International Estate Planning for Americans
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Contents
- #1: You Might End Up with a Higher Tax Bill
- #2: Missed Details Can Lead to Costly Penalties
- #3: Different Legal Systems Complicate Planning
- #4: International Estate Planning is Even More Complicated for Americans
- Key Concepts That Affect International Estate Planning
- Your Citizenship(s)
- Where You're Resident
- Your Domicile
- Key Tax Considerations for Cross-Border Estate Planning
- How Will You Be Taxed?
- Understanding Tax Treaties
- Foreign Tax Credits
- Estate Planning Strategies: Your US Planning Might Not Work Internationally
- Traditional Estate Planning Tools
- The Proper Way to Use Wills in International Estate Planning
- Key Requirements for a Valid Will
- Wills in the Cross-Border Context
- Key Requirements for a Valid Will
- The Importance of Professional Guidance
- Moving Overseas with Trust Structures
- Tax and Legal Risks of Moving Overseas with a US Trust
- The Role of Legal and Financial Advisors in International Estate Planning
- Need Help?
When we first started in this business, opening a foreign bank account was considered “going offshore”. In the decades since, our clients tend to do a lot more. More asset types. More real estate. More money invested internationally. And more people spending time offshore too.
In all of these situations—where assets or the client themselves are based outside the US—international estate planning comes into play.
Done well, it’s an efficient way to ensure your assets are well protected during your lifetime and seamlessly transferred to your beneficiaries after your passing.
In this article, we’ll talk about some of the key considerations that go into an international estate plan—focused on US clients.
First, though, let’s talk about why estate planning is so important for US clients with assets overseas.
#1: You Might End Up with a Higher Tax Bill
Without a proper plan, your beneficiaries could wind up paying tax in more than one country, and at a higher rate. An estate tax treaty might (or might not) help them avoid double taxation, but they’re poorly understood by estate planning advisors without a background in international tax planning.
The end result? Your heirs might pay more tax than they need to. A good advisor will help you avoid unnecessary tax exposure—and, in some cases, optimize your tax position globally.
#2: Missed Details Can Lead to Costly Penalties
Estate and tax laws in different countries can be strict and detailed. Failing to meet certain filing or reporting requirements—especially for US citizens—can trigger heavy fines and legal issues.
#3: Different Legal Systems Complicate Planning
Most US states (except Louisiana) follow English common law. It’s a body of law inherited from England which typically offers individuals almost complete control over how their wealth is distributed after they die.
Flexibility in Common Law Estate Planning
In the US and other common law countries, you can customize your estate plan through wills and trusts.
Wills outline instructions for passing assets to heirs like spouses, children, or charities, through the probate system.
Trusts can bypass probate entirely and may offer tax benefits in specific cases.
If you die without a will (intestate), state laws decide where your assets end up.
Taxes are usually applied to the estate before wealth is passed to heirs.
In contrast, many European, Latin American, and African countries follow civil law, which is rooted in Roman law. This system relies on detailed statutes and leaves less room for interpretation by courts.
There’s also less flexibility to leave your wealth to beneficiaries of your choice – a concept known as “forced heirship.”
This is important because many current expat hotspots use civil law, including:
- Spain
- Portugal
- Greece
- Panama
- Paraguay
- Costa Rica
- Italy
- Uruguay
- Argentina
- Switzerland
Why This Matters for International Estate Planning
Because legal systems handle inheritance and taxes differently, your estate plan may become ineffective—or even harmful—if your family moves to a country with a different legal system.
We’ve seen this plenty of times ourselves. It’s very important that your plan works with the other countries’ system.
Have Questions About Your Estate Planning?
Get in touch for a free, no-obligation consultation. Our team can help you navigate complex cross-border estate issues and ensure your wealth is protected—no matter where life takes you.
#4: International Estate Planning is Even More Complicated for Americans
As a US citizen, your global assets are subject to complex tax rules—including worldwide taxation based on citizenship.
Even if you permanently leave the US, you must still file tax and reporting returns annually with the IRS. And when you die, your worldwide estate remains subject to US taxes. The only way out of that is to give up US citizenship—not a light decision, to be sure.
In short, if you are a US citizen living abroad, both US income and transfer taxes still apply to you.
And while you may qualify for the Foreign Earned Income Exclusion (FEIE) to reduce income taxes, no such exclusion exists for estate or gift taxes.
(That said, fifteen countries, including Canada, have ratified estate tax treaties with the US.)
If you have assets in multiple countries, the complexity only grows.
Each country’s inheritance laws, tax rules, and treaties will affect how your assets are taxed and distributed.
Without a solid plan, you could face double taxation, forced heirship rules, and unexpected legal conflicts.
Managing the planning around a complex mix of domestic and international assets is our speciality. As you need help, please reach out to us to discuss further.
The Good News: The Current Estate Tax Exemption Is at a High—For Now
As of 2025, the federal estate tax exemption is:
$13.99 million for an individual.
$27.98 million for a married couple, both of whom are US citizens. If you don’t use your full exemption during your lifetime, your surviving spouse can claim the unused portion (portability).
However, these exemptions are set to expire at the end of 2025, returning to much lower levels.
That said, President Trump has promised to make these exemptions permanent. With his Republican Party controlling both the House and Senate, these exemptions may be extended or made permanent. We’ll have to wait and see.
What if your spouse isn't a US Citizen?
We’re occasionally asked to plan around a situation where one spouse is American and one is not. If you’re in that situation, estate planning becomes more complex.
The unlimited marital deduction does not apply for gifts or bequests from a US citizen to a non-citizen spouse.
Instead, you are limited to an annual gift tax exclusion of $190,000 (2025) applicable for gifts to a non-citizen spouse. However, gifts larger than $19,000 (2025) (the annual gift tax exclusion threshold applicable for gifts to non-spouses) reduce the $13.99 million lifetime estate and gift tax exemption threshold for the US citizen donor dollar-for-dollar.
This restriction can increase the chances of your estate being taxed when you die.
Planning ahead can help reduce this risk and protect your wealth.
Key Concepts That Affect International Estate Planning
When planning your estate across borders, you need to understand how different countries define your tax and legal status. Citizenship, residency, and tax domicile greatly influence what taxes you will owe and how effective your estate plan can be.
Your Citizenship(s)
Your citizenship plays a big role in how various countries tax your income, gifts, and estate.
If you hold dual or multiple citizenships, you might have tax and estate obligations in more than one country. Estate planning here requires careful coordination to avoid unnecessary taxation. Even if you continue to live in the US but have multiple citizenships, that status could mean that your international assets (and rarely, even your US assets) may be roped into the other legal system.
Where You're Resident
Residency status also affects how income and estate taxes apply to you in many countries. The rules vary a lot.
A US citizen is always considered US-tax resident no matter where they live.
A US permanent resident (green card holder) is automatically treated as a resident for tax purposes if they live in the US. If they don’t live in the US, they’re still considered US-tax resident unless they qualify to be considered non-resident under a treaty.
(As a practical matter, a green card holder who doesn’t spend most of their time in the US will probably eventually lose their green card, so it’s kind of a moot point.)
A non-US citizen who isn’t a permanent resident who spends enough time in the US can become US tax resident if they spend enough time in the US as determined by the substantial presence test.
Your Domicile
Domicile refers to the country you consider your permanent home. You can only change your domicile by moving to another country with the intention to stay there indefinitely. It’s often more important than citizenship or residency in determining if your estate is liable for transfer taxes.
Under US law, both citizens and permanent residents are automatically considered US-domiciled. A foreign citizen who gives up US permanent residency might still be treated as US domiciled unless they take concrete steps to establish a new domicile abroad.
Unlike residency, there is no clear-cut formula for determining domicile. Courts may look at various factors—where you own property, your business ties, and personal intentions, and so on—to decide your domicile status.
How Will You Be Taxed?
Your estate’s tax exposure depends on:
- The type and location of your assets.
- Your citizenship(s).
- Your country of tax residence.
- Your country of domicile.
- Applicable gift and estate tax treaties.
US citizens are taxed on their worldwide estate, no matter where they reside. Green card holders living in the US are also US domiciled, although if they leave the US, that can change depending on facts and circumstances.
Many US citizens mistakenly assume that living abroad removes them from US estate tax obligations—but unless they give up US citizenship, they remain US domiciled for life.
You can have multiple residency statuses but, at the end of the day, only be tax domiciled in one. How to do that in the most tax efficient way possible is a common request from our clients.
Key Tax Considerations for Cross-Border Estate Planning
When managing an international estate, understanding how different tax systems apply will help you avoid double taxation and unexpected tax liabilities. Things like tax situs rules, treaties, and foreign tax credits play a crucial role here.
How Will You Be Taxed?
How you are taxed depends on various factors, including the nature and location of your assets, your country of domicile, and any tax treaties in place. US citizens (always) and permanent residents (almost always) are taxed on worldwide assets for estate purposes.
Your estate’s exposure to taxes in other countries also depends on their tax laws, and whether those countries offer ways to prevent double taxation.
What’s “Situs”?
Situs is the location of an asset for legal and tax purposes. This concept is important in many countries, especially for non-resident individuals and expat families with cross-border assets.
What a country considers situs varies from place to place, but to give you an example, here are a few key US situs guidelines:
Real Property: Land, buildings, and fixtures located in the US are US situs assets.
Tangible Personal Property: Physical property (e.g., cash, valuables) within the US is US situs.
Intangible Property: Situs depends on the asset type. For instance, business investments linked to US operations are US situs, though rules may vary for estate versus gift taxes.
Understanding these rules helps you assess your global tax exposure and plan more effectively.
Understanding Tax Treaties
The US has estate and/or gift tax treaties with 15 countries, including Australia, Canada, Germany, Japan, and the United Kingdom. These treaties aim to reduce double taxation and establish. It also says which country has primary tax authority based on:
Domicile: The treaty country where the person who passed (decedent) was domiciled. One country may tax the entire estate, while the other country may only tax property located within its borders.
Property Location: Treaties say which assets are considered taxable in each country.
Treaties often include provisions for tax credits, allowing you to reduce your tax liability by claiming credits for taxes paid to the other country. However, you need to report them properly on your tax filings to benefit from a treaty.
Treaty terms also vary. Some newer ones prioritize domicile-based taxation. Some older treaties rely on detailed situs rules.
If it sounds complicated, that’s because it is. Thankfully, professionals are available who can help you create the most efficient tax situation.
Foreign Tax Credits
If there is no tax treaty between the US and another country, you may still be able to claim foreign tax credits and avoid double taxation. These credits depend on:
- Property Location: The property must be in the foreign country.
- Transfer/Death Taxes: The foreign country must impose valid transfer or death taxes.
- Gross Estate Inclusion: The property must be in your US estate.
US law allows foreign tax credits for eligible foreign death taxes under 26 US Code § 2014. However, credits may be restricted if the foreign country fails to provide reciprocal credits to US citizens.
Without proper tax planning, you risk facing overlapping tax liabilities across multiple jurisdictions. It’s important to work with tax professionals who understand cross-border treaties. Credits are key to reducing your overall tax burden.
Estate Planning Strategies: Your US Planning Might Not Work Internationally
When dealing with international estate planning, using the right tools and strategies can help you manage your wealth, minimize taxes, and avoid legal hassles. However, the tools that work well domestically may not work properly when applied across borders.
One of the riskiest things you can do is rely on estate planning designed for US investments to cover investments outside the US.
It’s usually a good idea to review your estate plan (and your overall financial plan) when major life changes happen, like marriage, divorce, but this becomes even more important when investing overseas.
And its doubly important if you physically relocate to another country.
Traditional Estate Planning Tools
Several common estate planning tools can be used to protect and transfer wealth. While these tools are standard in the US, they may require special review for cross-border situations:
- Wills: You may need a single US will or multiple wills, including a local “situs will” for property in other countries.
- Trusts: Options include living or testamentary trusts, grantor or non-grantor trusts, revocable or irrevocable trusts, and Qualified Domestic Trusts (QDOTs) for non-citizen spouses.
- Life Insurance: Policies like whole life, universal life, or second-to-die policies can play a role in estate planning. Irrevocable Life Insurance Trusts (ILITs) are often used to shield proceeds from estate tax.
- Gifting Strategies: These include charitable giving, inter-spousal gifts, and trans-generational wealth transfers, all of which may help reduce taxable estates.
- College Savings Plans: US-based 529 plans can be effective for estate planning, particularly for grandparents and great-grandparents.
- Cross-Portfolio Investment Optimization: Structuring investments correctly—choosing the right types of accounts and ownership structures—can reduce tax burdens and enhance returns.
Though widely used by US families, these tools may need adjustments when dealing with multiple jurisdictions.
For example, trusts often don’t have the same legal recognition in civil law countries. Mixing the tools above with foreign funds could trigger adverse tax consequences for US citizens or residents. Proper planning and expert advice are crucial to navigate these complexities effectively.
Let’s talk about a couple of options that can be considered as part of an international estate plan.
The Proper Way to Use Wills in International Estate Planning
A will is one of the most common estate planning tools in the US. However, when dealing with international assets, a regular will might not cut it.
Key Requirements for a Valid Will
Every state sets its own requirements. But typically, a will is valid under state law if:
- Competence: You must be mentally competent and free from undue influence.
- Property Description: The will clearly specifies the assets to be distributed.
- Witnesses: The will must be signed in the presence of the required number of witnesses.
You may also use living wills and powers of attorney to say who can make decisions on your behalf if you become incapacitated. For those with complex estates, or those approaching taxable thresholds (often lower in foreign countries), consulting legal experts is crucial.
Wills in the Cross-Border Context
Every state sets its own requirements. But typically, a will is valid under state law if:
- Competence: You must be mentally competent and free from undue influence.
- Property Description: The will clearly specifies the assets to be distributed.
- Witnesses: The will must be signed in the presence of the required number of witnesses.
You may also use living wills and powers of attorney to say who can make decisions on your behalf if you become incapacitated. For those with complex estates, or those approaching taxable thresholds (often lower in foreign countries), consulting legal experts is crucial.
Key Requirements for a Valid Will
If you have assets in multiple countries, standard estate planning methods may not be sufficient. Here are two common strategies for international wills:
Multiple “Situs” Wills
Some experts recommend having separate wills in each country where you own property. Each “situs will” governs the assets within its jurisdiction.
However, this approach has risks. That’s because executing a new will can revoke previous wills, which can invalidate your entire estate plan if not carefully coordinated.
One Geographic Will
Another approach is to create a single will that incorporates the legal requirements of all relevant jurisdictions.
This strategy can simplify administration but relies heavily on the expertise of your legal advisors to verify that the single will is legally acceptable in another country.
(In our experience, most advisors can manage one or possibly two jurisdictions; it’s a lot harder when there are three, four, five, or even more.)
Different countries have unique inheritance and tax laws, so your geographic will must be drafted to comply with each system.
The Importance of Professional Guidance
International estate planning requires specialized legal knowledge. Countries may have conflicting laws regarding wills, inheritance rights, and taxes.
To ensure your wishes are honored and your estate plan is effective globally, you should work with legal professionals experienced in cross-border planning.
Moving Overseas with Trust Structures
If your estate plan includes trusts, moving overseas can create significant legal and tax complications. Trusts designed under US laws may not be recognized or may face unfavorable tax treatment in your new country of residence.
Tax and Legal Risks of Moving Overseas with a US Trust
When you relocate, your trust may become subject to the tax rules of your new country. This can create unexpected tax burdens. For example:
- Taxation on Trust Income: Your trust may be classified as a taxable entity under foreign laws, resulting in immediate taxation on unrealized gains.
- Conflicts with Local Inheritance Laws: Many civil law countries with forced heirship rules may not recognize distributions from a trust. These distributions may have to pay higher taxes and come with extra administrative hurdles.
The Need for Strategic Planning
When relocating overseas, it’s crucial to review and potentially restructure your trust to comply with local laws.
Working with estate planning experts who understand both the US piece and the rules of your new country can help prevent unexpected tax liabilities.
Managing the planning around a complex mix of domestic and international assets is our speciality. As you need help, please reach out to us to discuss further.
The Role of Legal and Financial Advisors in International Estate Planning
Relocating internationally can complicate your estate plan, exposing you to conflicting tax laws, forced heirship rules, and other legal challenges.
Working with experienced legal and financial advisors is critical to ensure that your plan remains fit for purpose. Here’s what you should expect them to do:
Understand Local Laws and Tax Systems
Advisors help you get used to the complexities of your new country’s legal and tax systems. Different jurisdictions may impose:
- Inheritance laws that limit your control over asset distribution (e.g., forced heirship rules in civil law countries).
- Tax rules that apply to global assets, including local income, gift, and estate taxes.
Advisors assess how these rules affect your existing estate plan and recommend necessary changes to protect your assets and minimize tax exposure.
Coordinating Cross-Border Planning
For individuals with assets or beneficiaries in multiple countries, advisors ensure that wills, trusts, and other planning tools are coordinated across jurisdictions.
They help prevent conflicts between multiple wills (e.g., conflicting interpretations or revocation issues) and either:
- Structure trusts to comply with local laws while preserving their intended benefits, or
- Help you establish and maintain a new local structure that integrates seamlessly with your US planning.
Optimizing Tax Efficiency
Advisors look at how tax treaties, foreign tax credits, and situs rules affect your estate plan. They may recommend:
- Changing asset ownership to reduce transfer tax exposure.
- Restructuring trusts to avoid foreign classification as taxable entities.
- Using tax treaties to claim credits and prevent double taxation.
Maintaining Flexibility and Compliance
Advisors provide ongoing support to adapt your plan as tax laws change. This is especially important for US citizens who must continue filing with the IRS even after moving abroad.
They also assist with regulatory compliance, including proper reporting of foreign assets and claiming treaty benefits on tax filings.
Tailored Solutions for Your Needs
Every international move is unique. Advisors create a plan tailored to your goals, family structure, and assets.
They make sure you retain control over wealth transfer while complying with the laws of each relevant country. Their expertise can help you avoid costly mistakes, legal conflicts, and tax penalties.
In short, advisors provide the guidance and strategies needed to protect your wealth and ensure your wishes are honored globally—no matter where life takes you.
Need Help?
As you’ve probably gathered by now, having assets in multiple countries—or living as a US expat—brings new challenges you don’t have if you and everything you own is based in the US.
But just because it’s complex doesn’t mean it has to be hard. With decades of US-client experience under our belt, we’re able to help you build the plan that’s best for you.
That starts with a free, no-obligation consultation to discuss further. When ready, feel free to book in a call with a Nestmann Associate here.
About The Author
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We have 40+ years experience helping Americans move, live and invest internationally…
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We have 40+ years experience helping Americans move, live and invest internationally…
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