Foreign Assets and Estate Planning

Talk with an experienced attorney, before you purchase that Italian villa or cottage in the Cotswolds. They can advise you on the best way to structure ownership, based on the country’s laws. In the legal department, you should also hire a local counsel. You need to know how local law will affect your estate and tax planning. Some countries do not recognize trusts, which would make a big difference, if your U.S. will transfers all of your assets to a trust. They’ll also be needed to represent you with the purchase and transfer of real estate.

Be sure to disclose all of your assets to your estate planning attorney. Your attorney must be aware of the assets that you have and where they’re located, to help you determine how best to pass them at your death and the estate tax implications.

Depending on where the foreign assets are located, it may be wise to have two wills: one disposing of the foreign property and another for your U.S. assets. It is crucial that your U.S. attorney and your foreign counsel coordinate on drafting the wills. You don’t want one will to cancel out the other.

Probating a will written in a foreign language can be difficult and time consuming. A foreign will must be translated and understood by the government in that country. With a separate will in each country, this usually can make probate easier.
You may be surprised to find out that as a U.S. citizen, you’re taxed on your worldwide assets for estate tax purposes. Your attorney will be able to advise you on the estate tax implications of your foreign property and if there are any treaties in place with that country that will lessen the estate taxes.

Foreign asset ownership can be quite complicated. Speak with your advisors and make sure that you and your budget are prepared for all of the associated costs that come with a foreign property, whether you’ve inherited it or are purchasing it as your retirement home. Once you’ve addressed legal and tax hurdles, start packing!

Reference: Forbes (January 29, 2019) “6 Ways To Protect Your Foreign Assets In Estate Planning”