Inheriting property in a foreign country may seem like a dream. You may imagine the real estate you now own can be a vacation home, a retirement destination or a second income.
However, international inheritances can bring mind-boggling complications, the least of which may be a language barrier. This is why it is important to consider seeking assistance from a legal professional who has experience handling complex legal matters.
Your work is just beginning
The laws and statutes that govern an international inheritance originate with the country where the estate lies. Therefore, if you live in New York but inherit property in Brazil, for example, Brazilian law will apply to all matters of closing the estate. This may require you to deal with any of the following legal issues before you can take ownership of the property:
- Paying the inheritance tax in the other country
- Abiding by any restrictions on foreign ownership of property
- Managing tenants or domestic employees on the property
- Paying utility bills and other ongoing expenses while the property goes through the appropriate authorities
- Figuring out how to maintain the property until you complete the process of taking ownership
- Obtaining a visa or other rights to travel to the country if you desire
Of course, this does not mean the United States government will not have some say in your inheritance. Dealing with financial issues in another country may require you to open a bank account in that country, which means you must report this account to the IRS for tax purposes. The IRS will also want its share of any income you generate from any foreign property you inherit, including the proceeds from the sale of your overseas property. A skilled attorney may be able to minimize your tax burden.
Cutting through the red tape
Some countries -- for example Thailand, China, Japan and India -- maintain strict control over properties and currency. You may find that you are not able to own a property you inherit in one of these countries or that you will have difficulty obtaining the proceeds from the sale of the property.
No matter the country or the circumstances surrounding your inheritance, you can expect to complete mountains of paperwork, most of which will be in the language of the country of the estate. Assuredly, the process will be slow, and the potential for misunderstandings will be high. To minimize the complications you will face, it is wise to choose your attorney carefully so you have an advocate with experience in international transactions.