Should Foreign Property Be Included In Your U.S. Estate Plan?



With Hawaii's melting pot of cultures and immigrant roots, it is not uncommon to see clients owning real estate in countries outside of the United States. The question becomes: How should a foreign property be addressed in a U.S. estate plan?


One Set of Estate Planning Documents


For the sake of keeping things simple and minimizing confusion, it is preferable to have one set of estate planning documents as opposed to having a U.S. estate plan and a foreign estate plan. However, while a Will made in one state will generally operate in other states, this cannot be said when it comes to foreign countries. Some countries (i.e. France) have laws that require real estate to be distributed to certain blood relatives. A U.S. Will can do nothing to change that.


A Trust Might Not Work


Additionally, while Trusts are common in the U.S., they are less common elsewhere and even not recognized at all. For example, gift taxes in Germany are lower for beneficiaries who are closely related and higher for beneficiaries not closely related. A Trust is considered a stranger for gift tax purposes and is subject to a high tax rate.


Wills


Until Trusts are more widely used in the rest of the world, a Will may be the better option in addressing foreign real estate. If you'd prefer one set of estate planning documents, an International Will may be an option. Wills complying with the Uniform International Wills Act are valid in countries that are signatories or have otherwise agreed to be bound by the Act. Unfortunately, only a small amount of countries have signed or agreed to be bound.


When it comes to addressing foreign property in estate planning, a prudent method is to have both a U.S. estate plan and a foreign estate plan. The foreign estate plan will address the foreign real estate and the U.S. estate plan will, of course, address U.S. real estate. Each Will should have a clause referencing the other Will to prevent one from revoking the other. The benefit of having two estate plans is that each plan will be drafted by an attorney experienced in local laws. Additionally, probating a local Will could be less expensive and less cumbersome than probating a foreign Will.


DISCLAIMER: All information available at this website are for informational purposes only and is not legal advice. You should contact an attorney directly regarding your specific situation. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office of Keoni Souza, LLC and any users or any other party. Transmission of information via email or through this website does not create an attorney-client relationship and may not be secure, therefore confidentiality cannot be assumed.

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All information available on this website is for informational purposes only and is not legal advice. You should contact an attorney directly regarding your specific situation. The use of and access to this website or the transmission of information via email or through this website does not create an attorney-client relationship between the Law Office of Keoni Souza, LLC and any users or any other party. Transmission of information via email or through this website may not be secure, therefore confidentiality cannot be assumed.  By using this website or transmitting information via email or this website, the user agrees to this information being collected, stored, or transmitted to a third-party.

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