The United States has the highest number of immigrants globally, but more and more Americans are considering relocating to another country permanently. Many wealthy Americans are also interested in buying property overseas and spending at least part of their time there.
However, moving abroad has practical implications, such as taxation and estate planning. Even when living outside the U.S., Americans still have financial obligations to the U.S. government. They should also have someone legally authorized to make financial decisions on their behalf.
Expatriates with assets in multiple countries need an estate plan that covers their international lifestyle. This might involve working with estate planning attorneys in each country where they hold assets.
Double taxation, a system used by only the U.S. and Eritrea, means that Americans living abroad might end up paying income tax twice. This applies to estate taxes as well. While estate taxes typically affect the wealthy, a large percentage of affluent Americans were considering relocating abroad in 2022.
To avoid double estate taxation, options include renouncing U.S. citizenship or using the foreign death tax credit. Trusts can also help reduce estate tax liabilities, although they might not be recognized in all countries.
It’s important to note that an estate plan designed with U.S. laws in mind may not be valid for American citizens living abroad. Depending on their situation, expats might need multiple wills or an international will recognized by certain conventions.
For those with assets in multiple countries, coordinating estate administration across different jurisdictions can be challenging. In some cases, combining a primary will (U.S. or international) with a separate situs will for specific countries may be necessary.
Americans acquiring property in jurisdictions with forced heirship rules might also benefit from a separate will. These rules could restrict who receives assets and how much.
Living overseas can also raise guardianship and power of attorney issues. Parents of minor children should consider naming a guardian in their will, but they need to understand which laws apply. Additionally, having a financial and medical power of attorney can be crucial for managing assets and making healthcare decisions while abroad.
In summary, international estate planning is essential for Americans living or investing abroad. Due to legal differences, consulting experienced attorneys in each relevant country is recommended. If you’re an American living abroad, it’s advisable to review your estate plan to ensure it aligns with your current circumstances, and consider consulting an attorney in your new country of residence.
At Cheever Law, APC, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Family Wealth Planning Session. The Life & Legacy Planning Session will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session (aka Family Wealth Planning Session) to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a 15-minute introductory call today.