Estate planning can be difficult, especially for U.S. citizens living abroad. Since the Internal Revenue Service (IRS) draws no distinction between Americans residing within the United States and Americans residing overseas, expatriates seeking to establish an intergenerational legacy must still ensure their estate plan accommodates the federal government’s rules and regulations.
How Expatriates Can Manage Their Estate From Overseas
For expatriates who want to create an estate plan, it’s important that they think about the special circumstances associated with living in a country other than the U.S. They may want to consider unique planning tools to manage their property and money.
Name an Attorney-in-Fact
An attorney-in-fact, or an “agent,” is someone delegated the power of attorney to make financial decisions on your behalf. Attorneys-in-fact are considered fiduciaries, which means they have a legal obligation to only act in the best interest of the grantor. Expatriates may benefit from naming an agent, as they may occasionally be required to make legal and financial decisions in the United States.
How You Benefit From an Attorney-in-Fact
- The attorney-in-fact can pay your U.S. bills while you are overseas
- The attorney-in-fact can approve, initiate, and oversee bank transactions
- The attorney-in-fact can purchase and sell valuable assets such as motor vehicles and real properties
- The attorney-in-fact can handle creditor claims
- The attorney-in-fact can apply for loans
- The attorney-in-fact can manage investments
When delegating someone the financial power of attorney, expatriates can relay specific instructions for how certain transactions and assets should be handled.
Create Health Care Directives in Both Countries
A health care directive is a special legal document that allows you to decide how you should be treated if you are ever physically incapacitated. You could name an agent to make treatment decisions on your behalf and provide detailed instructions for potential end-of-life care.
Since every country treats health care directives differently, you should ensure that you create a directive for use in the United States and a directive for use in your new country.
Establish Your Burial Plan
Establishing a burial plan might not seem like an immediate priority. However, expatriates must often decide where they would like to be laid to rest well before they ever reach retirement age. Since transporting human remains across borders can pose significant legal challenges, U.S. citizens abroad may have to:
- Decide if they want to be buried in the United States or in the foreign country
- Speak to loved ones to determine how their body could be transported between countries, if necessary
- Prepay burial and funeral expenses
Prepare a Will Fit for Your International Circumstances
Your estate plan should be comprehensive, encompassing the assets you own in the United States and in your current country. In general, a will is the simplest way to ensure that an estate avoids intestacy.
However, wills are not universally recognized. While some countries will respect and probate wills valid in the United States, other countries have very different legal systems and may require substantive documentation to begin probate.
If you plan to remain overseas, or retain assets abroad, you may need to create separate wills for each jurisdiction in which your executors will be required to initiate probate proceedings.
Review Your Tax Obligations
U.S. federal estate taxes only affect very wealthy individuals: in 2021, the threshold for federal estate taxes was $11.7 million for individual taxpayers, and $23.4 million for married couples who file jointly.
However, expatriates may have to contend with estate taxes in their new country. Ideally, U.S. citizens residing overseas should have an estate plan which addresses:
- Their anticipated tax obligations in the United States
- Their anticipated tax obligations in their current country
- Probate and succession processes in every jurisdiction in which they own assets
Decide If a Trust Is Right for You
A trust is a legal entity that can receive, hold, and maintain a variety of assets, including but not limited to:
- A home
- Real properties
- Motor vehicles
- Cash accounts
Every country has its own laws regarding trusts. In the U.S., revocable living trusts can be used to reduce an estate’s tax liability. Trust assets are also not typically subject to probate, facilitating the fast, private transfer of assets from the decedent to their beneficiaries.
Do You Need To Speak With An Attorney About Estate Planning?
If you need to speak with an experienced estate planning lawyer please contact us online or call us directly at 800.756.5596 to first register for one of our free, informative seminars. Your attendance will qualify you for a special discount for our estate planning services should you decide to make a free appointment at the conclusion of the seminar and choose to proceed with us. We proudly serve clients throughout California with offices in Torrance, Newport Beach, Orange, Woodland Hills and Pasadena.