Category Archives: Local terms and conditions

Relocation & Expat Resources – Employment and Career Issues – local terms and conditions. Information, Inspiration, How-To Guides and Tools for Trailing Spouses, Accompanying Partners, and Families in Transition.

The Fragile Finances of the Expat Trailing Spouse. Defining Moves, The Art of Successful Relocation

Women, Money and What ‘Dependent Partner’ really means. The Fragile Finances of the Expat Trailing Spouse.

The Fragile Finances of the Expat Trailing Spouse. Defining Moves, The Art of Successful RelocationUpdate: After considerable lobbying from consumer groups, the US Bureau of Consumer Financial Protection has amended the rule requiring evidence of independent income when applying for consumer credit, replacing it with a declaration of household income. This is excellent news for accompanying partners in the United States who had been denied access to credit and left unable to build an independent financial identity, in a country where a credit card or credit history is required for everything from hiring a car to setting up a cell phone contract. Sanity is restored…

I came to a horrible realization the other day that I was beholden to my husband. It sounds incredibly old-fashioned; even using the word ‘partner’ in that sentence would be wrong, because it implies an equality that I had let slip away.

The dictionary describes the term beholden as owing something to somebody because of something that they have done for you’, so if you view being shuffled from pillar to international post as a favour, the word pretty much covers it. I realized that although I live in California, where community property and a 50/50 division applies, I did not have the independent means to pay for legal advice. And when he leaves all his dirty breakfast dishes on the counter above the dishwasher for the 5 millionth time, there is a big emotional difference between don’t want to divorce my Other Half, and CAN’T…

As with the vast majority of dual career couples, when I agreed to the OH’s first relocation, I was aware that from now on my own career would take a back seat. Global mobility research discusses the change (usually reduction) in income when a couple relocate, but discussion centres around household income, rather than individual earning power.

Which is exactly what I have lost. I have never worked in professions known for lavish salaries (nursing or teaching, anyone??), but I was able to earn significant personal income with opportunities for promotion. Now, however, my sole income in drawn from the ‘household’, and as such, is vulnerable. And I’m not alone.

It’s not just those of us who relocate that are in this position. It’s anyone who has chosen to reduce or give up work to manage family commitments, whether you are in constant global motion, or have never set foot outside your home town. If you have no independent source of income, whoever earns the salary holds the keys to your supposed household income.  And while you are legally entitled to a portion of those, it requires court approval to gain access to them, whatever the circumstances. Which also requires legal counsel, who (funnily enough) will want to be paid.

Take credit cards. Over the last 20 years, we have become used to being approved for credit, regardless of our personal income; the household income has always been taken into account. Sure, the credit limit may be small, but it’s quickly increased once our payment history shows our ability to make payments and manage the account well. However change is afoot, certainly in the US, where credit card issuers are changing their rules, and making it far more difficult for the accompanying partner to gain credit (and a good credit history), unless they are employed outside of home.

Last year, the Fed ruled that credit card applications should ask about a consumer’s individual income or salary rather than his or her “household income”. This isn’t just for students under 21, but for everyone. That means that a stay-at-home parent is considered as unworthy of credit as an unemployed college kid–and seven out of eight stay-at-home parents are mothers. No one without a pay stub, no matter the value of her contribution to her household, can get a line of credit unless her spouse cosigns the account. (Anisha Sekar,  July 7, 2011)

Now, in light of the recent economic meltdown, placing more focus on individual income and ability to repay debts is no bad thing, but it does have ramifications for those of us who suddenly lose the ability to get even the most basic forms of credit like a cell phone contract or credit card. It also means that unless you are named on the account, you lose the ability to make financial decisions, access accounts and resolve disputes, which if, like mine, your partner spends a great deal of time out of the country and on air flights, can make financial management impossible.

The Other Half is also the primary name on the host country bank account, and I don’t have automatic access to his account. Typically, he goes ahead to take up his new post, while I remain behind with the children to finish up the school year and pack the house for the move. It works well for us, but does mean that he has sole responsibility for setting up basic financial services in the new location, so it is his name on the salary transfer and tax details, and therefore his name on the account, at least until we get around to updating it.

We choose to manage this by having me sign all the checks (if he signed one himself, it would probably be dismissed as a forgery), I have the ATM card and PIN number, and I’ve set up the internet banking with my passwords. And while this unusual state of affairs makes for amusing dinner party conversation, it gives me absolutely no legal right to the household funds in that account, nor access to them should he suddenly develop amnesia / get run down by a London bus / decide to trade me in for a younger, blonder model…

The mention of Tax ID and salary above should alert you to the fact that opening your own bank account is not necessarily as easy as it first appears. Requirements vary from country to country, but most require evidence of who you are, your legal right to be in the country, how you will pay tax on any interest, and how you intend to fund the account. So when you turn up with your passport and cash, you may be disappointed… However, it is something that is worth doing if you value your sanity, because things can and do go wrong, and I am willing to bet that it is you who will be left holding the can when it does. If the money is in your sole name, you have control over it; if it’s not, you don’t. Simple as that.

And finally, let me mention the dying thing. I have known a few situations where a spouse has died at a young age, and not once did I ever hear the words “well now, let’s get on and sort out the money”. What I saw were people who had their lives knocked out from under them, who were trying to cope with immense loss, overwhelming grief, and devastated children. Imagine how much worse it gets when you are overseas, your right to be in the country expired with the demise of your spouse, and all your assets (and therefore your ability to get home, to make funeral arrangements, to pay medical bills and to pay for normal household expenses) are now severely compromised. I have seen it happen, and it was horrific.

So, if you do nothing else today, do these things for me, wherever you are. Get started on your own personal credit history, even if you have to take out a secured credit card to do it. Promise to keep track of your credit score, every month. Get an independent bank account in your host country, and commit to funding it, every month. And finally, make a joint will, keep it simple and safe, and make sure it is legal in the country that you live in.

Oprah would be proud. I feel more secure already…

Vintage photo of five girls on a horse

Essential Expat – Negotiating your International Assignment Contract

Vintage photo of five girls on a horse
Photo courtesy of the State Library of Queensland

 

 

 

 

 

 

 

 

 

 

 

When it comes to international assignments, relocation policy is not just a ‘one-size-fits-all’ affair. Not only is there flexibility to cater for specific individual needs within the various policies in use, there are also plenty of potential pitfalls to consider too. So what are the main areas that you need to understand when negotiating your expat assignment contract?

Home or Away. There are now a number of different types of contracts being used by the HR and relocation companies to manage your assignment. The two most common are local (including local plus)  and international. Local means that you will be temporarily governed by the employment pay and conditions of the host country, and aims to ensure parity among employees within a specific location for the duration of your contract. It can mean a increase in salary for more expensive regions, but a decrease for less expensive, and can significantly affect annual vacation entitlement. Local plus provides for additional needs or expenses incurred because of your temporary expat status, such as international school fees and trips home.

An international contract means you continue to work under the terms and conditions of your home location, regardless of the salary and benefit entitlements in your host location. As a comparison, European employees on an international assignment in the US would probably be entitled  to more annual leave days than their American counterparts, whereas US employees heading to Europe would find the opposite was true.

Matching Up. Once you have established what type of contract you will be working under, you need to look carefully at the terms and conditions of that contract, most specifically with regard to equalization. You need to be sure that the package provided gives you the same (or better) standard of living as you would have in your home location. It is more than just the immediate basic requirements – housing, healthcare, schooling, transportation, financial and legal status – you also need to consider the longer term: school planning, college eligibility and fees, provision for dependents becoming legally adult, access to legal services should you need them, long term medical and social care, financial planning, tax implications and superannuation (company pension plan). You will need to do detailed research in advance with reference to your specific individual and family needs, and if you have a preliminary visit, try and talk to resident expats to get a realistic picture of what the cost of living in your host location might be, and what challenges to expect. Don’t assume that the information given by the relocation management company is accurate – they use a generic formula that may have little relevance to your situation and needs. There are plenty of resources available to help you – Living Abroad, the ExpatInfoDesk , Journeywoman and Expatwomen all have country specific information and contacts that can help you understand what you are getting into.

Homeward Bound

“There is nothing like returning to a place that remains unchanged to find the ways in which you yourself have altered.” – Nelson Mandela

What happens when your contracted assignment is over? In an ideal world, there is a clear progression that goes beyond your repatriation, and provides for a smooth transition back to your home location.  Even with successful international assignments, many people have discovered that repatriation is as hard as expatriation, and there is an increasing awareness that companies need to provide similar support services to move employees back to their former home successfully. And finally, ensure that you are supported should the assignment not go to plan, and either the whole family or the dependents need to repatriate early. If the situation is serious enough to make you leave, the last thing you need is to have to manage and fund your own return journey..

Additional resources:

Expat Info Desk – Negotiating your contract

ExpatArrivals – Expat contract negotiation

BritishExpat – Negotiating the expat contract