Wealthy families in the United States are increasingly seeking second citizenships and national residences as a strategy to mitigate financial risks. These affluent individuals are constructing what's dubbed as "passport portfolios" - a collection of second, third, or even fourth citizenships - as a precautionary measure in case they need to relocate from their home country. Henley & Partners, specialising in high-net-worth citizenships, notes that Americans now lead in acquiring alternative residencies or additional citizenships, surpassing all other nationalities.

"While the U.S. remains a remarkable country with an outstanding passport," states Dominic Volek, Group Head of Private Clients at Henley & Partners, "wealthy individuals are inclined to hedge against volatility and uncertainty. Just as they diversify their investments, it's logical to diversify aspects of life, including citizenship and residency."

Recent instances of prominent figures acquiring second citizenships include billionaire tech investor Peter Thiel, who secured citizenship in New Zealand, and former Google CEO Eric Schmidt, who applied for citizenship in Cyprus.

Despite this trend, it's not a mass exodus of wealthy Americans renouncing their citizenship. The process of renunciation, primarily due to tax obligations, entails a hefty "exit tax," making it financially impractical for most, barring the ultra-wealthy.

Instead, many affluent Americans are exploring supplementary visa or citizenship programs to complement their U.S. passport. Portugal, Malta, Greece, and Italy rank among the preferred destinations for such endeavors. Portugal's "Golden Visa" program, for instance, offers residency and citizenship in exchange for a 500,000 euro investment in a fund or private equity, facilitating visa-free travel in Europe.

"Domicile diversification," as Henley terms it, is on the rise among Americans for several reasons. Firstly, alternative passports ease travel to regions less welcoming to U.S. citizens. Secondly, for business travelers, possessing a non-U.S. passport can enhance safety and discretion, especially in high-risk regions. Lastly, some affluent Americans seek secondary residency for retirement, proximity to family abroad, or lifestyle preferences amidst the era of remote work.

"We're living in uncertain times globally," remarks Volek. "It's prudent to have contingency plans in place, not just Plan B but Plans C and D as well."

Globally, millionaire migration is anticipated to peak in 2024 due to conflicts, governmental crackdowns on wealth, and political instability, prompting affluent individuals to seek refuge elsewhere. The U.S. continues to attract wealthy migrants, with a notable net inflow projected for 2024. China remains the primary source of millionaire out-migration.

"The U.S. offers unparalleled wealth-creation opportunities," concludes Volek.