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Estate Planning and Foreign Assets

Estate planning can be a complicated process, especially for individuals that have diversified assets. The process can be even more complex for individuals engaging in estate planning when those individuals have foreign assets to consider. If you have or are considering acquiring foreign assets, including foreign real estate property, it is important that you understand how doing so may affect your estate planning tools. An experienced estate planning attorney can help you further understand the unique nature of foreign assets as well as the mechanisms that you can put in place to protect them.

Validity of Wills

It is possible for a valid United States Last Will & Testament to be considered invalid in a foreign country. Typically, to avoid a Will being deemed invalid it must comply with the requirements of a valid Will in the foreign jurisdiction where a person’s assets are located. This is one reason why it is imperative to work with an experienced estate planner in the country in which your foreign assets are located – otherwise, you risk losing those assets or having them distributed in a way that is not according to your wishes. You also need to check with an experienced estate planning attorney in the United States to see how multiple Wills can affect your Will here.

The American Bar Association notes that creating an International Will is one of the best ways to handle estate planning when you have foreign assets. International Wills must meet certain requirements to be valid. Additionally, they must be accompanied by the certification of an authorized person indicating that they meet these requirements. This can help you ensure that your Will can govern the distribution of your assets in countries that have signed onto the convention which established the international Will. If your Will is not valid in a foreign country then you risk becoming subject to their version of intestate succession laws, something an International Will

Taxation

Taxes are one of the most complicated issues surrounding foreign assets and estate planning. The United States maintains estate tax treaties with several countries around the world, which means that when an individual dies with property in those countries then that property will be included in the individual’s estate and potentially subject to the estate tax. This could ultimately lead to double taxation on these assets, which can have a significant impact on the amount of assets which remain after tax considerations. Additionally, many foreign countries impose higher estate tax rates on assets that are distributed in a certain way. The American Bar Association uses France as an example in that bequeathing property to a cousin would carry a higher tax consequence than were you to leave that property to your sibling.

Additional Cost

Estate planning that includes foreign assets can require a lot more work to ensure accuracy in all of your estate planning documents. Each document, both foreign and domestic, will need to be reviewed to ensure that they comply with applicable rules and regulations. It is also important to spend time cross-referencing each document to make sure that they comport with the law. However, the additional upfront cost can be indispensable in saving you even more in the future. If you have already created your estate plan and have since added foreign assets, make sure you speak with an experienced estate planning attorney to ensure that your foreign assets are covered.

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