Family office friends have recently confided that they are attracted by the allure of moving out of the U.S. Whether it is the nature of politics, the changing weather or, frankly, the taxes, family offices are contemplating options like golden passports and visas. This week, Marcus Baram reports on the countries that are most appealing to Americans — including European hot spots and Caribbean destinations — and those that have tightened options for passports and visas.
Have you ever wondered what private security is like for a public figure like Larry Fink? BlackRock's costs to ensure the security of its chairman and CEO more than doubled in 2023 from the year before. Costs have gone sky-high because of concerns leading up to the presidential election, as Fink has faced political backlash from BlackRock’s stance on ESG.
As always, we appreciate any comments, ideas and insights that would make this newsletter more useful. I look forward to growing this family office community with your help. Please email me at [email protected].
HANDPICKED: Wealthy investors flock to golden passports and visas
By MARCUS BARAM
Many wealthy investors in the U.S. are exploring moving overseas via golden visas and passports due to investment opportunities, retirement plans or concerns over political unrest, investment advisers say.
Such special visas and passports — typically offering citizenship or residency in return for a substantial financial investment — have proliferated in recent years, with countries racing to offer more generous incentives to attract wealthy investors and family offices.
The recent uptick in interest really began in the wake of the pandemic, when so many people were limited in their freedom of movement.
“I think COVID really accelerated the golden-passport idea because if you weren't a citizen, it was tough to get into certain countries,” said Patrick Kilbane, a wealth adviser at Ullman Wealth Partners in Jacksonville Beach, Florida. “If you had dual citizenship, it would be much easier.”
Golden visas often offer residency permits for several years with the potential to gain citizenship. Golden passports go a step further, offering citizenship in return for a substantial investment ranging from $100,000 to a few million dollars.
Among the high-profile applicants are Peter Thiel, who has a second citizenship in New Zealand, and former Google CEO Eric Schmidt, who recently applied for citizenship in Cyprus.
Some countries clamp down, others open up
Across Europe, countries are phasing out their golden visas for a variety of reasons, ranging from reducing real estate speculation to security concerns resulting from the Ukraine war.
This year, the Netherlands announced that it will end its golden-visa scheme. Portugal and Spain have tightened their requirements for a golden visa, removing real estate investment as a basis for such applications. Australia recently scrapped its golden-visa program, which required a $3.3 million investment and was popular with Chinese investors, after determining that it was “delivering poor economic outcomes.”
But other countries have jumped in to fill the gap. Hungary is announcing a new initiative that allows real estate investors to get residency permits, Greece is expanding its popular golden-visa program, and Indonesia and the United Arab Emirates are launching new programs to attract wealthy investors.
Caribbean golden passports remain popular, though they’re about to get more expensive, with four countries in the region agreeing to charge at least $200,000 starting this summer.
The top destinations for additional passports among Americans are Portugal, Malta, Greece and Italy, according to Henley & Partners.
“There’s a lot of buzz around it and certainly a lot more interest than what was the case in years past,” said Gerald Goldberg, CEO and co-founder of GYL Financial Synergies, based in West Hartford, Connecticut. He attributes the appeal to a range of factors, ranging from business opportunities and the chance to expand into new markets to new cultural experiences and real estate investment opportunities.
Political landscape could push families abroad
Wealthy individuals and families in the U.S. and elsewhere might be motivated by concerns over elevated levels of political uncertainty. “It gives them pause and they say, ‘If I can afford to move, why not? If heaven forbid things really go badly in my country, then I have an option to go elsewhere.’ ”
Another factor is philanthropic. “Can their philanthropic dollars go further in that particular country, and does that benefactor want the ease of ability to see their dollars at work,” said Kilbane of Ullman Wealth Partners.
Jon Ekoniak, managing partner at Bordeaux Wealth Advisers in Menlo Park, California, has several clients who are getting golden visas to Portugal. “They don’t have plans to move there, and they’re not doing it for political reasons,” Ekoniak said. “They just want flexibility long term.”
Tax implications also a factor
In recent years, Singapore, Hong Kong and the UAE have offered generous tax incentives to attract family offices and wealthy investors from around the world to their shores. But wealthy Americans who are interested in getting golden passports and golden visas don’t necessarily want to move their family office overseas, advisers said, due to logistical hurdles and the lack of tax advantages.
“Most of the time, the U.S. is going to tax you on your worldwide income,” said a wealth adviser based in New York City. “So it doesn’t really help you if you have a foreign corporation, unless you relinquish your citizenship.”
Giving up citizenship is a big step but might be an attractive option for both entrepreneurs and retirees, Kilbane said. “Maybe you want to avoid an estate tax problem; and also, the giving exemption is set to potentially scale back at the beginning of 2026, so you pay the U.S. exit tax and set up in St. Kitts or New Zealand or wherever.”
There is a long list of countries that have scrapped their estate tax, from Austria to Mexico.
“Many people want flexibility of where they can live now, into retirement and potentially for future generations,” Ekoniak said. “A golden passport offers them that opportunity.”
Security costs for BlackRock's Fink more than double to $780,000
By BLOOMBERG NEWS
BlackRock's 2023 costs to ensure the security of Chairman and CEO Larry Fink more than doubled from the year before, according to the April 4 proxy filing by the $10.5 trillion New York-based money manager.
In the wake of the firm’s emergence in recent years as a focus of anti-ESG political campaigners, BlackRock reported in its latest proxy statement expenses of $780,350 for the year to protect Fink. That included $216,837 for security personnel and $563,513 to upgrade the home security systems at Fink’s residences.
The latest outlays compare with $376,360 for 2022, with $198,410 for security personnel and $177,950 to upgrade Fink’s home security systems.
The increase in security-related expenses points to continued caution by BlackRock’s board in the run-up to a presidential election in November, after Fink and the company became lightning rods for political pushback against an environmental, social and governance (ESG) focus.
After a period of full-throated support for ESG and climate-related factors in investing, which peaked with Fink's assertion in his 2020 annual letter to CEOs that “climate risk is investment risk," BlackRock's longtime head has tried to counter the narrative that the money manager effectively boycotts fossil fuel companies to the detriment of client returns. Fink stopped using the word ESG, claiming it had been "weaponized."
He has pointed to the hundreds of billions of dollars BlackRock invests in those companies, while emphasizing that the firm always invests in line with its clients’ preferences.
So far, 2024 has offered mixed signals as to whether that moderated message is resonating.
In March, for example, the $52.3 billion Texas Permanent School Fund terminated BlackRock from $8.5 billion in equity mandates to comply with a local anti-ESG statute.
But in April, a committee set up by Arkansas’ state treasurer to identify money managers that boycott fossil fuel companies or other sectors for ESG-related considerations didn’t include BlackRock on its initial list of six money managers — a potentially significant sign that the firm has ceased to be a one-stop shop for anti-ESG campaigners.
In addition to the costs outlined for Fink’s security, expenses to ensure the security of Robert S. Kapito, BlackRock’s president, in 2023 totaled $51,464 — with $2,499 for security personnel and $48,965 to upgrade the home security system at Kapito’s residences, the proxy statement said.
BlackRock’s April 2023 proxy filing said home security measures were put in place for Fink from 2022 and for Kapito from early 2023. The proxy statement noted that the steps taken to ensure the security of BlackRock’s top executives were recommended by an independent, third-party security study and supported by BlackRock’s board as “necessary and in the interest of the company and its shareholders."
LOOSE CHANGE
Keeping Tabs: What Kerri Scott is reading, watching and listening to: Scott is the COO of Mt. Vernon Investments, the family office for Kenny and Lisa Troutt.
Indonesia pursues family office presence in Hong Kong: The chairwoman of the Indonesian Employers’ Association recently met with Hong Kong chief executive John Lee to discuss the plan.
Matt Dmytryszyn joins Miracle Mile Advisors as CIO: The firm manages about $5.7 billion in assets for high-net-worth clients.
Help us with a story: We’re working on a story about family offices investing in sustainable fashion. If you have any comments on the topic, reach out to [email protected].