Prince Harry and Meghan Markle Moving Assets to Delaware

I usually pay no attention to news about the British royal family, even the marriage of American actress Meghan Markle into it, but this story of Prince Harry and the Duchess of Sussex moving assets to Delaware did catch my eye. As a born US citizen, Meghan remains subject to US taxes on her worldwide income and US estate taxes on her worldwide assets even after becoming a British royal.

Over the past decade, the US passed the Foreign Account Tax and Compliance Act (FATCA), which basically forces overseas banks to send information on their clients’ accounts to US authorities, and the OECD responded with Common Reporting Standards (CRS), where OECD countries other than the US share similar data with each other. These two separate systems have created a world where financial information must be sent to the US, but US institutions are rarely required to send any information out of the US, making the United States a unique tax haven and privacy haven. Earlier, I explained the advantages even for foreigners to maintain accounts in the US rather than in offshore centers like Hong Kong or Singapore. While there are some tax traps and paperwork headaches foreigners investing into the US need to deal with, these are generally well understood and straightforward enough to manage.

When setting up companies and accounts in the US, you also have 50 states and a few other jurisdictions to choose from, and of these, Delaware has long been the favorite state for company incorporations. If Delaware is good enough for 2/3 of the Fortune 500 and 80% of all firms that go public, it seems probably good enough for the Duchess.