Where to invest?

[percy]

Just don't die while holding US held shares/ETFs!

Sage advice.!

[Jonboyz]

I agree - that's why I use Interactive Brokers for Vanguard ETFs and buy them on the NYSE - much lower transaction costs and much less lost in the transfer from NZD to USD (and back). Just don't die while holding US held shares/ETFs!

What happens? You mean your next of kin can’t inherit US held investments? My US stocks are held by ASB as custodian (not direct holdings) so I expect my nok won’t have any problems accessing them.

[kiora]

couta :that"s the smartest thing I have read all day.The majority of investor's in shares over the last few years should be feeling quite smug now BUT Watch the stampede through a tight exit if there is a 'significant event'
Who is buying ETF's ?The least savy or the more savy?Time will tell.

[BlackCross]

I'm totally confused now regarding the overseas Smartshares funds and their standing within a FIF. I'm told that if I just owned Smartshares overseas funds (TWF, ASD etc) then they would not be caught within the FIF regime and even if my holdings wwere greater than $50,000 I would not have to declare them as a FIF. Tax would have been paid by Smartsheres. However, if I also owned other FIF investments they would then count towards the total value of a FIF? Bit of a bugger as I've deliberately kept my other overseas investments just below the $50,000 threshold as the FIF thing is a nightmare for me and now my Smartshares holding would push me well over..

[777]

I'm totally confused now regarding the overseas Smartshares funds and their standing within a FIF. I'm told that if I just owned Smartshares overseas funds (TWF, ASD etc) then they would not be caught within the FIF regime and even if my holdings wwere greater than $50,000 I would not have to declare them as a FIF. Tax would have been paid by Smartsheres. However, if I also owned other FIF investments they would then count towards the total value of a FIF? Bit of a bugger as I've deliberately kept my other overseas investments just below the $50,000 threshold as the FIF thing is a nightmare for me and now my Smartshares holding would push me well over..

Unnecessary worry on your part as I understand it. The fund would be subject to FIF but you with a share in the fund are not.

[Beagle]

I need to talk to them but my preliminary thinking is that as the Smartshares funds are PIE's (Portfolio investment entities) and they pay the FIF taxes under N.Z. tax law these are PIE's not FIF's so you are okay with just under $50,000 in other FIF's as well as Smartshares funds or up to $100,000 if owned jointly.

[kiwico]

What happens? You mean your next of kin can’t inherit US held investments? My US stocks are held by ASB as custodian (not direct holdings) so I expect my nok won’t have any problems accessing them.

It's always a good idea to try to not die anyway but refer to Voltage's comments below from the Should I actively avoid FIF investments thread.

Jonathan, you must beware of other issues with US ETFs. The main one is death duty tax is liable on any holding over $60000 for non US residents. This is why you need to look a non US domiciled ETfs.

[Beagle]

Hmmm...wonder if that just applies to the U.S. ETF holdings ? Another reason to keep it simple with Smartshares ?
My good mate's father in law who has a net worth of north of US$30m has spent the last 3 1/2 years with lawyers and accountants fighting death duties from various countries tax jurisdictions since his wife passed away. The problem being that at various times in their lives they've lived in a variety of different countries and now almost all of them want their cut ! Not sure how much he's spent on lawyers and accountants so far but there is speculation within the family it could be up to $1m now

[morphs]

Hmmm...wonder if that just applies to the U.S. ETF holdings ?

It is not just ETF holdings, it is any US domiciled investment (Direct Shares, US Mutual Funds etc.). If you die with more than US$60,000 of these you will be subject to US estate taxes on the balance. How they are able to administer/enforce this is debatable. If the shares are owned by a trust or company you are probably OK because they would not form part of your estate. If it worries you, probably best not to own US ETFs directly. There are ASX equivalents not domiciled in the US, or use the Smartshares wrapper to avoid the entire issue, accepting the extra cost.

[morphs]

I used to try and avoid FIF because I didn't understand it. It seemed complex and scary. But once I understood it, it's actually pretty straightforward. In some cases it is a big advantage. For example, if you own Aussie unit trusts, they must distribute all their capital gains every year on June 30th. If they have a good year that could be a significant distribution. If you are outside FIF (under 50K) you will have to pay tax on the full distribution as income but if you account for it under FIF (FDR), you only pay tax on 5% of the opening value no matter what the distributions are.