In the 21st century, travel between countries, whether for business or pleasure, is commonplace. Consequently, the number of people who own property in more than one country has also increased significantly in recent decades. You no longer have to be among the super-rich to own a vacation home in another country, for example. As the world gets smaller, “international” families are also more common, frequently resulting in property owned in two or more countries. As a U.S. citizen, owning property in another country requires careful estate planning with a particular emphasis on the tax consequences of owning and gifting assets located outside the U.S. In fact, if you own significant assets in another country you might need an international Will.
A number of issues can arise during estate planning when you own property in another country. One of the biggest of those is the tax ramifications of transferring the property upon your death. Without careful planning you could end up being taxed both by the U.S. and by the jurisdiction wherein the property is located. Currently, the U.S. has tax treaties in place with the following countries: Australia, Austria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, Norway, South Africa, Switzerland, and the United Kingdom. These treaties effectively result in your estate paying tax in the higher of the two jurisdictions. If, however, you own property in a country without a treaty it is crucial that you understand the tax consequences of transferring ownership after your death.
The other big issue that typically comes up with regard to estate planning for someone who owns property in multiple counties is where to execute your Last Will and Testament. Many jurisdictions will not recognize a Will created and executed in the U.S. and vice versa. One option is to create multiple Wills; however, that can create problems itself, the most problematic of which is the possibility that one Will results in inadvertently revoking the other Will. Conflicting language or bequests can also occur, particularly if the attorneys in the involved countries do not work closely with each other during the creation of the Wills. Using an international Will may be your best option.
In 1973 in Washington, D.C., the International Institute for the Unification of Private Law (UNIDROIT) held the Convention Providing a Uniform Law on the Form of an International Will. The purpose of the convention was to create guidelines to be used to determine when a Last Will and Testament may be considered an “international” Will. The guidelines agreed upon are as follows:
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The will shall be in writing (may actually be handwritten or typed), need not actually be written by the testator, and may be in any language;
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The will must be signed in the presence of and signed by two witnesses and an authorized person (in the , the only authorized persons are attorneys—a notary is not sufficient);
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All signatures must be at the end of the will;
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If the will is more than one page, each page must be numbered and the testator must sign each page;
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If the testator is unable to sign the will, the reason shall be noted on the will;
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A certificate must be attached signed by an authorized person, attesting that the requirements and procedures for drafting and execution of an international will have been satisfied.
If you have additional questions or concerns about how to handle foreign property in your estate plan, contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.
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