you enroll your kids in better schools

  • Would you invest in real estate, crypto and other assets?

The possibilities are almost endless, but direct taxes limit your ability to take advantage of them. Moreover, we cannot underestimate the demotivating effect of high taxes; it can lead to a feeling of working more for the government than for yourself. I’m a firm believer that the fruits of your labour should stay in your pockets, not in the government’s hands.

 

LIMITED INVESTMENT AND CAREER OPPORTUNITIES

Sticking solely to domestic investment and career opportunities can be limiting. Many professionals overlook the benefits of global markets and instead go for what’s familiar. It’s common for high earners to stick to doing their jobs and make a lot of money in the process but finally put off investment and wealth creation. Then, when it’s time to invest or purchase property, they often look only at their home country’s market, ignoring the bigger and better deals the overseas market can offer. 

The traditional approach is dangerous in today’s interconnected world. The old saying “Don’t put your eggs in one basket” holds immense significance, as your home country's economic downturns and market volatility can negatively impact your wealth and career prospects. Diversification is, therefore, vital to mitigating these risks.  

 

Colourful houses in Nassau, Bahamas

Colourful houses in Nassau, Bahamas

SECOND RESIDENCY

As you can see, limiting yourself to your home country will likely hinder your professional and economic growth. Years pass by, and taxes never cease to increase along with the cost of living and even unsafety in the streets. The good news is that the world still remains a huge place with lots of opportunities for those who are bold enough to take action. 

If you’re also aware of the limitations of sticking to your home country, read on to find out the benefits of having a second residency. 

 

BETTER VALUE FOR MONEY 

One of the most interesting reasons to get a second residency is the significant value for money it offers. While owning a top-notch property seems unattainable in major Western cities like London, Toronto and New York, other regions like Latin America offer this at a much better price point. Plus, this typically extends to other expenses like groceries, education and healthcare. 

For example, I live in Panama, and recently, my whole family (my wife, two kids and I) came down with a stomach virus – 4 cases in the emergency room, private rooms, all the tests, everything for less than $1,000 bucks total. 

 

TAX EFFICIENCY AND ASSET PROTECTION

A second residency may offer substantial benefits, such as low taxes and exemptions unavailable in your country. For instance, Panama imposes no wealth, inheritance, or gift taxes, while many Western countries do. This shift allows for greater wealth accumulation and facilitates passing your assets on to the people you care about.

Moreover, when used strategically, offshore foundations, trusts and corporations can help shield your assets against lawsuits and high taxes. Your hard-earned net worth deserves protection and the potential for growth.

 

TRAVEL EASE AND MOBILITY

One of the most important perks to second residencies is increased global mobility. First, you have your own country’s passport, which grants you visa-free access to a set of nations. Then, thanks to a second residency, you may have visa-free entry to new countries, complementing your passport. This allows for more business and investment opportunities in different places all over the world.

Another interesting aspect is that a second residency gives you a country you can legally call home, so in the case of political or economic turmoil, you can pack your bags and move easily. I recommend countries with a strong rule of law and stable governance, as they’ll protect you against any unpredictable happenings in your home nation.

 

ESTATE AND RETIREMENT PLANNING

Securing a second residency has long-term benefits because it may provide a retirement destination with favourable conditions or a safety net against unforeseen circumstances. Think of all the foreigners living in your country who earn Western salaries, and then, when it’s time for retirement, they go back home to enjoy a more comfortable lifestyle. 

If you come from a Western country, you can do something similar; namely, you earn money and then use it in a country with a lower cost of living, which will likely allow you to live almost like a king. 

Plus, by wisely placing your money in countries where your money is protected, your kids and spouse will inherit your wealth without much problem. 

 

ENHANCED QUALITY OF LIFE

The appropriate second residency will offer you way more benefits beyond low taxes and asset protection. You might also choose a country where you can enjoy better weather, more affordable, high-quality real estate and cost-effective healthcare. Second residencies will open the doors to a lifestyle in which you can get more value for your money, enhancing your quality of life. 

 

The easiest way to achieve residency in Panama is through the Friendly Nations Visa program

The easiest way to achieve residency in Panama is through the Friendly Nations Visa program

A FEW RECOMMENDATIONS 

Acquiring a second residency might look like a bold move, but financial prudence and diversification are essential in helping you keep more of what you work so hard for. Furthermore, this strategy will give you access to varied experiences, broader horizons and, overall, a richer lifestyle. 

 

POLITICAL INSURANCE

In our interconnected world, issues such as social unrest, economic downturns and unsafety are legitimate concerns that should also act as a wake-up call. Perhaps you have a high income, but confiscatory taxes limit your financial and personal growth. That's why second residencies are more than just an escape; they’re political insurance. Regardless of global events, you can be prepared and proactively protect your loved ones. 

 

A TAILORED LIFESTYLE

Designing the lifestyle of your dreams is a beautiful yet complex endeavour. When looking for a second residency and a long-term plan for your wealth, you must consider factors such as your aspirations and lifestyle preferences. There’s no one-size-fits-all solution, but you can pick the one that resonates with you. Each country has its own charm; whether you’re looking for wealth protection or purchasing a beautiful home, you can find one that suits your specific needs. 

 

THE LEGAL ASPECT

Contrary to popular belief, having a second residency and a plan B is perfectly legal. Of course, it’s not free of headaches and complications along the way. When you do your due diligence, it’s normal to face feelings of uncertainty and doubt. However, with the right guidance and detailed planning, you can protect yourself and your loved ones while staying compliant and free from legal entanglements. 

 

By understanding the different residency types and their requirements, you can navigate the application process more efficiently

By understanding the different residency types and their requirements, you can navigate the application process more efficiently

CONCLUSION

In essence, highly paid professionals can greatly benefit from second residencies on multiple fronts. From tax optimization to estate planning and lifestyle, this approach helps with avoiding many of the problems Western countries give to those providing great value to society with their profession. 

Rest assured that getting a second residency comes with multiple obstacles along the way, but the efforts will be worth it. I hope this article has shed some light on how you can keep the fruits of your labour where they belong – your pockets.


WORK WITH ME

I help my clients to move offshore for freedom, privacy and autonomy by focusing on the immigration, legal, and tax issues that you will face when becoming an expat. If you would like to work one-on-one with me on getting out of your home country (or setting up a Plan-B location), then read this important letter and fill in an application form to become a Private Client. My fees are not cheap; however, I can assure you that when you work with a professional firm like ours, the results will be worth it.

 

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Mikkel Thorup

Written by Mikkel Thorup

Mikkel Thorup is the world’s most sought-after expat consultant. He focuses on helping high-net-worth private clients to legally mitigate tax liabilities, obtain a second residency and citizenship, and assemble a portfolio of foreign investments including international real estate, timber plantations, agricultural land and other hard-money tangible assets. Mikkel is the Founder and CEO at Expat Money®, a private consulting firm started in 2017. He hosts the popular weekly podcast, the Expat Money Show, and wrote the definitive #1-Best Selling book Expat Secrets - How To Pay Zero Taxes, Live Overseas And Make Giant Piles Of Money, and his second book: Expats Guide On Moving To Mexico.

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