Forbes’ recent article, “6 Ways To Protect Your Foreign Assets In Estate Planning,” explains that estate planning is more complex when you have global assets. A big consideration is how to structure ownership of the assets to maximize your estate and tax planning. How you do it will depend on the laws of the country where the assets are located and your own citizenship. Let’s look at some things you need to know.
Be sure that you have an experienced legal expert and talk to him or her before you purchase the Italian villa. They can advise you on the best way to structure ownership, based on that country’s laws. In the legal department, 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.
Whether you have inherited a foreign property or purchased it as your vacation home, be sure you talk with your estate planning attorney about all of the issues and to address the legal and tax hurdles of foreign asset ownership.
Reference: Forbes (January 29, 2019) “6 Ways To Protect Your Foreign Assets In Estate Planning”