The expat life is certainly a unique one. Living in different cultures for long periods of your life offers distinct and significant challenges. At the same time, many expats love the international life and wouldn’t dream of settling down permanently back in their home country. In addition to cultural and linguistic challenges, many expats also face complex financial challenges.
Estate planning in particular can be very confusing when you are trying to figure out how your assets will be transferred and taxed once you pass away. In many cases, it is a good idea to get some of your estate planning done before you leave the United States. This will make things much less complicated later on when you’re living in a foreign country. It is not always possible to do this, and in that case you will need help from attorneys to arrange your estate correctly and legally. Here are a few things to keep in mind as you begin your estate planning as an expatriate.
One of the chief concerns about expat estate planning is dealing with double taxation of inheritance. Some people move to countries with no estate taxes in the hope that they can avoid paying any taxes at all. Unfortunately, if you and your family remain US citizens, your estate will likely still be subject to tax. You should check if there is a double taxation treaty with the United States for the country you live in. Not every country has a treaty with the U.S., but most of these treaties will allow you to avoid paying estate tax in the foreign country as long as you pay it in the United States.
Always remember to review the inheritance laws in the country where you are living. In some countries, assets will be transferred to the spouse, but in other countries they will go to the children. Keep this in mind as you do your estate planning, so that everything is distributed correctly after death.
Foreign Life Insurance
Buying life insurance in another country can also be very tricky. Some insurance policies may not conform to the life insurance rules in the U.S. This may cause them to be taxed unfairly or unexpectedly when you pass away. The interaction between foreign life insurance policies and U.S. law can be extremely complex, so you will want to get the assistance of an attorney to help you make the right decisions.
Although you may think your trusts are incredibly secure, the way they are distributed and taxed can be affected by the country you live in and the country where they were established. You need to make sure you understand the laws of the land, so that your estate planning is completed in a way that won’t give your loved ones added problems after you pass on.
If you are interested in estate planning or you are looking to make changes to your current arrangements, give us a call. Our attorneys have years of experience in estate planning and can make sure your assets are distributed fairly and correctly.