For the past few weeks, we have been covering critical issues relating to Estate Planning. We outlined How to Create an Estate Plan in America. Today, however we want to touch on ways to create an Estate Plan with foreign properties. As knowledgeable and experienced Estate Planning and International Transactions professionals, we will explore the best strategies to ensure your estate planning with foreign properties goes smoothly.
Estate planning which includes properties outside the United States is probably more urgent today than ever given the influx of highly skilled technical workers entering the U.S. as well as green card holders acquiring foreign assets to be inherited by US based nationals. In most cases, these individuals own real property and substantial personal property abroad and may need advice regarding how to transfer those properties to their heirs. Transfer issues may require in depth research and evaluation depending on the country where the property is located, the citizenship status of the owners and named beneficiaries, the value of the estate and other tax considerations before a plan can be finalized.
By recognizing the issues involved and the goals of the client, an estate planning attorney can research applicable federal and foreign laws, enlist the assistance of other professionals if needed and properly advise if not draft the appropriate estate planning strategies. Below we’ve included some international estate planning considerations for an American expat or green card holder, amongst other categories:
- Tax Burdens
- Citizens of the U.S. are taxed on all sources of income they earn, including income from overseas. Depending on the situation, the income may be subject to Social Security and Medicare taxes. U.S. Citizens must also pay taxes on assets in foreign countries. In order to avoid unnecessary tax burdens or double taxation, it is important to meet all reporting requirements for foreign assets, use all possible income exclusions and credits, and pay attention to the specific language of the income tax treaties that relate to your situation.
- Double taxation occurs most often with the transfer of foreign-held property. If you are a U.S. citizen who owns foreign property, and you try to transfer that property to the U.S. you may be taxed by both the U.S. and the country where the property is situated. Tax treaties between countries can be an immense aide in these types of situations. To find out which countries have property tax treaties with the U.S., click here.
- Non-American Spouses
- Special Consideration should be given to non-American spouses living abroad regarding international property transfers. Generally, all citizens or green card holders may take advantage of the federal estate tax exemption.
- Validity of Wills
- A valid United States Last Will & Testament can be deemed invalid in a foreign country. To avoid such a occurrence the Will must comply with the requirements stipulated by the foreign jurisdiction where the assets are located. This is a key reason why it is imperative to work with an experienced estate planner in the country where your foreign assets are located – otherwise, you risk losing those assets or having them distributed in a manner outside of your wishes. It is best to also check with an experienced estate planning attorney in the United States to see how multiple Wills can affect you’re the legitimacy of your America Last Will & Testament.
- The American Bar Association notes that creating an International Will is one of the best ways to handle estate planning when you have foreign assets. However, International Wills must meet certain requirements to be valid.
- Regularly Update an International Estate Plan
- `As we’ve mentioned in our previous article: Top Estate Planning Mistakes to Avoid, having an existing estate plan is great so long as it is being continually updated! When moving across borders or acquiring assets in a different jurisdiction, it is equally vital to review and update international estate plans accordingly. It is vitally important to determine before an event how an estate plan will function if the person is domiciled abroad at the time of their passing.
- An experienced international financial advisor can provide guidance on this topic and can help find legal counsel to adapt a will (last testament) so that it meets the requirements of the foreign country as well as the United States.
- Working with Qualified International Estate Planning Experts
- When assets cross multiple jurisdictions, professional advice becomes critical. An unplanned estate involving multiple assets or beneficiaries in multiple countries can cause immense financial and emotional stress for family surviving members. They are often left dealing with various legal systems (common law vs. civil law), and possibly having to travel to a foreign country to prove their rightful claim to the estate.
At The Law Offices of Marjory Cajoux, our international estate planning team can provide legal advice and assistance to clients. Whether you are a U.S. citizen who is married to a foreign national, a U.S. citizen living in a foreign country, or a non-U.S. citizen residing in the United States, we will gladly work with you. Our firm is committed to finding effective legal solutions for a variety of estate planning and international legal issues. We encourage you to discuss your matter with one of our experienced and knowledgeable attorneys today.