The headlines about George and Amal Clooney obtaining French citizenship might not be surprising to many, especially financial advisors, who are having more client conversations about living beyond U.S. borders. Such celebrity moves mirror a broader shift among Americans exploring a bold move abroad, with some even considering renouncing their citizenship. Political polarization, remote work flexibility and lifestyle aspirations are fueling the intrigue.
Intrigue is turning into action. American expatriation surged over the past five years, with the number of U.S. citizens expatriating rising 102% in early 2025 from the previous quarter.
Ada K. Colomb, an international estate tax attorney at Vacovec, Mayotte & Singer who specializes in pre-immigration and expatriation planning and cross-border inheritance, has seen an uptick in inquiries from clients looking to leave. But what many Americans underestimate, she says, are the legal and financial challenges beneath the glamour of global living: a thicket of tax rules, reporting obligations and long-term estate-planning consequences. Her insights can help advisors guide clients through these conversations.
Living Abroad vs. Expatriation
A common misconception is that moving abroad reduces or eliminates U.S. taxes. In reality, the United States (along with only one other country: Eritrea) taxes based on citizenship, not residency. A U.S. citizen who lives overseas, whether for five years or 50, remains subject to U.S. federal income tax on worldwide income and U.S. estate and gift taxes on worldwide assets.
As Colomb explains, true expatriation occurs only when a U.S. citizen officially renounces citizenship or a green card holder gives up permanent residency and then also files the necessary paperwork with the U.S. Internal Revenue Service. Advisors should clarify this distinction early to avoid costly misunderstandings.
What’s Expatriation Planning?
Expatriation planning involves advance tax and legal work before relinquishing U.S. citizenship or a green card. The aim is to understand, and as much as possible, reduce the tax implications of exiting the U.S. tax system.
A key part of this process, says Colomb, is IRS Form 8854, which officially notifies the IRS of expatriation. Until that form is submitted, the IRS still considers the individual a U.S. taxpayer, even if immigration paperwork has been finished. For high-net-worth individuals, expatriation might also activate the exit tax, which can be an unexpected and significant financial burden.
Understanding the Exit Tax
The exit tax is best described as a “deemed sale” of assets. On the day before the expatriation, the IRS considers the individual as if they sold all their assets, such as real estate, investment accounts, business interests and more, at fair market value. The difference between the asset’s cost basis and its current value is regarded as taxable gain, even though no actual sale occurs. “It’s effectively the IRS’s last chance to tax accumulated appreciation before the individual leaves the U.S. tax system,” Colomb explains. The tax generally applies only if assets exceed $2 million. Cash is excluded, but real estate, businesses, individual retirement accounts and trusts, depending on their structure, are all subject to taxation.
Tax Law: Section 2801
Even after expatriation, U.S. tax exposure may persist for the next generation, particularly for U.S. heirs when gifts and bequests from “covered expatriates” to U.S. persons are involved. Under Section 2801, gifts or bequests from “covered expatriates” to U.S. persons might trigger additional estate tax. Final regulations were issued in January 2025, and in January 2026, the IRS released Form 708, which U.S. recipients must use to file and pay the applicable tax at a 40% tax rate. Advisors should alert clients with U.S.-based heirs about this, Colomb recommends.
More Passports Means More Complexity
Dual citizenship is becoming more common and, by itself, isn’t a taxable event. Issues arise when citizenship overlaps with tax residency. Clients owe tax to the second country usually only if they become a tax resident there or have income from that country. But they remain full U.S. taxpayers unless they formally expatriate.
Colomb provides this example: A U.S. citizen living in Spain could be subject to taxation in both countries. Adding a vacation home in Greece might lead to additional tax liabilities if that property is sold or if Greek residency thresholds are unintentionally crossed.
Country-Specific Nuances Matter
Some countries also impose a “tax tail,” continuing to tax former residents for years after they leave. For instance, former residents of Germany could remain subject to German taxes for up to five years after departure. The United Kingdom is another well-known example, she says, adding complication because its tax year runs from April 6 to April 5, and new residents might be taxed retroactively. A sole trustee moving to the United Kingdom might even cause a U.S. trust to become taxable in the United Kingdom and to be treated as a foreign trust for U.S. tax purposes. Given this, advisors should recommend that clients consult local tax counsel before and after relocating to understand these ongoing obligations, Colomb adds.
France, she says, is notoriously unfriendly toward trusts, including revocable trusts commonly used in U.S. estate planning. Trusts may be subject to tax if the grantor, beneficiary or trustee resides in France, and inheritance taxes can reach up to 60%. “Anyone considering France must first talk to attorneys in both the U.S. and France,” Colomb insists.
Quarterbacking the Team
Clients rarely grasp the full picture when they first raise the idea of moving abroad or giving up U.S. status. Advisors are positioned to frame the right questions and then help clients coordinate with tax, legal and estate professionals across jurisdictions. This quarterbacking is essential in what Colomb calls “a team sport.”
At minimum, clients need “a U.S. trusts-and-estates attorney as well as a trusts-and-estates attorney in the destination country,” she says. They should also have a CPA or equivalent in both countries and additional advisors in any country where they hold assets.
Even when clients ultimately decide not to expatriate, the clarity gained through proactive planning can be invaluable. As global mobility grows, financial advisors who understand expatriation planning, at least at a high level, will be far better equipped to guide clients through what could be one of the most consequential financial decisions they may ever make.
