Dubai: Individual circumstances of families migrating to a new country differ along with their financial situations.
While some may have debts to clear and investments to consider, others such as Regi Varghese and his family had no such commitments. Syed Hussain had trouble with his investments in mutual funds that were finally settled favourably. Gulf News spoke to two financial advisers in Dubai on issues that should be prioritised when deciding to make the final move.
Clear all outstanding debts and the earlier you do it, the better, they say. It is time-consuming and no bank or mortgage institution will allow you to leave the UAE without settling all your dues, including credit cards and personal loans, car finance, driving fines, electricity and water bills. Each authority must issue an all-dues-paid receipt.
"You need to be clear of debt in the UAE, and that can be difficult, especially if you own a property here that has a mortgage on it," said Steve Gregory, a managing partner with Holborn Assets. "Banks are not going to allow you to leave with debt, and may allocate any end of service payment they receive as they see fit."
This could mean one can't access the gratuity to help fund the move. The resident therefore might have to sell cars and properties before departing, along with household goods and furniture. "This requires some months of planning, most likely," Gregory said.
Sarah Lord, wealth planning director at Killik and Co. suggested it is important to transfer cash balances held in financial institutions here either to the country a family is moving to, the home country or an offshore bank. Also, the migrant must cancel all insurance policies that are no longer required such as vehicle insurance.
As with Varghese and Hussain, if members of family depart at different times, it is important to take into account some issues that could arise from living in two countries.
"It might cause the one remaining in the UAE for a period to become liable for income tax and other taxes on the earnings in the UAE, especially if each is travelling frequently to meet the other," Gregory said.
Families need to do research on health insurance, schooling options and property purchases in the new country.
"These [health] policies can be expensive and therefore if a policy is required it is important to budget for this," Lord said.
In some countries, Gregory said, health insurance is usually connected with employment, so it is not a good idea to emigrate with a family before you know what medical coverage is offered.
Benefits such as free health care or education until the age of 18 are not likely to be available to your family or yourself until you are resident there.
Additional requirements
On schooling, Lord pointed out, costs such as fees and additional requirements such as on uniforms can vary significantly, not only by country but regionally too.
Go slow on buying property in a newly adopted country, Gregory advised. And it is not just a matter of price.
"Don't think to buy a property in a country before you have lived there six months," he said. "Only by living there can you decide what is convenient for schooling, medical services, shopping and entertainment. There are parts of many cities that have become enclaves for certain nationalities, and you might not fit in there."
Among the most common pitfalls, Lord said, is not budgeting correctly for the new country. Many find that they had not taken into account the full extent of the taxes on their income. They end up with less disposable income and find it tough to afford to live there.
Alternatively, Gregory said, immigrants may find the new country, like the UAE, to be liberal in lending money via loans and credit cards. "But after they take advantage of the offers they might end up losing their work or health, and find it impossible to repay, leading to imprisonment and deportation," he said.
Not all migrants move with a job offer and they must have sufficient funds at their disposal.
Lord suggested the equivalent of at least six months' anticipated living costs would be the most suitable emergency fund that will provide a cushion if it turns out to be harder to find a job than anticipated.
Tax issues are another important consideration.
If one has investments either in the UAE or elsewhere, Lord said, one has to understand what the tax implications are in the new country. It may be necessary to re-organise investments before moving to ensure that they are as tax efficient as possible.
With regard to the estate in the country of your domicile, there could be issues arising in the new country.
"Even when your country of domicile has no inheritance taxes to charge to your estate, your country of residence may do so, as may any other country in which assets are held," Gregory said.
"So consider holding foreign assets in trust, or set up an offshore company to hold them. The shares of the company can pass to the family avoiding inheritance taxes. But be aware also that some countries do not recognise trusts, or may not allow foreign companies to buy property."
On arrival, declaration of assets may be required because the new country wants to be sure the immigrant will not become a burden on the state.
"Some countries allow you to hold foreign assets for some years before starting to tax profits from them. Others tax them at the end of your first tax year," Gregory added.
