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In an increasingly interconnected world, families with dual citizenship often encounter complex challenges when it comes to estate planning and managing inheritance taxes across different countries. One common concern revolves around the implications of acquiring citizenship in a new country on long-term financial strategies, especially regarding inheritance taxes in both the US and the UK. Understanding the intricacies of inheritance tax laws in both jurisdictions is crucial. Similar to the US, the UK imposes an inheritance tax (estate tax) on worldwide assets for UK-domiciled individuals, including assets held within and outside the UK. You should primarily work with the US-UK inheritance tax double taxation relief agreement, which most other countries don't enjoy.   https://www.gov.uk/guidance/inheritance-tax-double-taxation-relief Thereafter, as the UK has lower thresholds for inheritance tax, the next aspect to consider will be whether you have one of three primary determinants applying to you from a UK inheritance tax perspective: domicile of origin (a person’s domicile at birth), deemed domicile (not resident in-country, but considered domicile for inheritance tax purposes), and general domicile. While residency duration may trigger considerations under general domicile, acquiring citizenship in the UK does not automatically establish domicile status. Tax authorities subjectively interpret individuals' intentions, adding further complexity as they tend to look at a wide variety of aspects in a holistic manner, potentially from where you spend your time, where your family resides and/or studies and perhaps even where you have a burial plot. Acquiring UK citizenship is a factor which may imply an inclination towards UK domicile, though it does not provide a definitive answer. It is important to consult a professional on these aspects in order to best prepare yourself with the estate plan most appropriate for your personal situation. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER AND ARE NOT ESTATE SPECIALISTS. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

The UK Finance Manager, Rachel Reeves, announced the new tax budget last month, which contained significant changes. Most significant to the US expat is the fact that the new budget includes a provision to raise UK capital gains taxes. The lower rates in the UK will go up from 10% to 18%, and the higher rate from 20% to 24%. This is now higher than the US capital gains rates (0%, 15% and 20%) What does that mean for you? The simplest answer is to take advantage of the lower US capital gains rates by investing in an ISA (individual savings account). Capital Gains Differential In the new UK budget, the capital gains rate has increased. The capital gains tax-free allowance is now down to £3,000, and capital gains tax rates have moved from 10% to18% in the basic tax band and from 20% to 25% in the higher bands. Therefore, you may be better off paying US capital gains taxes and avoiding UK taxes by placing the money in an ISA. US Long-Term Capital Gains Tax Rate 2024 are as follow: Capital Gains Tax Rate Single Married Filing Jointly 0% $0 to $47,025 $0 to $94,050 15% $47,026 to $518,900 $94,051 to $583,750 20% $518,901 or more $583,750 or more (Short-term capital gains are taxed as ordinary income according to federal income tax brackets) ISAs In 2024, as a UK resident, you can contribute up to £20,000 annually to an ISA. The UK recognizes this investment much like the Roth IRA. It is not income tax deferred when you contribute, but grows tax deferred and is never charged UK capital gains taxes. However, the US does not recognize ISAs as a tax deferred vehicle and will tax them as an ordinary account, so you will be subject to US capital gains taxes. But now, the US capital gains rate is much lower than the UK rates so this could be to your advantage. There are two primary types of ISAs: Cash ISAs - A Cash ISA functions mainly in the same way as a standard savings account. However, if you have a Cash ISA, you will not pay UK tax on the interest you earn, whereas if you have a savings account with a bank or building society, you will pay Income Tax on earnings over £1,000. Stocks and Shares ISAs - Your money can be invested in assets like shares, bonds, property, and commodities. For US expats you will want to stay with shares and bonds, not ETFs for Mutual Funds as they can be considered PFICs and cause you an undue tax burden, In a Shares ISA (also known as an investment ISA), and you don't have to pay UK tax on capital gains or income (interest and dividends). But, you will pay the lower US capital gains taxes. PFICs If you walk into many high street banks, they won’t permit you to buy one of their off-the-shelf ISAs (except for a cash ISA). With this, they are doing you a favor as the IRS in the United States would classify these investments as PFICs (Passive Foreign Investment Companies). PFICs are subject to strict and complicated tax guidelines set by the IRS to close tax loopholes on US citizens avoiding taxation on foreign income. Taxes vs Diversification If you think that an ISA might be right in your specific circumstance, you should also consider the fact that you may be giving up some opportunities for diversification. Since it is not recommended that you use a mutual fund in your ISA because of the PFICs, you will need to purchase individual shares in US companies. Mutual funds and ETF positions offer diversification through the various investments inside of the fund. Single stock positions are not. So, be sure you consider your risk exposure if you decide to invest in an ISA. Dunhill Financial has partnered with Morningstar Wealth Platform (formerly Praemium) to provide compliant portfolios that can be utilized in an ISA. Morningstar Wealth Platform (formerly Praemium) issues 1099s to make your US taxes as simple as possible, and we ensure that we use no PFICs (i.e., all US-listed securities). Contact our expert advisors to see how they can help in your situation. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2024 Dunhill Financial. All rights reserved.

The UK Spring Budget on Wednesday March 15th 2023 saw Chancellor Jeremy Hunt making large scale reforms to the UK pension regime. During the Chancellor’s 2023 Spring Budget, he announced that the Lifetime Allowance (LTA) is to be scrapped altogether and that the Annual Allowance (AA) would rise from £40,000 up to £60,000. Currently the LTA stands at £1.073m with any pension savings above this amount being subject to charges of 55% on excess benefits taken as a lump sum and 25% for excess benefits being taken as income. Reports that there were fears of high earners (doctors specifically being listed) retiring early (in their 50s) due to the freezes on the LTA and AA are understood to be the key driver behind this momentous move. Furthermore, the Spring Budget saw both the Money Purchase Annual Allowance (MPAA) and Minimum Tapered Annual Allowance (MTAA) set to increase from £4,000 to £10,000. In essence, both the MPAA and MTAA are limits to how much individuals can place into their pension per year. For the MPAA, this is once the individual has flexibly started taking benefits out of their pension. The MTAA is relevant for high earners earning past a certain threshold to the extent that their allowable contributions are tapered down as far as the rules allow. There is much to be excited about here for people at all stages of their pension journey. The increase in the AA is a big win for those focusing on accumulating significant amounts in their years prior to retirement, whilst the increase in the MPAA is certainly welcome to those who may wish to have some flexible access to pensions, yet still have many years to invest and have their funds grow e.g. semi-retired individuals. Given that UK pensions are not subject to Inheritance Tax (IHT), this budget opens up significant estate planning opportunities for High Net Worth Individuals in the UK. The changes listed will be implemented in April 2023. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2023 Dunhill Financial. All rights reserved.

When moving to the UK, if you are employed by a UK firm you will most likely find yourself enrolled into a workplace pension. This is known as 'auto-enrolment'. Through auto-enrolment you will be placed into a suitable direct contribution pension. Your contributions are paid into a pension pot and you will have a range of investment choices available to you: how extensive this range of investments is will depend entirely on the pension provider. With auto-enrolment, the minimum contributions required are: Employee: 5% (including tax relief), Employer: 3% Contribution splits may vary from company to company. Discuss with your HR representative to be sure of how much you and your employer are contributing. Within this article, we will be highlighting some key features/considerations when it comes to UK pensions. US citizens and UK pensions Thankfully, UK pensions are protected by the US-UK Tax Treaty. This means that so long as your money remains within a UK registered pension, it will not face exposure to US taxes. Furthermore, as UK pensions are covered by the aforementioned treaty, investments held within your UK pension(s) will not be subject to the Passive Foreign Income Company (PFIC) rules, which ordinarily apply to US investors abroad. See Dunhill Financial’s PFIC Reporting Explained . Lifetime Allowance The Lifetime Allowance for UK registered direct contribution pensions is £1,073,100 (2022/23). Should your pension pot grow above this figure, you will face charges on the excess amount when gaining access to your pension pot (55% for lump sums and 25% for income). Contribution Allowances The annual allowance for UK pension contributions stands at £40,000 per year, or 100% of your income if lower. Should you go above this threshold, you will be required to pay tax on your excess contributions. Carry Forward Should you have any unused pension annual allowance in the previous three tax years, this can be used in the current tax year, should you have the means and inclination to do so. For example: Client: Mr. Smith Salary £42,000 per annum (Gross) As you can see in the table above, Mr. Smith has been able to carry forward the full amount from the previous three financial years into the current year’s contributions. Should this be something you are considering, we recommend discussing this issue with your accountant. Please note, you must have been a member of a UK registered pension scheme, for each financial year that you are applying carry forward. Tax Relief Private pension contributions in the UK are subject to tax relief. On your workplace pension, whether or not you are entitled to tax relief will depend entirely on how your contributions are made. Should your contributions be made using the Net Pay Method , contributions that are made before tax can be deducted and therefore tax relief will not be granted, as it is considered to already have been received by means of reducing your taxable income. If the Relief at Source method is used for your pension contributions, then 20% tax relief (basic rate) is claimed by your workplace pension provider, e.g. an £80 contribution would result in a total contribution of £100. If you pay higher rate (40%) or addition rate (45%) tax, then you may be able to claim an additional 20% or 25% in tax relief, respectively. This can be done by way of self-assessment, or by contacting HMRC and requesting directly. Check with your HR Representative on how your workplace contributions are made. You are unable to claim tax relief on employer contributions, as they are made pre-tax. Accessing Your UK pension At present, you can access your UK Workplace/Private pension(s) from age 55, increasing to 57 from 2028. There are multiple considerations with potentially significant tax implications when it comes to taking income from a UK workplace/private pension, which we will cover in a separate article. Priorities If you are thinking about making additional contributions/significant changes to your UK pension(s), we have put together a basic priorities list of considerations. Please note that this is a suggested priorities list and each individual case is different. 1) Putting together an Emergency Fund Before increasing your contributions, we advise that you should ensure that you have a minimum of three to six months of expenses held in cash, in a readily available account. This is known as your Emergency Fund and acts to provide you with liquidity in uncertain times/unforeseen circumstances (we never know when we are going to need to buy a new boiler or repair a car!). 2 ) Specific Savings Goals Once you have established your Emergency Fund, it would now be a good time to consider any specific saving goals that you may have and to budget accordingly for them. For example, saving for a deposit for a mortgage. 3) Specific pre-retirement investment goals As highlighted previously in this article, you cannot access your UK workplace or private pension until you are at least 55 (57 from 2028) and there are several tax/financial planning implications to take into account when doing so. Therefore, should you have any investment goals with a time horizon that lands pre-55 or pre-retirement, then it is a good idea to get a full understanding of these goals, what suitable investment vehicles are available, as well as ascertaining your attitude to risk and capacity for loss. 4) Consider increasing monthly contributions or making additional contributions. Once you have addressed the previous three areas, it may be worth considering increasing monthly contributions or making a one off, or multiple additional contributions. UK direct contribution pensions act as a great tax wrapper which allows your investments to grow free of capital gains tax and income tax (income tax is potentially chargeable once an individual takes income from the pension). The longer your money is invested within your pension, the longer you have the potential of cumulative growth. However, ultimately the decision to increase your funding or make additional contributions is a personal one, which will come down to affordability and goals. 5) Consolidating previous workplace or private schemes into your current scheme Should you have any previous UK workplace or private pension schemes, it could well be worth considering moving them into your current workplace pension. These days, we see people changing jobs and/or companies far more frequently. It is not uncommon for people to reach retirement to find that they have 4+ workplace pensions in different locations. By having all of your pensions in one place, you can ensure that you have a cohesive investment strategy. Furthermore, you make things far simpler by the time you come to needing to access your retirement funds, by virtue of having everything in one place. 6) Consider transferring funds to a SIPP Once you have started to accumulate a relatively significant amount in your workplace pension(s) (>£50,000), you may want to consider a transfer to a Self-Invested Personal Pension (SIPP). One of the key advantages of having a SIPP is that they offer a much more extensive choice of investments that are available for you to grow your retirement pot. You can have a SIPP or multiple SIPPs open alongside your workplace pension. When moving funds over to a SIPP from a workplace pension, it is advisable to keep your workplace pension open. This way you can still receive your employer contributions and periodically move funds over to your SIPP. If you have any questions, don't hesitate to contact us. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2022 Dunhill Financial. All rights reserved.

The UK government introduced an advantageous savings vehicle in 1999 and has increased the maximum amount that we can save in those several times since. At the time of writing in 2024, we can contribute up to £20,000 to such a plan annually. There are 4 types of ISAs: Cash ISAs  - A Cash ISA functions mostly in the same way as a standard savings account. However, if you have a Cash ISA, you will not pay tax on the interest you earn, whereas if you have a savings account with a bank or building society, you will pay Income Tax on earnings over £1,000. Stocks and Shares ISAs  - Your money is invested in assets like shares, bonds, property, and commodities in a Stocks and Shares ISA (also known as an investment ISA or S&S ISA), and you don't have to pay tax on capital gains or income (interest and dividends). Innovative finance ISAs  - You can become a lender with an ISA by lending to qualified individuals and businesses using an online peer-to-peer lending platform in exchange for a defined amount of interest over a certain length of time and paying no tax on the interest you earn. Lifetime ISAs  - You can save for your first home and/or retirement by contributing to a Lifetime ISA, and you won't have to pay tax on your earnings or capital gains. The government will add 25% to your investment (maximum £1000). Your maximum contribution for the year is £4,000 and if you are not using the money for your first home, you can access funds after turning 60. Cash ISAs are considered typical international bank accounts in the United States, with interest taxed at ordinary rates. When it comes to stocks and shares ISAs, though, you'll need to be cautious in determining the underlying investments. If the investment is in individual shares or bonds, the income is treated similarly to interest from a cash ISA, with income flowing to the appropriate section of the return (for example, schedule B, D, etc.) based on the nature and classification of the income produced. We will cover all three of the issues that are controversial regarding setting ISAs up for Americans in the UK. The three issues are PFICs, HMRC reporting funds, and the tax situation between the jurisdictions. PFICs If you walk into many of the high street banks, they won’t even permit you to buy one of their off-the-shelf ISAs (except for a cash ISA). With this, they are actually doing you a favor as the IRS in the United States would classify these investments as PFICs (Passive Foreign Investment Companies), which can become very costly from a tax vantage point. You can find plenty of information on the internet on why Americans should avoid this at all costs, even if you take the QEF election. HMRC The HMRC has a strict list of funds that meet their qualifications and are approved as offshore reporting funds. We utilize this guideline even for ISAs to keep all our clients’ portfolios consistently independent of whether they invest in a tax-advantaged wrapper or in a general investment account. Tax Situation The real reason that funding an ISA becomes controversial for Americans is the tax situation. In the UK, the growth and distribution of an ISA will not be taxed. However, the US does not recognize this tax advantage and will, therefore, tax the account as if it were a regular investment. So, why would we want to shift the tax burden from the UK to the US? Simply because US capital gains tax rates on passive income are lower than UK tax rates. For the UK tax year 2024-25, the tax-free dividend allowance is now £500. Dividends above this level are taxed at: 8.75% (for basic rate taxpayers) 33.75% (for higher rate taxpayers) 39.35% (for additional rate taxpayers) Capital gains also have a tax-free allowance of £3,000, but thereafter you will pay 20% taxes (unless you're in the basic rate tax band) which, apart from those making a significant salary, is higher than the rate in the US. Therefore, you're better off paying US taxes and avoiding UK taxes by placing the money in an ISA. With all these complications of even setting up an ISA for this small portion of the American population in the UK, you will find only a few firms that offer them properly. Dunhill Financial has partnered with Morningstar Wealth Platform (formerly Praemium) to offer compliant portfolios that can be utilized in ISAs. Morningstar Wealth Platform (formerly Praemium) issues 1099s to make your US taxes as simple as possible and we ensure that we use no PFICs (i.e., all US-listed securities) and that all funds are HMRC reporting funds. To learn more about this offering, please see our portfolios here . Get in touch with our expert advisors to see how they can help in your situation. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2024 Dunhill Financial. All rights reserved.

The short answer: they are now a smart move. With recent changes to the UK tax regime, shifting your tax liability to the US can be an effective way to reduce your overall tax burden. Since their introduction in 1999, Individual Savings Accounts (ISAs) have been a cornerstone of tax-efficient investing for UK residents. With an annual contribution limit of £20,000 for the 2024/25 tax year—frozen until at least 2030—they remain an attractive savings vehicle. However, for Americans living in the UK, ISAs present a complex and often controversial choice. Should US taxpayers contribute to an ISA? The answer hinges on a few critical factors: Passive Foreign Investment Companies (PFICs) and the divergent tax treatment between the UK and the US. The PFIC Pitfall If you're an American attempting to invest in an ISA, you may have been turned away by major UK banks. While this can be frustrating, it’s actually a blessing in disguise. The IRS classifies most non-US mutual funds and ETFs as PFICs, subjecting them to punitive tax treatment. The tax burden is severe, with complex reporting requirements that can lead to excessive tax bills. Even if you elect for Qualified Electing Fund (QEF) status, the administrative burden remains significant. In short, investing in non-US mutual funds through an ISA can create unnecessary tax headaches for Americans. At Dunhill Financial, we mitigate this by ensuring we avoid all securities that could be considered PFICs, preventing these tax complications. The Tax Dilemma ISAs are designed to be tax-efficient in the UK, with no income or capital gains tax on distributions. However, the IRS does not recognize this benefit—to the US tax authorities, an ISA is simply a standard investment account. This means income and gains remain fully taxable in the US. So, why would an American voluntarily shift their tax liability from the UK to the US? The answer lies in the comparative tax rates. The Autumn 2024 Budget, announced by UK Chancellor Rachel Reeves, raised UK capital gains tax rates, making the US tax regime more attractive for many American investors. US Capital Gains Tax Rates: Income Range (Single Filers) Income Range (Married Filing Jointly) Long-Term Capital Gains Tax Rate $0 - $11,600 $0 - $23,200 0% $11,601 - $47,025 $23,201 - $94,050 0% $47,026 - $100,525 $94,051 - $201,050 15% $100,526 - $191,950 $201,051 - $383,900 15% $191,951 - $243,725 $383,901 - $487,450 15% $243,726 - $518,900 $487,451 - $583,750 15% Over $518,900 Over $583,750 20% In the UK, capital gains have a tax-free allowance of £3,000 for the 2024/25 tax year, but once you exceed this, you will pay 18% tax if you are a basic rate taxpayer and 24% tax if you are in the higher rate band. Additionally, carried interest is taxed at 28%. For many Americans, this is higher than the long-term capital gains tax rates in the US, making it more beneficial to pay US taxes rather than UK taxes. In addition to the CGT allowances, there is a dividend allowance of £500. Dividends above this are taxed at:  8.75%  for basic rate taxpayers 33.75%  for higher rate taxpayers 39.35%  for additional rate taxpayers The Solution: ISA-Compliant Portfolios for US Taxpayers With all these complexities, very few firms offer ISAs in a way that works properly for US taxpayers. At Dunhill Financial, we have partnered with Morningstar to provide compliant investments by selecting individual stocks and bonds. Whilst this approach needs to be considered in a careful manner, and is not suitable for everyone, it does allow US persons to use an ISA to shift their tax liability to the US from the UK. Conclusion: Are ISAs a Smart Move for Americans in the UK? Following the Autumn Budget and the growing gap between UK and US capital gains tax rates, we believe ISAs have become an even more viable option for Americans in the UK. With UK capital gains tax rates rising relative to the US, deliberately shifting your tax obligations to the US through an ISA could be an advantageous strategy. By structuring your investments properly, you may reduce your overall tax liability while still benefiting from a tax-efficient savings vehicle. Get to know DF-Direct To learn more about how we strategically prevent tax complications  and explore opportunities for portfolio growth,   join our webinars  or sign up for an account today . You can also visit or websites at Dunhill Financial  and DF-Direct for our low cost robo-advisor. Get a complimentary copy of the American expat guide here  for more information about the financial planning process as an American expat. Join our referral program Have friends looking for smarter investing? Get $50 when you refer them to DF Direct! DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

Investing can feel overwhelming, especially if you're navigating financial decisions across borders. DF-Direct simplifies the process, offering a streamlined, tech-driven solution tailored for U.S. expats. With no minimums and no hidden fees, you can start building your financial future today. What is DF-Direct? How DF-Direct Works Why Choose DF-Direct? Who is DF-Direct For? Discover financial insights on our YouTube channel & webinars What is DF-Direct? DF-Direct is a low-cost, automated investment platform designed specifically for U.S. expatriates. It provides globally diversified portfolios that are fully compliant with U.S. tax laws, helping expats manage their finances without unnecessary complications. Whether you're just starting out or already investing, DF-Direct offers a seamless way to grow and protect your wealth while living abroad. How DF-Direct Works DF-Direct offers a hassle-free approach to investing by leveraging advanced technology and expert insights. The process is simple: Sign Up – Get started with an easy, guided onboarding experience tailored to your financial goals. Portfolio Matching – DF-Direct assesses your risk tolerance, investment objectives, and timeline to match you with a professionally designed portfolio. Automated Investing – Your portfolio is managed through intelligent rebalancing, ensuring long-term growth while adapting to market changes. Compliance & Tax Efficiency – As a U.S. expat, you benefit from an investment solution that aligns with U.S. regulations while optimizing for global financial growth. Why Choose DF-Direct? Many traditional investment platforms are not designed to accommodate the specific needs of U.S. expats. DF-Direct stands out by offering: Regulatory Compliance – Investments remain compliant with U.S. tax laws and reporting requirements. No Minimum Investment – Start investing with any amount, making it accessible for all financial situations. Global Diversification – Exposure to international markets to help mitigate risk and enhance returns. Automated Rebalancing – Your portfolio is continuously optimized to stay aligned with your long-term financial goals. Transparent Pricing – No hidden fees, just clear and affordable pricing to keep more of your money working for you. Who is DF-Direct For? U.S. expats seeking a tax-compliant investment solution. Young professionals looking for an easy, hands-off way to invest. Those who want a globally diversified, low-cost portfolio. Investors who value automation and expert-driven asset allocation. Ready to invest smarter? Opening an account with DF-Direct is quick and straightforward. The platform guides you step by step, ensuring that your investments are aligned with your financial situation and risk appetite. With just a few minutes of setup, you’ll be on your way to a smarter, more efficient investing experience. Discover financial insights on our YouTube channel Dive into expert advice and practical tips for financial planning and expat life on our YouTube channel. DF-Direct Presents features insightful discussions with Brian Dunhill and expert guests, it’s your ultimate resource for making smart financial decisions—wherever life takes you. If you want join our webinars live, check out our latest events. Have more questions about how DF-Direct works? From account setup to portfolio management and compliance, our FAQ section covers everything you need to know. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN. Copyright © 2025 Dunhill Financial. All rights reserved.

The market update itself remains positive across the board, with large cap growth leading the pack as a trend continuation. Despite the rate cuts small caps have yet to participate in the upside on the same magnitude. Some positive developments out of China, combined with a weaker US Dollar for the month, have led to some gains in the Asia Pacific and EM regions, being the best performers on the 1-month and 3-month time-frames. Somewhat left-field, Utilities are now the best performing sector on a YTD basis for the S&P500 which can be somewhat explained by the recent rate cut of 50 bps by the Fed coupled with the increased energy demands by big-tech for the continued rollout of data centres to keep the AI narrative alive. The best performers for last month was GRID (clean energy/utilities/electrical grid) and FTGC (commodities), with the latter’s performance being explained by an uptick in Crude Oil due to middle east tensions but also a stronger Chinese fiscal/monetary response. Last but not least the yield curve; it continues to un-invert (see below) with the 2Y/10Y spread finally in the positive territory with all but the shortest of paper still at elevated levels which is likely to come down as a function of further Fed rate cuts. DISCLOSURES DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. THE INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. IT DOES NOT PRESENT THE FULL RANGE OF OPTIONS AVAILABLE TO YOU. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

When it comes to saving and investing for a child's future, parents and guardians have a few different account options to consider. Two common choices are the Uniform Gifts to Minors Act (UGMA) account and the Uniform Transfers to Minors Act (UTMA) account. While these custodial accounts share some similarities, there are also important distinctions between the two. What is a UGMA Account? A UGMA account is a custodial account that allows adults to gift cash, securities, insurance policies, and other types of assets to a minor child. The adult serves as the custodian and manages the account until the child reaches the age of majority, which is typically 18 or 21 depending on the state. Once the child reaches this age, they gain full control over the account and the assets within it. UGMA accounts are governed by the Uniform Gifts to Minors Act, which was originally enacted in 1956. These accounts allow a wider range of assets to be contributed compared to some other custodial account types. What is a UTMA Account? Like a UGMA, a UTMA account is a custodial account that allows adults to gift assets to a minor child. However, the Uniform Transfers to Minors Act, which was enacted in 1983, expanded the types of assets that can be contributed to include real estate, fine art, patents, royalties, and more. The custodian manages the UTMA account until the child reaches the age of majority, at which point they gain full ownership. This age is typically 18 or 21 depending on the state, just like with a UGMA. Key Differences Between UGMA and UTMA The main differences between UGMA and UTMA accounts come down to the types of assets that can be contributed: UGMA accounts are limited to cash, securities, insurance policies, and certain other financial assets. UTMA accounts have a broader scope and can hold a wider variety of assets including real estate, fine art, patents, royalties, and more. Another key difference is the taxes on the accounts. UGMA and UTMA accounts are both subject to the "kiddie tax" rules, which means the first $1,100 of unearned income (e.g. investment returns) is tax-free, the next $1,100 is taxed at the child's rate, and any amount above that is taxed at the parent's marginal rate. Which is Better - UGMA or UTMA? There is no clear-cut "better" option between UGMA and UTMA accounts. The best choice depends on the specific goals, needs, and asset types of the child's savings and investment plan. UGMA accounts may be preferable if the plan is to contribute primarily cash and securities. UTMA accounts offer more flexibility if the intent is to gift the child a broader range of assets like real estate or intellectual property. Ultimately, both UGMA and UTMA accounts can be useful tools to help save and invest for a child's future. The key is to understand the differences between the two and choose the one that best fits your specific circumstances. DISCLOSURES DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. THE INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. IT DOES NOT PRESENT THE FULL RANGE OF OPTIONS AVAILABLE TO YOU. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

When you were in the US, it was commonplace to have a trust in order to avoid probate. But how does this change after you have made the move over to a European country, such as Belgium? If you are a Belgian resident with assets held in a trust or other legal arrangement, they will likely not view a trust in the same way as it would be seen by the IRS in the United States - i.e. they may disregard the structure of the trust and view its contents as taxable on the beneficiary, meaning the trust loses its advantage it enjoys in the states. Therefore, it is crucial to be aware of your tax reporting obligations, as not complying can lead to significant penalties. You should reevaluate the purpose of holding the trust and whether it continues to be fit for purpose if you now live in a different jurisdiction with a different legal system. Why is it Important? Tax Compliance:  Accurate reporting of your assets helps you maintain compliance with Belgian tax laws, avoiding potential penalties and interest charges. Transparency:  By filing appropriately, you contribute to the integrity of the Belgian tax system. Risk Mitigation:  Proper tax reporting can protect you from future disputes with the tax authorities. What should I know about my filing obligations? The Belgian government decided in December 2023 that a taxpayer who declares to either hold a trust or be a beneficiary of a trust (or another similar administrative construction) has to attach a special form to their income tax return, Annex 276CJC.  In this attachment 276CJC the taxpayer has to mention information (figures) about the trust. Annex 276 CJC is a tax form used in Belgium to declare income and assets held through trusts, companies, or other legal entities. It is part of the annual income tax return and is designed to ensure that all income generated by these structures is correctly reported and taxed. To complete Annex 276 CJC accurately, you will need information about: The structure of your trust or legal arrangement. The income generated by the structure. The assets held within the structure. Your beneficial ownership of the structure. Seek Professional Advice While this article is written with the specific view of how a trust should be considered in Belgium, it is worth noting that many European countries regard US trusts in a similar way. Given the complexities of international tax law and the specific nuances of the above and any other filing obligations you may have as a resident in Belgium, it is highly recommended to consult with a qualified tax advisor. They can guide you through the filing process, ensure compliance, and help you optimize your tax position. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. THE INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Receiving a financial gift can be a generous gesture from family, whether it’s to purchase property, funding education, starting a business, or simply easing the cost of living. However, even as the recipient, it’s essential to understand the tax implications and reporting requirements to avoid any undue surprises from the IRS. Who Pays the Gift Tax? According to tax law, the responsibility for paying tax in the US lies with the gift giver, not the recipient. This applies in specific cases: U.S. Citizens Living Abroad : If the gift giver is a U.S. citizen residing outside the U.S., they are subject to U.S. gift tax laws. Permanent Residents (Green Card Holders) : Green card holders, regardless of their residence, are also subject to these laws. Covered Expatriates : U.S. citizens or green card holders who renounced their status but met certain criteria at the time of renunciation may still be liable for gift taxes. If the gift giver does not fit into any of these above categories, they generally aren’t subject to U.S. gift tax laws. Reporting Requirements Even if no gift tax is owed, there are specific reporting requirements for large foreign gifts: Form 3520: If you receive a gift exceeding $100,000 from a foreign individual or estate, you must report it to the IRS using Form 3520. This form is crucial for compliance and should be kept indefinitely as proof of the gift. Failing to file Form 3520 can result in substantial penalties, up to 25% of the gift's value. Gifts from Foreign Entities The reporting thresholds differ when the gift comes from a foreign corporation or partnership: For 2024, gifts from foreign corporations or partnerships must be reported if they exceed $19,580. Compliance Matters Properly reporting gifts from overseas ensures that you stay in good standing with the IRS and avoid hefty fines. While the process might seem daunting, it’s a small price to pay for the financial support and opportunities these gifts provide. In conclusion, while you might not owe taxes on your gift from overseas, adhering to reporting requirements is essential. Always consult with a tax professional to navigate these rules effectively and ensure you’re complying with regulations correctly.  DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. THE INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

The month of June brought an onslaught of economic data releases to which the markets gyrated numerous times only for the overall market to continue its march higher. The US yield curve is a graphical representation of the interest rates on debt for a range of maturities. It shows the relationship between short-term and long-term interest rates of US Treasury securities. A normal yield curve slopes upward, indicating that long-term interest rates are higher than short-term rates. An inverted yield curve, on the other hand, shows the opposite, with short-term rates higher than long-term rates. The shape of the yield curve is closely watched by many economists and investors as it can provide insights into future economic conditions and potential recessions although with a lag. The curve has been inverted since early July 2022. As of today, June 17, 2024, this inversion has surpassed the longest one on record, which lasted 624 days in 1978. While an inverted yield curve has often been followed by a recession, the effects of the FED and policy may have inadvertently warped this indicator, but as always time will tell. Moving onto the wider markets; the US continues its dominant outperformance compared to the international markets on the equity front drive primarily by the magnificent seven technology stocks, with the poster child being Nvidia (NVDA) having benefited tremendously from the artificial intelligence hype. You can check out our NVDA breakdown in earnings/growth in our last quarterly update here. If we take a deeper look at the overall sector composition in the US, it becomes clear that a few select companies are having an outsized impact on not just the sector level but the index level. Technology as a sector is the highest weighted sector we’ve seen for the S&P 500 since records began. Real estate remains the standalone sector seeing negative return on a YTD basis, partly owed due to the ongoing crisis in commercial real estate and higher cost of capital due to rates. Finally moving onto the portfolio breakdown; First Trust NASDAQ® Cln Edge®StGidIfsETF (GRID) was the best performer for the month of June followed closely behind by the overall S&P 500 as markets continued higher after Apple’s recent debut of AI into their suite of products. First Trust NASDAQ Cybersecurity ETF (CIBR) took a slight pull back after having enjoyed a nice run-up earlier in the year. DUNHILL FINANCIAL, LLC IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.