As technology grows, our world shrinks and ownership of assets in multiple countries becomes more common. Many families move to other countries or have international marriages that create international ties. Whether you are a U.S. citizen who owns property abroad, or you are a foreign national who owns U.S. assets, you face some unique international estate planning challenges.
- First, be aware that your estate is subject to U.S. estate and gift tax laws if you were a U.S. citizen, or if you were domiciled in the U.S. at the time of your death. Additionally, even if you were not a U.S. citizen or domiciled in the U.S. at your death, any U.S. assets owned at the time of your death are subject to U.S. estate tax.
- If you were a U.S. citizen or domiciled in the U.S., your home state governs administration of your estate and all assets, whether U.S. or foreign for estate tax purposes. The country in which you own foreign assets may have separate probate and tax laws as well. The U.S. does have credit provisions for foreign estate and inheritance tax, but the rules are complicated and should be considered in advance.
- Real property creates a particular challenge, as it is solely governed by the laws of the country in which it is located.
- The problem with international estate planning often lies in the differences between common-law and civil-law. U.S. is a common-law based society and has drastically difference definitions of inheritance, beneficiaries, and property rights. Countries like China, Japan, Germany, Australia, and many others are civil-law based societies and will therefore have different interpretations of words and inheritance rights. Some countries do not even acknowledge the existence of a trust. Even countries that share an Estate and Gift Tax Treaty with the United States have limits. Even if the Trust itself is not subject to that country’s laws, the beneficiary who resides in that country may face heavy tax consequences as a result of being the beneficiary of such a trust.
- If you reside in another country for any period of time longer than a vacation, getting a Will completed in that country is a wise idea. A lawyer in the country you presently reside in will be able to help you protect the assets you own in that country and help you plan and navigate the probate process, and any potentially negative consequences, while you reside there. Also, any real property owned in another country is subject exclusively to that country’s real estate law and needs careful consideration for inheritance. You can have a U.S. Will and a Will in the other country to ensure that your estate plan incorporates all necessary provisions.
- Non-resident U.S. clients who reside in the U.S. should be aware that the tax laws only allow a $60,000 exemption, unlike the $11.48 million allowed by U.S. residents. Good estate planning for real estate and stocks for U.S. assets is critical for a non-resident to protect the assets from the 40% estate tax.
While international estate planning can have some unique challenges, Grissom Law, LLC is prepared to help walk you through the best plan for all assets, foreign and domestic.
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This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.