Who need international estate planning?
- foreigners who have moved to the United States or U.S. persons who are moving, either temporarily or permanently, to a foreign country
- U.S. persons marrying foreigners
- U.S. persons with family members moving to or living in a foreign country
- U.S. persons inheriting wealth from foreign parents or family members
- U.S. persons who have foreign based assets or income
- foreigners present in the United States with U.S. based assets or income
- foreigners with family members moving to or living in the United States
Common issues in international estate planning
- Immigration Strategy
A person’s nationality, habitual residence and immigration status often determine how his/her income, assets and estate may be transferred or taxed. Thus, a solid, sensible immigration strategy for all family members is the foundation of international estate planning.
- Disputes Prevention
Laws governing marriage, divorce, marital property regime and kinship are especially relevant in international estate planning. Successful estate planning requires a thorough assessment of international litigation risk.
- Long-term Care
The high cost of long-term care in the United States makes it necessary to consider both private insurance and public options available in relevant countries.
- Tax Planning and Compliance
Due to the high tax exemption, only about 0.15% of decedents in the United States owe estate (inheritance) tax every year. For most people, estate tax planning should focus on minimizing transfer tax and income tax burdens of their estate and heirs. International estate plans also need to ensure compliance of tax reporting and payment obligations for foreign-connected transactions, including but not limited to income from foreign assets, or distributions from foreign trusts, or gifts from foreign persons. Failure to recognize and comply with these reporting obligations, even if no tax is due, can result in significant penalties and potential criminal prosecution.
- International Treaties.
The United States has bi-lateral tax treaties with various foreign countries. There are also several international treaties governing execution and legal effects of trust and testamentary documents. These treaties must be thoroughly considered in international estate planning.