Many Americans lead global lives. Immigrants or first-generation US citizens may find themselves with interests in property inherited from families overseas. Older Americans often purchase property in other countries—leisure homes, boats—or acquire interests in foreign corporations.

How do you manage your estate plans and your family’s future if you have property in other nations? No matter where your property is located, you should begin by discussing the matter with an estate planner in your own home jurisdiction in the US. An estate planner can review your situation and, if necessary, show you when you need assistance from specialists in the local law of a foreign jurisdiction.

The planner will ask you about a few key issues first:

  • Are you a US citizen? If not, what is your citizenship, and what is your status in the US?
  • In which country is your property located?
  • What type of property is it—real estate? Personal property? Intangible assets, such as royalties or intellectual property?
  • How did you acquire it? Did you purchase it, inherit it, or receive it as a gift?

US Citizenship and Tax Issues

If you are not a US citizen or a lawful permanent resident (an LPR, or Green Card holder), US estate tax laws apply differently. For citizens and LPRs, federal estate and gift tax only applies to estates or lifetime property transfers worth over $13,610,000, as of 2024. Naturally, this excludes most people.

However, the IRS has different estate and gift tax rules for non-residents of the US. If a deceased non-resident owned assets in the US that were worth more than $60,000 at the time of their death, they may be subject to federal estate tax. Large gifts may also be taxable against any non-resident who gifts assets exceeding the value of the annual gift exemption amount, which increases yearly. (As of 2024, it is $18,000.)

To meet the IRS definition of a US resident for tax law purposes, a non-citizen must pass the “substantial presence” test. Although this test carries several exemptions and exceptions, it ultimately rests on the number of days that the non-citizen spent in the US during the past three years.

If a decedent does not meet this test, their estate will have to file a federal estate tax form for any US assets worth over $60,000. However, a number of credits and deductions can be available for the estates of non-citizens. Certain expenses are deductible from federal estate tax, including:

  • Funeral expenses
  • Administration expenses
  • Claims against the estate
  • Unpaid mortgages and liens
  • Uncompensated losses from theft or casualty that occurred during settlement of the estate

The US has tax treaties with over a dozen countries, including Canada and the UK, which may provide exemptions or credits for estate tax for their citizens abroad. However, these countries may require the estate to file a tax return or undergo probate under their own laws as well.

Multiple Probates and Multiple Laws

The situs of property—its location—generally determines the property law that applies to it. But when someone dies in the US, their estate must generally go through probate court in their home jurisdiction. When a decedent owned property in multiple jurisdictions, that can involve multiple probate filings.

Even if the properties are in different States in the US instead of different countries, multiple probates will need to be filed with different lawyers and, of course, different judges.

Filing for a single probate is often time-consuming, painful, and expensive. Filing a second probate in another country, especially where there is a language barrier or an entirely different system of law, could be a nightmare. It is best to plan ahead to avoid this situation, if at all possible, or to understand how to manage it when necessary.

Systems of Law

The United States largely has a “common law” system, as do many other countries with British heritage, such as Canada, Australia, and several Caribbean nations. Courts, procedures, and legal principles operate in similar ways in these countries, even though the governments involved have differing laws and policies.

The “civil law” system originated in Western Europe. Civil law systems operate in European nations today, as well as in Mexico, Guatemala, and several other Central and South American nations. Even the state of Louisiana has a mixed civil law and common law system. The principles of civil law—including inheritance and property law—can be very different, and it is important to plan ahead to avoid conflict.

For example, some civil law systems follow the principle of “forced heirship.” Under such a law, a decedent’s child must receive an inheritance. Although the law may differ on when and what the child is entitled to, the decedent does not have power to change it. Even in a situation where the decedent wanted the child to have their assets, a forced heirship law can create a difficult situation that interferes with the child’s own financial planning and saddles them with large expenses. Depending on the laws involved, it is often possible to avoid this by creating a trust or an entity to own the overseas property.

Investigating Your Obligations

It is crucial to speak with an estate planner about how to properly title your international assets, preferably as soon as you acquire them. Attorney Mike Bascom can offer knowledgeable, compassionate help for Georgia residents who need an estate plan that spans continents.

Contact us at 770-285-5493 today to schedule your free case review in our offices in Cumming, GA.