Whether you currently own foreign property or are considering an investment in foreign property, you should consider how foreign assets will affect your estate planning.
Generally speaking, estate planning with foreign property is much more complex than estate planning with U.S. property alone. When you have an international estate, you need to consider the intricacies of international estate planning in order to avoid unnecessary costs and confusion later on. Most importantly, you will need to think about your will (and whether you need a different will or multiple wills), as well as issues of estate tax.
We want to provide you with some key pieces of information to keep in mind about international estate planning.
You May Need More Than One Will
If you are a U.S. resident but own property in, for example, Germany, it may not be sufficient only to have a will that you have drafted in accordance with U.S. law.
For instance, if you live most of the year in Miami and have a will that takes into account Florida law, you should know that owning real estate in Germany or another country could mean that the foreign property does not pass according to the terms of your will.
Rather, the foreign country in which you own property might require your property to pass according to its own intestacy laws if you do not have a will that is specific to that country’s laws.
An international lawyer can explain how foreign inheritance law works and what you will need to do to ensure that any foreign property passes according to your wishes.
You have a few options:
- Create an international will;
- Develop a U.S. will that will be recognized by the foreign jurisdiction where the property is situated; or
- Have multiple wills.
You Will Need to Take Steps to Avoid Double Taxation
As an article from the American Bar Association explains, one major issue with foreign property is that it often ends up getting taxed twice: once by the foreign country in which the property is situated, and then again in the U.S. when the property passes to a U.S. resident.
If the rest of your estate is subject to U.S. estate taxes, then the foreign property also will be subject to those estate taxes. You should discuss with a lawyer the ways in which U.S. estate tax treaties with foreign countries can help to prevent double taxation. There also may be other ways to avoid the property getting taxed twice.
Seek Advice from an International Estate Planning Lawyer
Estate planning is complex even when you only own property in one location. When you begin thinking about foreign property, and assets located across multiple national boundaries, the estate planning process becomes even more complicated.
If you own foreign property, it is extremely important to work with an international estate planning lawyer. I work with co-counsel in many jurisdictions. Contact me to learn more about the services I provide to clients in the U.S. and abroad.
Timo Becker
Timo Becker works with U.S. business owners throughout America and overseas, and he also assists people from German-speaking countries looking to invest or start a business in the United States.
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