Yes, you absolutely can include international property in your estate plan, though it significantly increases the complexity and requires careful planning with an attorney experienced in international estate planning.
What are the biggest challenges with foreign assets?
Dealing with assets located outside the United States introduces a host of complexities stemming from differing legal systems, tax treaties, and probate procedures. For instance, many countries have forced heirship laws, meaning a portion of your estate *must* be left to specific family members, potentially conflicting with your wishes. Approximately 65% of high-net-worth individuals possess assets in multiple countries, yet a surprising 30% haven’t fully accounted for these assets in their estate plan. This can lead to substantial delays, increased costs, and unintended consequences for your heirs. Furthermore, the US estate tax applies to *worldwide* assets, meaning property located abroad is subject to US tax, potentially requiring multiple tax filings in both the US and the foreign jurisdiction. “Proper planning is key, as ignoring foreign assets can create a logistical and legal nightmare for your family,” states Ted Cook, a San Diego estate planning attorney.
How does probate work with foreign property?
Probate, the legal process of validating a will and distributing assets, becomes far more complicated when foreign property is involved. Generally, probate must occur in the country where the property is located, necessitating legal counsel in that jurisdiction. This can mean navigating unfamiliar legal systems, language barriers, and potentially lengthy court proceedings. Imagine a Californian widower, Mr. Henderson, who owned a small vineyard in Tuscany. When he passed, his family faced years of litigation and substantial legal fees trying to navigate the Italian probate system. The process took nearly five years and significantly diminished the value of the inheritance. The cost of foreign probate can easily exceed 5% of the asset’s value, a significant drain on the estate.
What role do trusts play in international estate planning?
Trusts are incredibly valuable tools for simplifying the transfer of international property. A properly structured trust can allow you to avoid foreign probate altogether, and potentially minimize estate taxes. For example, a revocable living trust can hold title to the foreign property, allowing for a smoother transfer to beneficiaries upon your death. It’s crucial, however, that the trust is drafted to comply with both US and foreign laws. I recall advising a client, Ms. Ito, who owned several properties in Japan and California. By transferring the Japanese properties into an irrevocable trust, we were able to avoid Japanese probate and streamline the inheritance process for her children. This saved her estate an estimated $75,000 in legal fees and probate costs. “The goal is to create a cohesive estate plan that minimizes complications and maximizes benefits for your heirs, regardless of where your assets are located,” explains Ted Cook.
Can I avoid double taxation on my international assets?
The US has estate tax treaties with many countries, designed to prevent double taxation. However, these treaties can be complex and require careful interpretation. The US estate tax exemption (currently $13.61 million per individual in 2024) applies to worldwide assets, but each country has its own rules regarding estate taxes and inheritance taxes. A couple, the Millers, owned a vacation home in Canada and significant assets in the US. Without proper planning, their estate would have been subject to both US estate tax and Canadian inheritance tax on the same assets. By utilizing a specific provision in the US-Canada tax treaty, we were able to structure their estate plan to minimize the overall tax burden, saving them nearly $150,000. It’s essential to work with an attorney who understands these treaties and can develop a tax-efficient estate plan tailored to your specific circumstances.
“International estate planning requires a proactive approach, careful documentation, and a deep understanding of both US and foreign laws,” says Ted Cook.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, a trust lawyer near me: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
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