International Issues in Estate Planning: One Will or Two?

Individuals and couples with assets in more than one country need to ensure that their estate planning documents are valid in all the jurisdictions in which they have property. Although in some instances this may be accomplished by means of one set of documents, in most cases having separate wills for the U.S. and the foreign assets is preferred.

International estate planning and administration

The laws of different jurisdictions often conflict, and a will that is perfectly acceptable in one country may be held invalid in another. Following are just a few issues that arise when dealing with the administration of an estate of someone who owned property in more than one country:

Will formalities. Even when the intent of the testator is clear, if the overseas jurisdiction where the foreign property is located has different drafting and execution requirements, a U.S. will may not be accepted. Are two witnesses sufficient? Is an attorney or notary certification required? Are holographic (handwritten) wills, nuncupative (oral) wills, and digital wills deemed valid in the foreign jurisdiction? Even a perfectly clear and valid U.S. will may not pass muster in another country, so it is crucial to ensure that the will satisfies the inheritance laws of the country where each property is located.

Invalid document or provisions. Many countries do not utilize living or testamentary trusts, and a judge in another country may refuse to acknowledge them. In some cases, opinion letters and affidavits may be accepted, but this could result in a very complicated administration and add significant costs to the proceedings. Other provisions may simply not be popular in another country because of adverse income tax consequences.

Forced heirship. A number of countries (including France, Spain, Italy, Japan and Saudi Arabia) mandate forced heirship or forced share, meaning that regardless of what you have designated in your will, specific beneficiaries (e.g., your spouse and/or children) are entitled to a portion of your assets.

Foreign language. If English is not the official language of the foreign jurisdiction, a will must usually be translated into the official language of that country when submitted to probate. This could be costly, and there is still no guarantee that the translated will’s provisions will be accepted by the foreign court. The Washington Convention of October 26, 1973 was intended to create the framework for international wills, to be used in several countries. However, very few countries have ratified it and the U.S. is not among them.

Estate planning and international tax attorneys

Estate planning is more than just a document noting who is to inherit your property. Issues concerning inheritance and taxation can get extremely complicated, especially when cross border issues come into play. If you have assets in more than one country, you need a law firm that can:

  • Advise on inheritance tax and cross-border issues, including those related to conflicts of law, succession and domicile
  • Obtain property valuations in the U.S. and abroad
  • Prepare U.S. wills and trusts, and coordinate with estate planning and tax attorneys in the jurisdiction(s) where the foreign assets are located
  • Coordinate the probate or other administration of U.S. and foreign estates
  • Arrange for the preparation of affidavits or opinion letters on U.S. or foreign estates law
  • Handle the transfer and/or repatriation of sale proceeds of inherited foreign property

To learn more about how you can arrange your estate to ensure your intended distribution and minimize taxes, contact the estate planning and tax attorneys at Moskowitz, LLP today.