Even if your family is built in the United States, chances are that you may have family members who moved abroad. It is easier to move around now more than ever. This may mean that your daughter chooses to go teach abroad in Spain and live there, or your son moves to Australia to be closer to his wife’s family. While it may not seem like a big issue, if you pass away and want to leave your estate to a beneficiary that lives abroad, it can be unnecessarily tricky. This is often because you have to follow the estate rules of the United States as well as those in the country where the beneficiary lives.
Potential issues that will likely rise when it comes to foreign beneficiaries includes:
- Tax Laws – In most states in the United States, estate planning is based on the common law system. However, some countries abroad are often based in a civil law system. What this often means for beneficiaries abroad is that while the United States and common law taxes the estate before being given to the beneficiaries, civil law imposes those taxes on the heirs afterwards. This leaves the potential for double taxation.
- Residency Status – If you have a beneficiary who travels the world, residency status can be a difficult affair. However, it is needed to determine which laws to follow. Often, if they move frequently from country to country, their residency status may still be the United States as that is likely where they will return to permanently. However, it is important to determine so that it is known what foreign estate laws, if any, they need to follow.
- Special Instructions for Other Designations – Typically a good estate lawyer can help you plan your estate for foreign beneficiaries. However, you will also need to give the same consideration to life insurance policies and other designations not written into the will. Often these come with special instructions that you will need to follow as well.
If you want help planning your estate for a beneficiary or multiple beneficiaries that live abroad, contact us today.