Estate Planning Tips for U.S. Expatriates

Living and working abroad while maintaining your United States citizenship can add a layer of complexity to the estate planning process. International property, assets, accounts, taxation, and other issues that can affect estate plans must be considered that normally do not complicate the estate planning process. If you expect to be working as an expat, consider looking into the following issues for your estate plan before you go.

Review Your Estate Plan

It may seem basic, but review your estate plan before you go abroad. Update any necessary documents or beneficiary forms before leaving and make sure that everything is set with your attorney in the United States before going abroad. It would also be helpful to review the interactions between the U.S. legal system and the laws where you will be going to so that you can understand how your estate plan may be affected by the move.

Understand Domicile and Residence Laws

For expatriates, it is very important that you understand the difference between a domicile and a residence. In some cases, documents drafted in one country do not comply with the laws in another. The creation of trusts within an estate has been known to cause serious problems with foreign taxes, so it is important to establish through your estate plan that the United States is still considered to be your domicile.

You can change your residence without needing to change your domicile, and you can only have one domicile at a time, whereas you can have multiple residences at once. Domicile and residence rules can have a massive effect on your estate plan.

Look Out for Double Taxation

If you have property, assets, accounts, or other things of value in more than one country there is the possibility that multiple countries will claim taxes on the estate. There are agreements with some countries that prevent double taxation, but it is a good thing to check on before you go abroad.

Be Careful with Foreign Life Insurance

Consider purchasing life insurance from a United States company before you go abroad. It can be incredibly difficult to purchase life insurance from a U.S. company once you are residing in a foreign country. Furthermore, purchasing life insurance from a foreign country might not conform to U.S. laws. It can result in the policy being denied outright in the U.S. or subject it to very unfavorable tax treatment.

Review Foreign Estate Disposition Laws

The United States probate system is known for letting people dispose of their property however and to whomever they see fit. However, in many civil law countries the courts compel the estate to be distributed under their “forced heirship” principles. This means that children inherit the assets of the family upon the first parent’s death, and spouses are not typically considered when distributing the estate. However, some civil law countries have amended their laws to allow for a person to distribute their estate according to the laws of their domicile, but it must be made explicit in your will.

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