This blog post is written for US professionals assisting foreign investors. Foreign investors and their advisors, however, should still read this blog post to understand issues foreigners will experience. Please note that “foreigner” refers to a person who is not a US citizen. This blog post focuses on the advantages of international wills for foreigners purchasing real property in the US, such as a personal residence.
In addition to the US income, gift and estate tax issues foreigners face when purchasing property in the US, they have to worry about how their property will be conveyed in case of death. The typical advice foreigners receive from US estate planning professionals is trust planning is likely advised for acquired real property in the US. This advice is SELDOM helpful and frequently harmful. Many EU countries do not recognize the US trust system. For example, the Canadian province of Ontario will not recognize a US pour-over will into a US trust because the trust can be amended after-the-fact. The trust amendment is considered the equivalent of a change in the will that does not meet the requirements of the province of Ontario. Many professionals in the European Union and Canada even question the obsession in the US with the use of trusts. While trust planning is completely understandable for US Citizens in the US, trust-planning for foreigners is much more complicated, to say the least.
If a trust is not appropriate, then planning with a will is likely the next consideration. Estate planners will then have to consider whether to draft a will for the Foreigner to dispose of property in the United States. Numerous critical issues need to be addressed, such as accidental revocation if the foreigner’s will by the US based will, the definition of what is considered movable vs. non-moveable property, etc. Significant coordination will likely be needed with the foreigner’s estate planner to ensure the US will is effective. The legal fees in the US and in the foreign country could begin to mount to an uncomfortable level.
The Advantages of International Wills
All of these concerns can be circumvented by turning the foreigner’s will in the US into an international will. Most countries throughout the world recognize some sort of designation of last wishes regarding property of a deceased, many times in the form of a last will. For those foreigners who have a will and whose country is a signatory on the Uniform International Wills Act can convert their will drafted in their country into an international will recognized in the US. The Uniform International Wills Act provides a method to confirm the foreign will in Nevada and Colorado. Twenty-one other states recognize the Uniform International Wills Act.
This blog post is meant to propose one alternative in the many that may be available to Foreigners while investing in US property so as to ensure proper inheritance should the investor die. Each foreigner has unique circumstances that could lead to a different planning opportunity.
The United States, United Kingdom, Belgium, Bosnia-Herzegovina, Canada, Cyprus, Ecuador, France, Italy, Libya, Niger, Portugal, and Slovenia have enacted the Uniform International Wills Act; Laos, the Russian Federation, and Sierra Leone, are also signors of the Uniform International Wills Act.
The author, Kirk D. Kaplan, is licensed as an attorney in Nevada and Colorado, and is a CPA licensed in Nevada. Mr. Kaplan, as an attorney, focuses upon estate planning and as a Certified Public Accountant is an expert in tax planning and tax preparation for foreign nationals investing in the US. He is the controlling member of Crest Key -Your FIRST ADVISOR. If calling from outside the US, not including Canada, to speak to Mr. Kaplan call +01(702) 202-4153. In the US and Canada call (702) 202-4153.
January 20, 2016
Kirk D. Kaplan, Esq., CPA