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Common Questions About Foreign Assets in Estate Plans
Estate planning can be complex even in the best of cases, but if you’re a California resident who has dual citizenship and assets in another country, you have unique concerns that need to be addressed by an experienced estate planning attorney. You may have questions about whether a California will can include foreign assets, how estate taxes work in other countries, and what you can do to make the process as simple as possible for your beneficiaries.
Whether you have real estate, financial assets, or even business interests in another country, working with an experienced attorney knowledgeable about international estate planning concerns is essential.
Will a U.S. Estate Plan Be Recognized by Another Country?
Whether an estate plan drafted in California is recognized and valid in another country depends on several factors. These include the country’s estate planning laws, whether you’re considered a resident or nonresident of the other country, and what’s included in your estate plan. For example, a will may be recognized if it is translated and validated by the other country’s government, but a trust may not be. Sometimes, you may need a separate foreign will or local estate documents to ensure your wishes are carried out. An attorney can help you determine the requirements for the other country and create a plan that reflects your assets here in the United States and abroad.
Do U.S. Estate Taxes Apply to Foreign Assets?
In most cases, you will be subject to federal estate taxes based on the value of all your assets, including those held in foreign countries. However, it’s also possible that you could face double taxation if the other country also has estate taxes. There are some ways to reduce the tax burden in some cases, such as if the government has an estate tax treaty with the United States.
Understanding estate taxes can be complicated, but an estate planning attorney can help you determine your worldwide tax liabilities and whether your estate may be eligible for any credits based on estate taxes paid in other countries. An attorney can also provide counsel on how to structure your assets to maximize any treaty or credit benefits and minimize estate taxes.
Do Foreign Assets Have to Go Through Probate in That Country?
When a California resident dies, their estate must go through the probate process. This includes valuing their assets, settling the estate, and distributing any remaining assets to beneficiaries according to the will or other estate planning documents. It’s essential to be aware of how probate works both in California and in any applicable foreign country, as there may be rules on what you can and can’t do with assets until the probate is completed. For example, you may not be able to sell real estate during probate.
If you have dual citizenship and foreign assets, your estate may also need to go through probate in the other country. This is sometimes referred to as ancillary or secondary probate. Cross-border estate administration can be particularly complex, but an attorney can provide counsel on how to structure asset ownership to simplify probate and make it as easy as possible for your heirs to navigate.
What Strategies Can You Use to Simplify Estate Plans That Include Foreign Assets?
If trying to make an estate plan that accounts for both domestic and international assets seems overwhelming, you’re not alone. The good news is that there are strategies you can use to simplify your estate plan as much as possible. This often includes using tools such as trusts, joint ownership accounts, and coordinated wills to ensure your estate plan meets the requirements of both countries. What this will look like depends on the countries involved, as each government has its own rules for estates. For example, one country may recognize trusts, while another may not. Working with an experienced international estate planning attorney is key to ensuring you’re aware of your options and can decide on a strategy that works best for you.
What Are Some Common Mistakes When Developing an Estate Plan With Foreign Assets?
Two of the most common mistakes dual citizens make when creating an estate plan that involves foreign assets are assuming that the laws are the same in both countries and not getting legal help. Many countries require a local will — and potentially even local estate administration — meaning you may need someone on the ground in that country to settle your estate after your death. Failing to report foreign assets could also result in significant penalties.
An attorney makes this process as stress-free and straightforward as possible by providing tailored guidance on how to structure your assets and draft comprehensive estate planning documents. An attorney can also help you choose an executor who has the knowledge and skills to administrate an international estate or determine if you need a plan that includes two executors, one for each country.
Another common mistake is creating an estate plan and not reviewing and updating it regularly. Your estate plan should be evaluated after any significant life changes, such as marriage, divorce, or the birth of a child, and at least every couple of years to ensure it reflects your current wishes.
How Can an Experienced Estate Planning Attorney Help?
If you hold dual citizenship and want to know how to protect any foreign assets you have, the team at Yonano Law Offices, P.C., is here to help. We can evaluate your estate planning needs and ensure you have a comprehensive plan that takes into consideration state, federal, and international law. Call 916-894-8790 to schedule your appointment.
