Estate Planning for the Modern Global Family (Part 2)

In the last post, I began writing about global families and estate planning for non-U.S. Citizen spouses. Today I will write about planning for international assets and bequests.

Planning for International Assets and Bequests

Because estate planning laws can vary greatly between countries, understanding the legal intricacies of your home country, your country of residence, and the residence of your beneficiaries is crucial. Some countries have “forced heirship” laws that often prioritize family members over wishes communicated in one’s will. There are also some countries that have inheritance taxes making it that the beneficiary of a U.S. citizen’s assets may incur considerable taxes if they receive property in that country. Also, expatriates may be subject to estate taxes in both their home country as well as their country of residence unless there is an applicable tax treaty. Laws such as these can have a significant impact on the intended transfer of wealth.

Global families should carefully choose a team of professionals, agents, and fiduciaries to navigate legal matters associated with international estate planning. This team will typically include estate planning attorneys able to collaborate to draft compliant wills and trust as well as accounting and tax advisors who are familiar with the laws and regulations in each country.

It is important to note that any trust that is controlled by a non-U.S. person will be designated as a foreign trust. This type of trust is subject to different IRS reporting requirements which are more rigorous. One option to consider to avoid having your trust unnecessarily classified as a foreign trust is to appoint a U.S. professional trustee instead of a family member who may not be subject to U.S. jurisdiction as trustee. Also, if you move to a new jurisdiction or add any international assets to your estate, be sure to keep your team updated on these changes. It’s also important to keep an eye out for updates and changes of applicable laws in each jurisdiction.

When it comes to wills, families may opt for an “international will” designed in compliance with the International Wills Act enforceable in any jurisdiction that has adopted the Act. This type of will should ensure its compliance with relevant laws in each jurisdiction. In some cases, separate wills for different countries (known as “situs wills”) may be a necessary part of estate planning. It is important that any revocation clauses in wills be tailored to avoid inadvertently revoking complimentary situs wills.

For help with your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.