Estate planning can be a lengthy and complicated process — especially for families with international assets. Each country has its own tax codes and estate planning regulations that must be followed in order for your affairs to be handled according to your wishes.
If you’re unaware of what those codes and requirements are, you could be facing lengthy and expensive court proceedings that could lead to incorrect inheritances, tax penalties, various legal challenges and an overall loss of control in the United States and abroad.
So what do you need to know if you have beneficiaries and assets outside of the U.S.?
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Citizenship, residency and domicile
First and foremost, it’s important to recognize that each country has its own set of laws when it comes to inheritances, probate and gift taxes, and sometimes these laws differ depending on your citizenship.
In the U.S., estate planning regulations differ between green card holders and citizens. For example, although a green card holder is considered a resident for estate tax purposes, they have a lower estate tax exemption on international assets compared to a U.S. citizen.
This means their estate taxes on international assets will likely be much higher, which could impact the amount of assets left to heirs.
To begin formulating your plan, it’s important to know the difference between nationality, residency and domicile, as these factors determine which jurisdictions have control over your estate.
In the eyes of the law, a person’s nationality is the country in which they hold citizenship. Due to country-specific laws, a person’s nationality could prevent them from choosing who to pass their assets to.
These laws are known as “forced heirship,” requiring assets to be passed down to blood relatives or next of kin.
Residency, on the other hand, refers to the country where one is living either part time or full time.
Domicile refers to the individual's permanent home.
For example, a U.S. college student studying in Europe has residency in Europe, but their domicile would be the U.S.
Knowing the difference between these terms and how they apply to you can help determine the estate and gift taxes you may be subject to.
Gift tax laws
You’ll also want to consider gift tax laws. These specific taxes are imposed anytime you transfer assets to someone without receiving payment in return.
For 2025, the annual gift tax limit for a U.S. citizen is $19,000. If you gift assets that exceed this annual limit, the amount will be subtracted from your lifetime limit, which is $13.99 million per person in 2025.
Just like the U.S., other countries have their own annual and lifetime limits, and being unaware of them could be costly. However, the U.S. does have international estate and gift tax treaties with more than a dozen countries.
Under these treaties, residents of foreign countries are taxed at a reduced rate, or may even be exempt from U.S. taxes on certain items of income, according to the IRS.
These treaties can also provide certain protections to citizens who may have assets in both countries.
Trusts
Trusts may also be a helpful tool for those with foreign assets. A foreign asset protection trust or offshore trust is primarily used to protect international assets.
This tool allows individuals to hold property overseas, potentially protecting it from creditors in their home country.
Typically, these trusts are established in a jurisdiction with favorable asset protection laws. It’s important to note that transferring assets to an offshore trust may have tax and other legal implications, so it’s best to consult with a financial adviser and certified public accountant (CPA).
Depending on your specific situation, you may need to create a separate estate plan for those assets.
Each country has unique inheritance laws, meaning a will drafted in the U.S. might not be valid when it comes to distribution of assets in another country. Therefore, multiple wills might be necessary.
If you do create multiple wills, it’s imperative that they are coordinated to avoid conflicts while outlining your wishes as clearly as possible.
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