Does it make ANY sense for a US citizen to stash emergency funds overseas?

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Badger1754
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Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 2:47 pm

My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).

This makes almost no sense to me. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a major political crisis, just because the money is stored overseas doesn't mean the powers of the IRS are no longer in effect. Kind of afraid to mention this to DW because I'm afraid she'll next suggest putting emergency money in diamonds or worst yet, Bitcoin. Am I thinking about this right?
Last edited by Badger1754 on Sun May 06, 2018 3:16 pm, edited 4 times in total.

SlowMovingInvestor
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by SlowMovingInvestor » Sun May 06, 2018 2:57 pm

Badger1754 wrote:
Sun May 06, 2018 2:47 pm
. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a fascist / socialist takeover, just because the money is stored overseas doesn't mean FATCA is not longer in effect. Am I thinking about this right?
FATCA does not make 'any assets of US citizens subject to audit and potential seizure by the IRS'. FATCA does have a hefty penalty, but it doesn't allow seizure.

FBAR rules (different from FATCA) do allow penalties of upto 50% of the account per year, so the penalty could reach 100%.

However, I don't think foreign courts would allow penalties to be applied to accounts in their country based on US tax laws (although FBAR is technically not a tax law). But, of course, the IRS could try and take the penalties out of funds you hold in the US, so you would have to essentially leave the US for good and have no assets here, and even relinquish SS and the like.

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JoMoney
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by JoMoney » Sun May 06, 2018 2:59 pm

You might want to remove references to specific politicians if you don't want to make it a political post.

If you're a U.S. citizen you're required to report foreign accounts over a certain amount, and required to file U.S. income taxes from anywhere in the world.
The IRS/U.S. Treasury is probably the most powerful institution in the world.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:04 pm

SlowMovingInvestor wrote:
Sun May 06, 2018 2:57 pm
FATCA does not make 'any assets of US citizens subject to audit and potential seizure by the IRS'. FATCA does have a hefty penalty, but it doesn't allow seizure.

FBAR rules (different from FATCA) do allow penalties of upto 50% of the account per year, so the penalty could reach 100%.
You are right. I didn't mean FATCA not being in effect. I meant the powers of the IRS would still be in effect in case of a socialist/fascist takeover.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by drk » Sun May 06, 2018 3:10 pm

It looks like you edited your post after JoMoney's comment to reflect the letter but not the spirit of the request. You should remove references to specific political actors and ideologies from your post. They are orthogonal to your question.

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:12 pm

drk wrote:
Sun May 06, 2018 3:10 pm
It looks like you edited your post after JoMoney's comment to reflect the letter but not the spirit of the request. You should remove references to specific political actors and ideologies from your post. They are orthogonal to your question.
All right, let me try again.

drk
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by drk » Sun May 06, 2018 3:15 pm

Badger1754 wrote:
Sun May 06, 2018 3:12 pm
drk wrote:
Sun May 06, 2018 3:10 pm
It looks like you edited your post after JoMoney's comment to reflect the letter but not the spirit of the request. You should remove references to specific political actors and ideologies from your post. They are orthogonal to your question.
All right, let me try again.
If I may:
Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).

This makes almost no sense to me. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a major political crisis, just because the money is stored overseas doesn't mean the powers of the IRS are no longer in effect. Kind of afraid to mention this to DW because I'm afraid she'll next suggest putting emergency money in diamonds or worst yet, Bitcoin. Am I thinking about this right?

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HueyLD
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by HueyLD » Sun May 06, 2018 3:15 pm

Unless the OP or his wife is a dual citizen, it may be very difficult for someone with an American passport to open an account overseas. The reporting requirements are such that American citizens are not very welcome by foreign financial institutions.

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:16 pm

drk wrote:
Sun May 06, 2018 3:15 pm
Badger1754 wrote:
Sun May 06, 2018 3:12 pm
drk wrote:
Sun May 06, 2018 3:10 pm
It looks like you edited your post after JoMoney's comment to reflect the letter but not the spirit of the request. You should remove references to specific political actors and ideologies from your post. They are orthogonal to your question.
All right, let me try again.
If I may:
Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).

This makes almost no sense to me. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a major political crisis, just because the money is stored overseas doesn't mean the powers of the IRS are no longer in effect. Kind of afraid to mention this to DW because I'm afraid she'll next suggest putting emergency money in diamonds or worst yet, Bitcoin. Am I thinking about this right?
Very well. Self-censorship in progress... :)

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whodidntante
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by whodidntante » Sun May 06, 2018 3:19 pm

I think it's reasonable to diversify across currencies and to gain exposure to foreign markets. But I'm not quite clear about what threats you are trying to protect against. Is the threat seizure of your assets, economic collapse of the USA, devaluation of the dollar, or what exactly?

SlowMovingInvestor
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by SlowMovingInvestor » Sun May 06, 2018 3:21 pm

Badger1754 wrote:
Sun May 06, 2018 3:04 pm
SlowMovingInvestor wrote:
Sun May 06, 2018 2:57 pm
FATCA does not make 'any assets of US citizens subject to audit and potential seizure by the IRS'. FATCA does have a hefty penalty, but it doesn't allow seizure.

FBAR rules (different from FATCA) do allow penalties of upto 50% of the account per year, so the penalty could reach 100%.
You are right. I didn't mean FATCA not being in effect. I meant the powers of the IRS would still be in effect in case of a socialist/fascist takeover.
The key question is whether a foreign country with a solid judicial system would allow this, especially if you were a resident/citizen of that country. I suspect the answer would be no.

To answer your original question, I think it would only make sense if you were also willing to leave the US for good, keep no assets here and forego SS and other income. If you aren't willing to do that, no point in stashing emergency funds overseas for this particular eventuality.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Nate79 » Sun May 06, 2018 3:22 pm

Tell your wife she's crazy. Come back and let us know how that went.

:sharebeer

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:27 pm

SlowMovingInvestor wrote:
Sun May 06, 2018 3:21 pm
The key question is whether a foreign country with a solid judicial system would allow this, especially if you were a resident/citizen of that country. I suspect the answer would be no.

To answer your original question, I think it would only make sense if you were also willing to leave the US for good, keep no assets here and forego SS and other income. If you aren't willing to do that, no point in stashing emergency funds overseas for this particular eventuality.
You raise a good point. This would only happen in a late-1930s Germany / late-1940s Eastern Europe / early-1950s China type situation. But then again, if that happened in the US, my own emergency savings would probably be the least of anyone's concerns.

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:29 pm

whodidntante wrote:
Sun May 06, 2018 3:19 pm
I think it's reasonable to diversify across currencies and to gain exposure to foreign markets. But I'm not quite clear about what threats you are trying to protect against. Is the threat seizure of your assets, economic collapse of the USA, devaluation of the dollar, or what exactly?
Again, trying to not raise politics here, DW is trying to protect against a life-threatening/existential situation where the stable political system of the US were to be upended and replaced with something that we could no longer rely on. Think 1930s Germany, 1940s Eastern Europe, 1950s China.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by drk » Sun May 06, 2018 3:34 pm

HueyLD wrote:
Sun May 06, 2018 3:15 pm
Unless the OP or his wife is a dual citizen, it may be very difficult for someone with an American passport to open an account overseas. The reporting requirements are such that American citizens are not very welcome by foreign financial institutions.
^ This exactly. Even if able to open an account, though, Americans' property rights abroad derive from the power of the US government. In the event of the type of emergency that threatened privately held property domestically, those rights would not be nearly as reliable without citizenship or some other permanent legal standing.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by CedarWaxWing » Sun May 06, 2018 3:34 pm

If that is the reasoning, I would say not a good idea.

Can things here go bad? Maybe.

If they go REALLY bad here, why would the rest of the developed world not also be in bad shape?

Badger1754
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Badger1754 » Sun May 06, 2018 3:37 pm

Nate79 wrote:
Sun May 06, 2018 3:22 pm
Tell your wife she's crazy. Come back and let us know how that went.

:sharebeer
CedarWaxWing wrote:
Sun May 06, 2018 3:34 pm
If that is the reasoning, I would say not a good idea.

Can things here go bad? Maybe.

If they go REALLY bad here, why would the rest of the developed world not also be in bad shape?
Yeah... Convo with DW a few nights ago:

Me: "Honey, I know you've been binge-watching Handmaid's Tale on Hulu, but that's a work of fiction. That won't happen here."
Her: "THAT'S WHAT OFFRED'S HUSBAND SAID TO HER RIGHT BEFORE THEY TOOK OVER!!!"

grkmec
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by grkmec » Sun May 06, 2018 3:46 pm

Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).

This makes almost no sense to me. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a major political crisis, just because the money is stored overseas doesn't mean the powers of the IRS are no longer in effect. Kind of afraid to mention this to DW because I'm afraid she'll next suggest putting emergency money in diamonds or worst yet, Bitcoin. Am I thinking about this right?
Many ideas come to mind:

1) Stash USD or Euros in a safe deposit box in a foreign country. I am not an expert on FATCA but you are not creating any kind of account by doing this and you are allowed to exit country with up to 10k without disclosing to authorities.

2) Own physical gold (eg. 1 ounce american gold eagles)

3) Own some bitcoin or a basket of cryptocurrencies - split between a hardware wallet like Ledger Nano and a mobile wallet accessible via your iphone

What you are trying to protect against is a very unique situation. Something far more likely is a EMP attack on US. In that case, you want to own property in a rural area with a nice stash of food and guns / ammo. High density urban centers don't work when electricity is out over 1 week and supply chain breaks down.

GCD
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by GCD » Sun May 06, 2018 3:49 pm

Google "Accidental American" if you want to see how the IRS impacts people with assets overseas. There are numerous examples of people who hardly lived in the US at all, but were born here, who by "accident" have US citizenship with no real social ties to the US. The US went after them for tax on sales of foreign real estate purchased with money from foreign salaries earned in a foreign country. Kid of hard to skate on that. Or at least it seems not worth the effort unless you are talking about bigger amounts of money or a more clearly defined threat.

If she really forces you to go down this road, maybe you could research countries which will allow a US citizen to purchase real estate. Then bury a bunch of diamonds and gold there.

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JoMoney
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by JoMoney » Sun May 06, 2018 3:56 pm

Regarding the reach of U.S. gov:
https://arstechnica.com/tech-policy/201 ... -millions/
...All the while, the US government has seized millions of dollars in Dotcom bank accounts in Hong Kong and New Zealand, as well as multiple cars, four jet skis, Dotcom's mansion, several luxury cars, two 108-inch TVs, three 82-inch TVs, a $10,000 watch, and a photograph by Olaf Mueller worth more than $100,000...
... and he's not a U.S. citizen or even been to the U.S.
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by TravelGeek » Sun May 06, 2018 4:00 pm

Badger1754 wrote:
Sun May 06, 2018 3:29 pm
Again, trying to not raise politics here, DW is trying to protect against a life-threatening/existential situation where the stable political system of the US were to be upended and replaced with something that we could no longer rely on. Think 1930s Germany, 1940s Eastern Europe, 1950s China.
How much of an emergency fund is your wife thinking of?

clemrick
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by clemrick » Sun May 06, 2018 4:11 pm

What good is your money in another country if you can't get to it? What if you can't leave the former USA? Any transactions online could also be monitored and the money confiscated.

And what if the country you stash your money in is the one that gets a new government?

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Ged » Sun May 06, 2018 4:13 pm

> Does it make ANY sense for a US citizen to stash emergency funds overseas?

No I don't think so. You would have to establish a non-US citizenship and renounce your US citizenship and leave the US to make this step be protective of your assets.

SrGrumpy
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by SrGrumpy » Sun May 06, 2018 4:25 pm

Was your wife watching the Sopranos episode where Camilla gets anxious about finances, and Tony tells her not to worry because he has money overseas? (*)

In other words, don't waste your time indulging this fantasy unless you're in the mob.

(* and they all got whacked anyway!)
Last edited by SrGrumpy on Sun May 06, 2018 4:55 pm, edited 1 time in total.

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bottlecap
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by bottlecap » Sun May 06, 2018 4:27 pm

Doesn't make any sense on any level.

It will complicate your finances and taxes and provide no benefit.

JT

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Watty
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Watty » Sun May 06, 2018 4:55 pm

About 30 percent of my target date 2015 fund is invested in international stocks and bonds.

To think of a situation where that would be at risk is pretty extreme and while it might be highly taxed or something like that it is hard to imagine a situation where fleeing with the shirt on your back would leave places like London and Israel any better off.

golfCaddy
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by golfCaddy » Sun May 06, 2018 6:50 pm

Your wife is crazy. The IRS and DOJ have a long reach which effectively extends to any financial institutions, which do business in the US.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Tribonian » Sun May 06, 2018 8:39 pm

Ged wrote:
Sun May 06, 2018 4:13 pm
> You would have to establish a non-US citizenship and renounce your US citizenship and leave the US to make this step be protective of your assets.
This seems an overstatement; opening an account overseas is not forbidden so long as you report account info to the IRS. There are plenty of developed nations under a rule of law that would afford a resident (or even a non-resident) due process.

I was looking at opening a Euro-based account to hedge against currency risk in case we decide to retire there and the preliminary research indicated it would be somewhat involved but certainly not require residency. Unfortunately, we presently lack sufficient disposable funds, but the biggest drawback I saw was that their version of FDIC guarantees lesser amounts of deposit and varies from country to country.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by arcticpineapplecorp. » Sun May 06, 2018 9:22 pm

Tell her to turn off the T.V. and read a good book instead. Can I suggest 1984? Just kidding. I know the handmaid's tale was based on a book. I read it. Frightening stuff indeed. There are two books I can recommend if you want to read more about fears of confiscation:

Harry Brown: Fail Safe Investing (I haven't read it)
William Bernstein: Deep Risk (I have it)

On Harry Browne's radio show he recommended stashing cash overseas, legitimately. That is, you inform the U.S. you have money in banks overseas as has been indicated in this post. You can listen to archives of his radio show here: https://www.harrybrowne.org/Archives/Archives.htm

Even William Bernstein talked about confiscation as one of the four horsemen (of financial disaster) in his book "Deep Risk". William Bernstein discusses Harry Browne's concerns about confiscation in this book. He shows Browne's solution was the permanent portfolio and then critiques the portfolio (as has been done here on bogleheads).

Here's a question...how much (percentage wise) of your net worth would you be stashing overseas? In other words, if it's less than half, wouldn't you still lose half your money (or more) if U.S. assets were confiscated? Whatever percentage you would plan to move, would likely not be a meaningful amount. Which is why I also see this conversation as somewhat silly.

I think you stand more to lose through inflation rather than confiscation. For that there's I-Bonds and TIPS and stocks.
Last edited by arcticpineapplecorp. on Mon May 07, 2018 8:04 am, edited 1 time in total.
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by AlohaJoe » Sun May 06, 2018 9:47 pm

Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).
Does it ever make sense? Sure. This why is nebulous talk about "emergency funds" on Bogleheads always goes in circles a bit. Unless you define what your "threat model" is -- that is, what you're worried about and what circumstances the money is supposed to help with -- you don't have any real idea whether the amount is enough (or too big), the fund are liquid enough (or too liquid, giving up some liquidity premium), and so on.

Every reply so far is making assumptions -- based on their own position -- about this. I mean, that's not a horrible thing, since you gave them nothing to go on and despite all of us wanting to believe we are individual and unique, the reality ain't so.

Let me give you two scenarios where it makes sense for a US citizen to stash emergency funds overseas. You can make up your own. Keep in mind that any kind of "emergency fund" is an insurance. And you need to realistically assess both the probability and the impact against the costs of the insurance.

Scenario #1. I am a US citizen. I live overseas. I don't really call it an emergency fund but I keep a few months of liquid cash overseas. Why? Because nowadays you never know when an American bank is going to lock access to your account with no warning or notice. "I'm sorry, sir/madam, we noticed you accessing your account from an overseas IP address and our Fraud Detection Algorithm automatically froze the account. Unlocking it is simple, just go into the closest branch office with your driver's license or passport. Oh, you don't live in the US? Then just hard copy mail us a Medallion Certified copy of your passport? Oh, there's no such thing as Medallion Certification in your country? Then just make an appointment with the closest US consulate. It is in a different city? And they only schedule non-emergency passport related appointments at least a week in advance?"

(This is all based on a true story.)

Scenario #2. You....are engaged matters that may result in you being sued and want to shield your assets from possibly civil (not criminal) judgments. So you set up a Cook Island Trust.

In general, though, I agree with the other posters that none of the realistic scenarios are likely to apply to you. Americans -- more than other places I've lived -- are strangely fascinated with doomsday scenarios.

Give your wife a copy of Enlightenment Now to read. Or, for a shorter read, this recent James Fallows piece: https://www.theatlantic.com/magazine/ar ... ca/556856/

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by golfCaddy » Sun May 06, 2018 10:11 pm

AlohaJoe wrote:
Sun May 06, 2018 9:47 pm
Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).
Does it ever make sense? Sure. This why is nebulous talk about "emergency funds" on Bogleheads always goes in circles a bit. Unless you define what your "threat model" is -- that is, what you're worried about and what circumstances the money is supposed to help with -- you don't have any real idea whether the amount is enough (or too big), the fund are liquid enough (or too liquid, giving up some liquidity premium), and so on.

Every reply so far is making assumptions -- based on their own position -- about this. I mean, that's not a horrible thing, since you gave them nothing to go on and despite all of us wanting to believe we are individual and unique, the reality ain't so.

Let me give you two scenarios where it makes sense for a US citizen to stash emergency funds overseas. You can make up your own. Keep in mind that any kind of "emergency fund" is an insurance. And you need to realistically assess both the probability and the impact against the costs of the insurance.

Scenario #1. I am a US citizen. I live overseas. I don't really call it an emergency fund but I keep a few months of liquid cash overseas. Why? Because nowadays you never know when an American bank is going to lock access to your account with no warning or notice. "I'm sorry, sir/madam, we noticed you accessing your account from an overseas IP address and our Fraud Detection Algorithm automatically froze the account. Unlocking it is simple, just go into the closest branch office with your driver's license or passport. Oh, you don't live in the US? Then just hard copy mail us a Medallion Certified copy of your passport? Oh, there's no such thing as Medallion Certification in your country? Then just make an appointment with the closest US consulate. It is in a different city? And they only schedule non-emergency passport related appointments at least a week in advance?"

(This is all based on a true story.)

Scenario #2. You....are engaged matters that may result in you being sued and want to shield your assets from possibly civil (not criminal) judgments. So you set up a Cook Island Trust.

In general, though, I agree with the other posters that none of the realistic scenarios are likely to apply to you. Americans -- more than other places I've lived -- are strangely fascinated with doomsday scenarios.
If you read this, it seems clear the OP's threat model is a much more serious crisis than your scenarios.
Again, trying to not raise politics here, DW is trying to protect against a life-threatening/existential situation where the stable political system of the US were to be upended and replaced with something that we could no longer rely on. Think 1930s Germany, 1940s Eastern Europe, 1950s China.

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Ged
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Ged » Mon May 07, 2018 10:32 am

Tribonian wrote:
Sun May 06, 2018 8:39 pm
Ged wrote:
Sun May 06, 2018 4:13 pm
> You would have to establish a non-US citizenship and renounce your US citizenship and leave the US to make this step be protective of your assets.
This seems an overstatement; opening an account overseas is not forbidden so long as you report account info to the IRS. There are plenty of developed nations under a rule of law that would afford a resident (or even a non-resident) due process.

I was looking at opening a Euro-based account to hedge against currency risk in case we decide to retire there and the preliminary research indicated it would be somewhat involved but certainly not require residency. Unfortunately, we presently lack sufficient disposable funds, but the biggest drawback I saw was that their version of FDIC guarantees lesser amounts of deposit and varies from country to country.
Hedging currency risk is a very different scenario than what the OP is envisioning. They are thinking of a major political crisis.

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unclescrooge
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by unclescrooge » Mon May 07, 2018 12:40 pm

Badger1754 wrote:
Sun May 06, 2018 3:29 pm
whodidntante wrote:
Sun May 06, 2018 3:19 pm
I think it's reasonable to diversify across currencies and to gain exposure to foreign markets. But I'm not quite clear about what threats you are trying to protect against. Is the threat seizure of your assets, economic collapse of the USA, devaluation of the dollar, or what exactly?
Again, trying to not raise politics here, DW is trying to protect against a life-threatening/existential situation where the stable political system of the US were to be upended and replaced with something that we could no longer rely on. Think 1930s Germany, 1940s Eastern Europe, 1950s China.
While I don't think this line of reasoning has merit, I bought 30 ounces of gold coins as an insurance. If i ever needed to get out of the country, this should be enough to get me out of the country.

Having lived in 2 different countries prior to the US, and having access to corresponding non-US passports it's very easy for me to set up foreign bank accounts, and properties. However, I really don't see the value. America is awesome!

If your wife is worried about things in the US political system, just move to California. As the world's 5th largest economy, we'll protect our vested interests just as well as the federal government. :mrgreen:

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DaftInvestor
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by DaftInvestor » Mon May 07, 2018 12:49 pm

Insane. Today's media is making everybody crazy.
If you are worried about your accounts being seized if the US were to be taken by another country under dictatorship or something as equally as crazy it won't matter how you diversified or what country your accounts are in (if you are a US citizen). Your accounts can be seized regardless.
Perhaps if your wife is that paranoid you should convert cash to gold - fly to one of the countries you think are somehow more magically immune to any problems (England or Israel are the ones you mention) with it - and find some remote place to bury your gold that you could some day return to. Of course that assume if some crazy event happens that gold might actually still have some sort of value somewhere in the world and that you would be able to somehow obtain transportation to get there.
A better solution would be to convince your wife to balance out the far-left media she is reading or watching with something from the right. If she watches X minutes of CNN she should watch an equal number of minutes of Fox News. Similar for reading pubs like NYT, WP, etc.

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Peter Foley
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Peter Foley » Mon May 07, 2018 1:00 pm

No. Daftinvestor presented the alternative that came to mind to me. Hold some small denomination gold coins or silver. I wouldn't hold it anywhere except the US, however. If you need emergency assets you would not want to have to travel to get to a foreign country to get them.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by jalbert » Mon May 07, 2018 6:54 pm

There's an old Taoist proverb that if you move to aggressively in one direction, you end up in the opposite place. People who focus on protecting against theoretical apocalyptic tail risk often miss addressing the much more likely garden variety risks that are right under their nose.
Risk is not a guarantor of return.

Trav
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Trav » Mon May 07, 2018 7:40 pm

Me: "Honey, I know you've been binge-watching Handmaid's Tale on Hulu, but that's a work of fiction. That won't happen here."
Her: "THAT'S WHAT OFFRED'S HUSBAND SAID TO HER RIGHT BEFORE THEY TOOK OVER!!!"
[/quote]

Read that book last fall, and found myself grateful to live in Venezuela ... a functional nation lol.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by windrose » Tue May 08, 2018 12:20 am

I am the grandchild of immigrants, and was raised in a suburban Chicago neighborhood with a fairly large immigrant population, often with several generations living together under one roof. I'd describe it as the *world in miniature*, and many of my childhood friends had parents/grandparents who left their former countries for a variety of reasons.
Again, trying to not raise politics here, DW is trying to protect against a life-threatening/existential situation where the stable political system of the US were to be upended and replaced with something that we could no longer rely on. Think 1930s Germany, 1940s Eastern Europe, 1950s China.
The two Japanese-American families on my block would add 1940s America to your list, due to Executive Order 9066. It can happen here. It did. They lost everything and had to rebuild from scratch.

What I learned from all my immigrant neighbors: people who know/understand how to manage money are usually able to make it back, even after unfortunate situations. It is a skill, and you either have it or you don't, and doesn't really leave you, no matter where you end up or what happens to you--you can bounce back. It's a mindset. This is more important than having money saved elsewhere, IMO.

I agree, as others have said, that having money overseas might only be useful if you plan to relocate in a "worse case scenario".

It would be more important to have friends/contacts in a target country--people who could help you get settled/get a job/etc. Your emergency stash would only last so long. Also, have a plan B and C backup country, in case your top pick can't/won't take you.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Roberts111 » Tue May 08, 2018 1:34 am

I think overseas Real Estate is the better option. As long as it is in a country with a record of respecting property rights. Foreign Bank Accounts have lengthy reporting requirements for over $10k. It's best to get a citizenship in the country where you plan to store assets.

The problem with this plan is that the USA is in a unique position at the center of the world economy. So if it goes bad, everywhere is bad. If the USD is toast, I can't imagine people will be clammering for crypto-currency. Money will be replaced with guns, ammo, gasoline, cigs, alcohol, food, medical supplies. In such a scenario it would be best to join family or close friends in the areas least affected by whatever disaster. The USA is better positioned to handle disasters due to it's size and low average population density.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by HongKonger » Tue May 08, 2018 7:12 am

I would rule out Europe for stashing cash now that Bail In is the default in the case of crashes.

As was mentioned previously - if regime change is the concern then a rural property with land and a water source, a good preppers pantry, and the knowhow to live off the land self sufficiently would be the way to go.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Jack FFR1846 » Tue May 08, 2018 7:50 am

Don't you have a perfectly good mattress to stash cash under?

A relative of my wife recently learned of the passing of a neighbor. This neighbor was renting a dilapidated apartment in a 3 decker house that was "bulldozer ready" by most indications. The man had been a regular at homeless shelters for meals and appeared to own pretty much nothing. Upon the man's passing, the contents of the house were inspected and in a closet, in a simple paper grocery bag was $130,000 in cash. It was thought that the money had been saved by the man's mother, who had passed some years ago and also lived in that house.

So go ahead and stash......but if nobody knows that the money is stashed and where, expect it to be gone on your passing.
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Irisheyes » Tue May 08, 2018 9:26 am

I don't think your wife is crazy. I can see where she is coming from.

My partner and I opened a euro-based account with a European bank last month as we were planning to buy property in Europe. It wasn't a very onerous process and, though I am a dual citizen, I opened it with my US details.

As it turns out, the property sale has fallen through but we are happy to have the account set up and plan to leave the cash there for reasons similar to your wife's thinking.

I will say the dollar has strengthened considerably against the Euro since we made the transfer, which sucks. Also, while interest rates on MM accounts and the like are ticking up here, the interest on the European account is still negligible.

But every insurance policy has a price.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Tribonian » Tue May 08, 2018 9:53 am

Hedging currency risk is a very different scenario than what the OP is envisioning. They are thinking of a major political crisis.
[/quote]

Understood, but if there is a major political crisis to the point that people are rushing across borders with gold and jewelry and whatever other personalty they can carry, foreign banks in developed countries are much less likely to honor a request from an oppressive regime to freeze assets.

Regardless of whether the intent is a hedge against currency devaluation or a doomsday scenario escape route, the mechanism for establishing foreign accounts is the same and does not require one to renounce citizenship.

rgs92
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by rgs92 » Tue May 08, 2018 9:55 am

I think it would be less secure, maybe even a lot less secure. Nobody has ever lost a cent by keeping money in the US.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Valuethinker » Tue May 08, 2018 9:58 am

grkmec wrote:
Sun May 06, 2018 3:46 pm
Badger1754 wrote:
Sun May 06, 2018 2:47 pm
My wife has lately been nudging me to look into stashing our emergency funds overseas (say in London or possibly Israel).

This makes almost no sense to me. FATCA makes any assets of US citizens subject to audit and potential seizure by the IRS. And in the case of a major political crisis, just because the money is stored overseas doesn't mean the powers of the IRS are no longer in effect. Kind of afraid to mention this to DW because I'm afraid she'll next suggest putting emergency money in diamonds or worst yet, Bitcoin. Am I thinking about this right?
Many ideas come to mind:

1) Stash USD or Euros in a safe deposit box in a foreign country. I am not an expert on FATCA but you are not creating any kind of account by doing this and you are allowed to exit country with up to 10k without disclosing to authorities.

2) Own physical gold (eg. 1 ounce american gold eagles)

3) Own some bitcoin or a basket of cryptocurrencies - split between a hardware wallet like Ledger Nano and a mobile wallet accessible via your iphone

What you are trying to protect against is a very unique situation. Something far more likely is a EMP attack on US. In that case, you want to own property in a rural area with a nice stash of food and guns / ammo. High density urban centers don't work when electricity is out over 1 week and supply chain breaks down.
EMP attack on that scale is unlikely.

Because USA would reply w total nuclear annihilation. US strategic forces are EMP hardened.

That's not a risk any state actor would take. Worry about nuclear war. EMP is just a pseudo nuclear threat that would lead to a nuclear response.

The US eventually got bin Ladin. So you'd need an incredibly sophisticated terrorist group and a conviction USA would never identify them or the host country.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by TravelGeek » Tue May 08, 2018 10:52 am

windrose wrote:
Tue May 08, 2018 12:20 am
What I learned from all my immigrant neighbors: people who know/understand how to manage money are usually able to make it back, even after unfortunate situations. It is a skill, and you either have it or you don't, and doesn't really leave you, no matter where you end up or what happens to you--you can bounce back. It's a mindset. This is more important than having money saved elsewhere, IMO.
I’d think your ability to “make it back” very much depends on your age and human capital. A 60 year-old getting wiped out (for whatever reason) isn’t in the same position as a 30 year old.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by afan » Tue May 08, 2018 2:25 pm

I don't think it makes sense for any but the very wealthy. The scenarios the OP is suggesting would require the family to make an emergency escape from the US and move to another country. It presumes they would either not be permitted to or the hast would not let them get at their assets in the US.

So hold money overseas and have a plan for a fast exit if necessary. As people have pointed out, there are hurdles to clear to hold assets overseas, installed mainly to make tax evasion more difficult and partly to limit other criminal activity.

If you want to be able to get to another country and have money based there, so that you can get it in spite of whatever has happened in the US, then it needs to be enough to live on. It needs to be readily negotiable in a time of chaotic turmoil, war, or other dislocation- so probably not stocks. Markets could be closed or collapse under such situations. You are probably talking about bank accounts.

Then you have to decide where to park the money. Given one does not know what other countries would be affected by the collapse of the US, you would probably want to diversify across countries and continents.

So you are talking about having enough money to live on in each of several widely distributed countries sitting in bank accounts.
If the worst were to happen you certainly would need money. But you would also have to be prepared to be a refugee. Do you have a visa that would let you live in the country to which you would need to escape? Do you have a place to live?

Enough money could buy you a place to live or cover rental. But in a catastrophic emergency the nice country to which you wish to escape might be overwhelmed and not that eager to let you in at all.

My personality does spin out disaster scenarios, but if you think through the problems that would lead to needing the foreign money you see how many other problems you have to solve.

Now, imaging you have triple digit millions of dollars, already own nice houses in several countries that you visit regularly. You have obtained joint citizenship in these countries so that they will let you in when the world falls apart. You have a combination of physical gold, local cash, bank accounts and real estate in each of these countries.

For the tiny number of people that describes the only challenges are recognizing the need to bolt and getting out before it is too late.

For the rest of us, simply having an account overseas would not help much. But we would have to deal with the suspicions of the IRS about having that asset.

Does not sound practical for upper middle class.
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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by wolf359 » Tue May 08, 2018 2:39 pm

Invest in education and in marketable skills. Educate your kids as well. One thing that is very difficult to confiscate is knowledge, skills, and education.

I don't believe stashing emergency funds overseas is necessary. What would be more important is having the ABILITY to get out if it ever came to that. The United States is a continental power with only two borders, north and south. Going anywhere else requires crossing an ocean. If you feel it necessary to leave, others will feel it necessary to leave at the same time. At that point, it will be very difficult to do so.

Think of it like Florida and hurricanes. You could try to evacuate when everybody else does, which is the worst time to do so. You could get caught in the storm. Or you could just choose to be elsewhere during certain months. You don't need the emergency fund overseas. You need it where you are, so you can use it for whatever the situation calls for.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by Finridge » Tue May 08, 2018 4:30 pm

I think it does make sense, if it can be done in a cost effective way and without too much convenience.

It's a form of diversification, just like owning shares in the Total International Stock Market Index Fund. If I knew off an easy and convenient way to have an investment account as an American in Germany or France or the U.K., and if there were no significant adverse tax consequences, then I would do so.

It's important to note that this would not be for purposes of trying to avoid U.S. income taxes. I'd report and pay all taxes as required.

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Re: Does it make ANY sense for a US citizen to stash emergency funds overseas?

Post by golfCaddy » Tue May 08, 2018 4:47 pm

Finridge wrote:
Tue May 08, 2018 4:30 pm
I think it does make sense, if it can be done in a cost effective way and without too much convenience.

It's a form of diversification, just like owning shares in the Total International Stock Market Index Fund. If I knew off an easy and convenient way to have an investment account as an American in Germany or France or the U.K., and if there were no significant adverse tax consequences, then I would do so.
Having international bank accounts doesn't protect your assets from US seizure. Foreign banks routinely hand over assets of US citizens to the US government. For the type of nightmare scenario the OP is worried about, you would need assets outside the financial system, such as gold or diamonds in a safe deposit box. The OP's wife needs to be banned from watching preppers.

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