Estate planning can be especially important for those persons with international ties. Typically, international estate planning issues come up in two contexts. First, there are situations where a U.S. citizen or resident owns foreign assets, lives abroad, or wants to name beneficiaries who do not live in the U.S. Then there are non-resident aliens who have ties to the United States, such as owning real estate or have designated beneficiaries who live in the U.S. If you have international ties, one thing is certain: you can benefit from estate planning.
U.S. citizens are subject to U.S. estate and gift taxes not only on their property in the U.S. but on all of their worldwide assets. This may subject the individual to a double tax based on the foreign jurisdiction the assets are located in and other factors, such as whether he/she is deemed a foreign resident or not. The U.S. government grants individuals a foreign estate tax credit that encompasses assets abroad, but this credit has limitations and requires specific criteria to be met. Treaty relief may also be present if the U.S. has entered into a specific treaty with the nation that your assets are in. The Federal Government allows for the U.S. marital deduction to encompass foreign property if your spouse is a U.S. citizen. If you transfer property to a spouse who is not a citizen, however, certain additional requirements must be met for your spouse to receive the marital deduction.
Non-resident aliens in the U.S. are subject to U.S. estate and gift taxes only on their assets which are situated in the county. The Federal Government has specific criteria for identifying what is considered to be situated in the United States, as well as a list of assets that fall under this category. Similar to U.S. citizens, treaty relief may be available for non-resident aliens if the U.S. has entered into a specific treaty with your home country addressing tax obligations. Non-resident aliens are limited in the different types and amounts of deductions they are eligible for relating to taxes. For example, non-resident aliens have a limited estate tax exemption for their assets situated within the U.S. There are numerous other limitations and exceptions to the limitations, such as a qualified domestic trust (QDOT), which are beneficial for tax purposes. It is important to consult an experienced estate planning attorney if you have assets overseas.
International estate planning is a complicated field with numerous specific rules and regulations. Every person’s situation is likely different depending on their citizenship status, where their assets are kept, and what their goal is in transferring them, just to name a few. Fredrick P. Niemann is a New Jersey Estate Planning Attorney who welcomes you with your international estate planning matter. Please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Planning Attorney