A prominent law firm reveals that wealthy Americans are increasingly applying for second citizenships and national residences as a way to protect their fortunes from unwanted risk.
Wealthy Americans Are Building 'Passport Portfolios'
According to CNBC, Henley & Partners reported a surge in wealthy individuals building "passport portfolios" that provide second, third, or even fourth citizenship in case they must flee their home country.
Dominic Volek, the group head of private clients at Henley & Partners, said that while the US passport remains valuable, having multiple citizenships provides a hedge against volatility and uncertainty.
"The US is still a great country. It's still an amazing passport. But if I'm wealthy, I would like to hedge against levels of volatility and uncertainty," Volek told CNBC.
"The idea of diversification is well understood by wealthy individuals around what they invest. It makes no sense to have one country of citizenship and residence when I have the ability to actually diversify that aspect of my life as well," he added.
Billionaire tech investor Peter Thiel, who added New Zealand citizenship, and former Google CEO Eric Schmidt, who applied for Cyprus citizenship, are among the high-profile figures who recently applied for second citizenship without ditching their American citizenship.
Many wealthy Americans reportedly explore supplementary visas or citizenship programs to complement their American passports. According to Henley, Portugal, Malta, Greece, and Italy are among their favored destinations for supplemental passports.
Why Wealthy Americans Are Expanding Their 'Passport Portfolios'
The rise of American passport portfolios is attributed to several factors. Henley & Partners reported that the first reason was alternative passports make travel easier to countries that are less friendly to the US.
Second, non-US passports can enhance safety and discretion during international travel, especially for business leaders. Lastly, secondary citizenships could streamline cross-border financial transfers, and the second country picked could serve as a backup residency during retirement or for lifestyle reasons.
The trend towards "domicile diversification" reflects global uncertainty, prompting individuals to seek backup plans. Henley expected a record number of millionaire migrants in 2024 as government crackdowns on wealth, political uncertainty, and wars drive more wealthy families to relocate to other countries.
According to Henley, around 128,000 millionaires are expected to move to a new country this year, higher from 120,000 last year and 51,000 in 2013.
Henley reported that the US remains an attractive destination for global millionaires due to wealth-creation opportunities, while China continues to be the biggest source of millionaire out-migration.
While Henley projected around 3,500 millionaires to move to the US this year, it said China lost about 13,500 millionaires in 2023.
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