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What are tax concerns with foreign estates?

On Behalf of | Apr 29, 2020 | Estate Planning |

Even after death, there are still issues you want to account for through proper estate planning. Ensuring that your heirs receive the property and assets you want them to involves careful planning and creation of legal documents.

According to the American Bar Association, when you have your estate in two countries, it can create special concerns you may not have if you only have your estate and property in the U.S. One of the biggest concerns usually come with real property left in a foreign estate. This is in the area of taxation. However, another common issue is the validity of a will if you happen to have one in the U.S. and in a foreign country.

Validity of will

If you have a will in the U.S. and in the foreign country in which you hold property or assets, it could pose an issue with determining which will is the valid one. This is not a big issue if you are careful to make sure the wills match and do not vary in any way. However, if there is something major different about them, it could lead to a holdup with the administration of your estate.

Double taxation

Your heirs will face a potential double taxation issue when transferring property from your foreign estate to the U.S. The foreign country will want to tax the assets and so will the U.S. There are treaties that can help avoid this situation or at least provide some relief. If the U.S. has a treaty with a foreign country, it may enable your heirs to only pay tax to the country of the property’s location. In other cases, a credit may apply to help ease double taxation.