Is Your Brokerage Account in Danger of Being Sold Out?
By Douglas Goldstein, CFP®
Imagine if your brokerage firm called you up and told you that they were going to sell out all of the positions in your brokerage account within the next 60 days. “Why?” you ask them. They respond that due to increasing regulatory restrictions they will no longer service your account. They give you two options:
Believe it or not, many people in Israel are receiving such a call. This is because they are U.S. citizens, and due to tough regulations regarding Americans living abroad originally intended to prevent money laundering, many U.S. financial institutions no longer want to work with any non-resident Americans. Though it may be disconcerting to receive notification that a long-standing relationship with a brokerage firm is about to end, there is no need to panic. Americans living in Israel who have U.S. brokerage accounts have a solution to this issue.
If you know anyone in this situation, it is important that they speak with a financial advisor well-versed in cross-border financial issues before they sell out their accounts and transfer the funds to Israel. That is because, if securities are sold, people might inadvertently trigger an unwanted tax bill.
Don’t cash out your American account
Instead of cashing out your American account, find a cross-border-friendly firm that specializes in opening brokerage accounts for U.S. citizens who have a foreign address. Then you can transfer your assets “in kind” to the new account. This new account can even be an exact replica of the old one, unless you specifically want to change your investment structure. Best of all, by moving everything over in kind (without selling), there are no tax consequences or reporting requirements.
At the same time, take this opportunity to update and review your financial plan and investments with an investment advisor who is licensed in both the United States and Israel.
To find out more about opening a U.S. brokerage account from outside the United States, go to www.Profile-Financial.com/Account.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.