In our
practice, we have a significant number of clients who own real property or have bank
account in a foreign country whether China, Mexico, England, Costa Rica, England, Canada or France or other countries. Our
clients are becoming more global and mobile, especially when buying properties
abroad for retirement, vacation or for their families.
One
issue that arises with foreign property is the risk of double taxation. It is
possible that when foreign property is transferred, U.S. estate tax will apply,
but so will the tax of the foreign country. When a citizen of the United States
dies and owns property in a foreign country, the property in the foreign
country will be subject to U.S. estate tax if the estate is subject to taxation
at all. There are treaties with certain countries which prevent the double
taxation and give credit.
Another
issue that comes up is multiple wills in different jurisdictions. Somestimes one last will and
testament may ultimately revoke another. When ttwo wills are
needed, it is important that attorneys from each country work and coordinate the estate planing and wills.
If there is no will or trust, in
civil law countries, such as France, the property vests in the decedent’s heirs
immediately upon the death of the decedent. This is unlike the United States
and other common law countries, where there generally must be a personal
representative or executor to transfer title or, at a minimum, some sort of
court recognition of the death and transfer of property.
For example, if a
client owning property in France desired that property vest in a long time companion and there was no will or trust, the property would immediately vest as set forth under French succession laws. On the other hand, if the client wanted the property to vest in their heirs, then drafting a will in France to deal with
the French property would be not be needed.
We work with attorneys in other countries while advising clients with foreign property during the estate planning or probate phase. It is always
best to address these issues during estate planning rather than going through
the difficult and expensive process of dealing with them after death through
the probate process. As we live in a more global society and smaller world, these issues are
becoming more common. Don't forget to prepare for all your estate planning and probate issues, particularly when foreign real
property is involved.
Email: hm@moravecslaw.com
Office: 626-793-3210
