Last updated July 2, 2021
Dateline: Kuala Lumpur, Malaysia
I have an attorney friend who likes to tell the almost mythical story of the Chinese man who always had a fast junk boat with a few gold bars and the second set of papers ready for when things went bad.
While that idea might seem foreign to you, it’s a much more commonplace concept than it seems. After all, you wouldn’t put your money in an uninsured bank. And you wouldn’t leave your home or business uncovered.
Why should your citizenship be any different? Everyone needs some kind of insurance on their citizenship.
Think of it like this: citizenship insurance is having a contingency plan in place in case you no longer want to live in your home country. And it can look like backup citizenship and passport so you and your family can leave quickly, safely, and legally if you decide where you are is no longer conducive to your comfort and happiness.
Often, this is what we refer to as a Plan A at Nomad Capitalist. People want to go offshore and are looking to get a second passport so that they can get rid of their current citizenship.
This may be for privacy, personal freedom, financial reasons, or because they simply want to live in a different country. Some people also develop these types of plans so that they can send their kids to better schools or more affordable universities.
For example, if you are from the United States and want to live in the European Union, you would create a Plan A to help you get permanent residency and then a passport.
But what is your Plan B in case that doesn’t work out?
Your answer should be citizenship insurance.
In this article, we’ll discuss how passports serve as insurance policies, why you need citizenship insurance, and how it’s a plan for the future, as well as the best time to get a second passport.
PASSPORTS AS INSURANCE POLICIES
If you’re a high or ultra-high-net-worth individual, you probably have a lot of insurance policies to help you cover your lifestyle. These can include insurance for your car, your home, your business, fine art or jewels, and anything else of high value.
Now, there is a growing trend in the world where people in countries such as Russia, China, Turkey, or many places in the Middle East are taking the idea of insurance a step further by going out and getting second passports.
In fact, a recent study of ultra-high-net-worth individuals said that a very significant percentage of the demographic in emerging countries had or were making plans to obtain a second passport. This is because there is always the potential for things to fall apart at home.
For example, there are a lot of people in China who are chasing a second passport. They want to ensure that no matter what the government does, no matter what happens politically and socially in the country, they can take themselves and their family elsewhere.
The goal is to go somewhere where they can’t be refused entry, no matter what the situation is back in China.
Essentially, they want citizenship insurance — a Plan B for when things go bad in their home country.
Getting second citizenship also gives people visa-free travel privileges and the perks of being associated with the second country. But in most cases, the biggest reason for securing a second passport is the need for an insurance policy.
It’s a way to prepare for times outside of euphoria and protect yourself.
WHY DO I NEED CITIZENSHIP INSURANCE?
Citizenship insurance isn’t about doom, gloom, and doomsday prepping. It’s about diversification and planning.
Basically, you’re taking an insurance policy out of bureaucracy.
The reality of the world is that many governments are putting increasing restrictions on their citizens. In the United States, if you have a $50,000 tax debt, they can take away your passport or refuse to issue you one.
You might not think this would be a problem if you just stay up to date on your taxes, and I’m right there with you. Our plans and strategies focus on legal tax reduction and taking your life offshore so that you can go where you’re treated best.
We don’t support tax evasion.
The problem is that tax agencies sometimes make mistakes. Yes, they’re not infallible. I know this from personal experience from early in my business career in the United States.
I had already paid my taxes, but I had to fight to demonstrate that I had done so because a mistake led the IRS to believe that I owed twice as much as I had already paid. Now, at that point in my career, the payment they wanted wasn’t much; they stated that 22-year-old me owed around $1,200.
Imagine if they had thought I owed them $50,000! It would have been easy for them to cancel my passport.
But this isn’t just about taxes.
Today, more countries are telling their citizens where they can and cannot travel. In studying different countries around the world, you can see a trend among governments to impose restrictions on the movement of their citizens. At the very least, they are giving themselves the power to create more limits in the future.
In a very real way, having only one citizenship makes you a slave to that country and whatever they decide.
People in a lot of countries like China and Russia understand this. They can see the cracks in the wall, the fault lines. They understand that if things go badly, they could be left dealing with the consequences and want a way to protect themselves.
On the other hand, people in the United States and other western countries don’t feel the same need. They can understand why someone in a place like China might be worried but could never imagine something bad happening in their backyard.
In all my years of travel and designing offshore strategies, I’ve not only studied history and the different trends around the world, but I’ve also talked with people from every corner of the globe about what they’ve seen in their countries throughout their lifetimes.
And if there’s one thing I’ve learned, it’s that countries change their policies to limit their citizens very slowly, then all at once.
There are plenty of people throughout history who could have benefited from a second passport, but they weren’t proactive enough to go out and get one while they could.
One of the big things I see in the Western world is that governments are increasingly looking to raise taxes. Countries that don’t have wealth taxes are discussing implementing them. There’s also a big target on the back of high-net-worth individuals in countries like the United States, where politicians want to raise their taxes up to 70%.
They want to confiscate a part of your wealth and force you to do all sorts of other things with your money.
Just look at Cyprus or Greece. When the government decided that they needed the citizen’s money, people lost access to their assets.
Having a second passport puts you in control, no matter what the politicians do and no matter who gets elected. You will always have the opportunity to go where you’re treated best.
There are people with whom we’ve worked who needed a second passport. We went through the process of creating a strategy for them, only to have them decide that they’ll get around to it later.
Then, before “later” came around, they had an urgent situation come up and needed to rush through the process. They ended up spending a lot of money, going through a lot of hassle, and suffering a lot of stress — often to not even make it in time.
Sometimes situations come up, and if you haven’t already obtained that passport, it’s much too late to try.
CITIZENSHIP INSURANCE AS A PLAN FOR THE FUTURE
The positive side of citizenship insurance is that it can have benefits that reach beyond your present situation. Having a second citizenship can allow you to leave a legacy that your family can benefit from. In many cases, you can pass your new citizenship down to your kids and grandkids.
In fact, looking at your family tree is where you should start when it comes to getting a second citizenship. A parent or grandparent could be your chance at claiming another citizenship practically for free.
Others may choose to get their citizenship through investment. Many countries have options that allow you to get a passport in a matter of six to twelve months after investing in some aspects of the country’s economy. You can hold that passport for the rest of your life all while making investments that have the possibility to earn you higher returns than you would see at home.
If you have a second citizenship, you get the benefits of living in both countries. You can send your kids to school where you want. You can live, work, and do business without restriction in either country.
And, if that second citizenship is somewhere like the European Union, those benefits and opportunities could expand to a whole block of different countries.
Plus, if there’s any point at which citizenship starts to cause you problems, you have the right to either exit the country and leave it behind or give up your primary citizenship.
However, renouncing citizenship isn’t a decision to be taken lightly. I understand that most people don’t want to leave their home country. They want to remain a citizen of the country in which they were born and that’s all fine.
But, if you’re a successful person, you owe it to yourself to have a citizenship insurance policy to protect yourself in the future. There’s no reason it should be different from any other important asset in your life.
And there are affordable ways to get started. There are also more expensive ways to speed things along. No matter how you end up getting it done, the important thing is that you are prepared and protected when you have a citizenship insurance plan in place.
WHEN SHOULD I GET A SECOND PASSPORT?
Second citizenship is particularly important for every investor, entrepreneur, and successful person. It’s good for everyone to have options, to have a Plan B. But I like to look at second citizenship as an insurance policy.
Taking out an insurance policy is a preventative measure. It is something you do as a precaution against things that could happen. This is why you can’t buy insurance after you’ve been robbed, your house burns down, or a car crash occurs.
So, when’s the best time to buy car insurance? Immediately after you buy the car – you don’t wait around. It’s not as if you would drive the car around for a month thinking you won’t get into an accident and that you’ll buy insurance later.
You get insurance before anything can happen because you never know when a disaster is going to hit. That’s why I think the best time to get a second passport is now. Don’t simply wait until you need it.
Basically, you’re making sure that something bad isn’t going to happen to you and that you’re protected if it does.
When the people in Greece or Cyprus couldn’t get their money, the government or banks didn’t put out a notice that said, “90-Days-Notice: just so you know the ATMs won’t work for a while.”
It just happened. When countries raid pension funds because they need the money, they don’t give anyone notice.
But that was Greece and Cyprus, not the United States, right? Wrong. The famous last words throughout history are, “That can’t happen here.”
People haven’t seen what governments are capable of, especially in the western world. And what they have seen, they usually brush off because they figure it’s different in countries outside of the west.
Plus, people often have a sense of calm because they understand their own culture, know how it feels and can monitor it and its risks. But this is a false sense of calm.
And unfortunately, if you have this mindset, you aren’t going to be prepared. Politicians could pass a law tomorrow and apply it retroactively.
Now, this doesn’t mean that you have to live your life always under the assumption that the worst is going to happen – but wouldn’t you like to have insurance before the proverbial house burns down?
Another thing I often hear is, “When things get bad, I’ll think about it.”
First of all, thinking about it is worth nothing. Second, if you keep putting it off, you’re either never going to do it or you won’t do it in time.
There are many different ways to get a second citizenship. But it would be wise to ensure that you also do some tax planning when choosing a location.
There are also methods that can take longer than others. If you’re trying to get citizenship through naturalization, the process can take years. If you don’t start now, you might not get your citizenship before the process requirements change.
And what if the country you want your second citizenship from stops their program?
Every year, new residence and citizenship programs either go up in price, become more difficult, or get canceled altogether. Just in the last year we’ve seen programs like those in Canada simply go away.
It’s always a game of finding what’s working now, but when you’re in you’re in.
When you get the passport, it’s yours forever. When you open a bank account, they’re probably not going to close it on you, even if the rules change.
If you want to protect yourself and have the option to live in another country at a moment’s notice, you should create a Plan B.
And citizenship insurance is just the way to do that.
Governments often act very quickly when it comes to restricting your freedom or taking your money. And if you wait until that moment to have an insurance policy against it, you’re going to end up like the citizens of Cyprus or Greece.
No one wants that.
If you’re serious about having second citizenship that can protect you, why not start the process?
Reach out to Nomad Capitalist today to create a strategy to invest in citizenship insurance.
The best time to get started is now.