International Estate Planning – Everything You Need to Know

international estate planning

Today, many people work, live, and make investments across jurisdictions and countries. These people, especially U.S. expats, should have an International Estate Plan to completely understand the laws related to succession, domicile, generation-skipping transfer of wealth and assets, and even the gift tax laws in the country. Besides domicile, the U.S. has legal gift and estate taxes according to your citizenship, which makes estate planning more complicated. Hence, if you’re one of those expats in the country, here’s everything you need to know about International Estate Planning. 

What is International Estate Planning?

International Estate Planning is a helpful way to manage the business, personal, and family’s assets, investments, and entire wealth. Doing so will make your steps tax-efficient in regards to Estate, onshore and offshore Income, Gift, Excise, and, as mentioned earlier, the generation-skipping taxes. 

Moreover, the International Estate Planning will also raise the issues in the financial transaction transparency, law conflicts, and even the compliance with the rules and restrictions when you make use of asset and tax protection havens. Hence, if you are a non-resident who is investing in the U.S., or you are a U.S. resident and married to a non-citizen, you need to have International Estate Planning to manage all of your assets and investments both onshore and offshore. 

Simply put, to start creating your International Estate Planning, there’s an assumption that all assets and income are subject to estate, income, and gift taxes in the U.S. Then, an individual will look for legal ways to decrease the aggregate amount of taxes, like estate tax marital deductions, municipal bond interest, charitable deductions, and many others. So when it comes to International Estate Planning, U.S. income sources, U.S. residence, and U.S. situs assets are the things you need to look into. 

What are Some of the Benefits of Estate Planning?

Many people tend to become busy planning their next family vacation trip, new smartphone, or car to purchase, but most of them seem not to care about cross border estate planning. It’s, in fact, so much helpful to prepare all of your assets and investments and choose who you want to pass them onto before you leave this world. You may don’t like how it sounds to you, but without estate planning, there may be nobody to inherit whatever you’ve worked for in your entire life. 

Moreover, estate planning isn’t only for affluent individuals, it’s also applicable to all people like you. In fact, you don’t have to be rich if you want to find your fortune in real estate or the stock market. So without it, you may leave your loved ones with an expensive and long-lasting impact on their lives. In addition, here are a few benefits below that will make you and your family happy and secure when you have International Estate Planning. 

  • The estate planning will protect your family or your chosen beneficiaries. So if you don’t decide on who you want your assets and investments to pass them on, you consequently won’t have control over whatever happens to them in the future. 
  • It also protects young children. Of course, no one desires to die young, but if you still have small children, you have to make sure to consider things that are unexpected and inevitable, especially death. So estate planning will be so much help for you to secure your children’s future. 
  • Estate planning helps get rid of any possibilities of issues or problems with your assets and investments that your family may go through when you leave. So if you want to make it easy for them to acquire your wealth conveniently, go ahead and create estate planning. 
  • Estate planning helps your beneficiaries avoid paying any possible high taxes. It’s because it may decrease the state inheritance taxes, and even state estate and federal taxes. Besides that, your beneficiaries may also have to pay reduced or adjusted income taxes.

U.S. Estate and Gift Tax Law

Based on your citizenship, the United States imposes legal transfer and income taxes. In fact, 40% is the minimum federal estate tax rate that you need to pay according to the tax code of the country. But, many people do not show any too much concern with estate tax planning, especially those who are under the estate tax exemption. If the gift involves cryptocurrency or virtual assets (like NFTs), read more about taxes on crypto gifts – and our Ultimate Guide to Reduce Taxes on Cryptocurrencies.

Moreover, the gift and the estate-tax exemption applies to the aggregate of the person’s assets when he died and the taxable gifts he received during his life. But, it started in 2018 when Congress decided to double this particular exemption and it’ll continue to increase with the foreseen inflation in the coming years. In fact, the inflation adjustment becomes $23.4 million per couple and $11.7 million per individual in 2021. Whereas in 2020, the exemption for married couples was $23.16 million and $11.58 million per individual. Besides that, the top estate tax rate from 2020 to 2021 is 40%. 

Issues to Consider

International Estate Planning has never been easy. But when you do your research and get enough support from the right people, you’ll surely get through the arduous and stressful process. Besides that, here are a few common issues below that you may encounter along the way as you create your International Estate planning. 

international trust and estate planning

U.S. Estate Tax Treaties

Many Americans who live onshore or offshore are concerned about the federal estate laws. The law governing estate taxes has had significant changes over the years, including the increase in the thresholds for the gift tax and federal estate tax exclusion. Besides, the transfer taxes will apply wherever a resident of the country lives, dies, and gift his or her assets and properties to another person. When a person died and retained his or her interest in the property or within a particular time before his or her death, the beneficiaries may owe an estate tax on certain transferred assets. 

Moreover, as to the determination of the person’s income sources, residence,  income withholding rates, and situs of assets, the treaties with other countries may change some of the rules. Currently, the U.S. has a gift and/or estate tax treaties with 16 sovereign nations. These treaties help determine the consequences of taxes for transferring assets whiting the cross-border estate. 

Generally, if other countries have significant taxes of their own, the United States will enter into treaties with them to get rid of double taxation. So if the treaty will allow an individual to decrease his or her tax obligations in the U.S., then there should be an offsetting tax in his or her own country where he or she came from. Besides that, by discriminatory tax treatment and mitigating double taxation, these treaties may give a reduction in the estate taxes while having a reciprocal administration. 

In addition, there are different ways that the treaty will have control on which treaty country can be granted access to transfer taxes. It includes the identification of which country is the domicile of the donor or decedent and the determination of which country where the property is physically located. Hence, if the spouse of a non-U.S. resident individual died, he or she will be entitled to the marital deduction with the help of these estate tax treaties. 

Blocking Estate Tax Exposure (BETE) Trust

The Blocking Estate Tax Exposure Trust applies to non-U.S. residents who have assets and properties in the United States. BETE is a trust managed by the trustees in the country, administered in the U.S., and it holds the U.S. assets, but it’s still a foreign trust for the purpose of estate and gift taxes. Besides that, foreign corporations also need the creation of a BETE Trust to be in line with the IRS challenges, especially when making an International Estate Planning. However, many people get confused about it, making it, as well, more complicated to do estate planning. 

International Wills (Situs Will vs. Domicile Hague Wills)

Creating a legal will is a method of producing a blueprint that contains your specific instructions and other important information when you transfer your wealth to your chosen beneficiaries or heirs. Many people prefer to have a will in the country where they’ve invested a property. But if you own different properties from multiple countries, you should have carefully drafted wills. 

According to the law, the word situs refers to the actual physical location of your property for legal purposes. It includes real estate properties in the U.S., like land, condos, houses, buildings. All of these have a situs in the U.S. It also includes your jewelry, furniture, art, cash, and other valuable tangible personal properties. Besides, if you have shares in a U.S. registered investment fund and shares of stocks in U.S. companies, these also have a situs in the U.S. The same thing goes for your cash accounts with brokerage firms in the country. 

Hence, when you make your estate planning, you need to get your documents ready because the IRS will assess all of your estate taxes that contain U.S. situs assets. In addition, when you create a situs will, it should also carefully define the particular property you’re disposing of under the situs and you should also coordinate it with your other wills. 

On the other hand, the Hague Convention on Form of Testamentary Disposition of 1961 has various parties, from different countries. As long as the will has been legally drafted in the home country of the decedent, these parties recognize wills that have been executed abroad. Even though the United States is not one of those parties in the said convention, it doesn’t impact the will’s validity that would be recognized by the convention’s parties. So if the country where you come from is one of the parties of the Hague convention, your will in the US will remain legally valid in your home country. 

Qualified Domestic Trust (QDOT)

Normally, a non-citizen spouse of a deceased taxpayer won’t take advantage of the marital tax deduction, but the U.S. citizen spouse does. However, with the Qualified Domestic Trust, you’re now allowed and entitled to get the legal marital tax deduction on estate taxes for the investments and assets kept in the trust before your spouse died. According to the Internal Revenue Service, under Section 2056A, you are eligible to take advantage of the 100% marital deduction on the owed taxes from your spouse’s assets. 

Pre-Immigration Estate Planning

Many people from different parts of the world want to move to the U.S. for various practical reasons. It could be that they’re looking for opportunities in getting their dream job, career, profession, and even for business. Hence, if you’re one of them, you should create a pre-immigration estate planning for tax purposes to have no consequences in the future in your home country. It can also help minimize the aggregate owed taxes in the U.S. for the assets and other investments, including those that have been appreciated in value from the date they were purchased or acquired. 

However, getting any deductions from your local and state income taxes against your federal income taxes can be very limited. So getting legal advice from an experienced tax professional can be of so much help. On top of that, failure to create pre-immigration estate planning until it becomes too late may also result in paying costly consequences with your taxes. 

Offshore Asset Protection

Many people who want to move to the United States always look for ways to preserve and protect their wealth, especially those individuals with more assets, investments, and high net worth. Some traditional ways of doing it include family limited partnership, retirement account plans, simplistic homestead, and many others. Today, many people prefer the use of a safer and more sophisticated vehicle through offshore trusts

The offshore trust is a particular trust agreement created in a jurisdiction and it holds assets outside of the United States. In fact, it’s often called a self-settled trust and one of the best-known protection planning tools for your offshore assets. Besides that, the beneficiary and the trust-maker of this offshore trust are the same. You can even appoint a particular person of your choosing, like your spouse or your family member, who is an individual citizen of a trust’s company or a foreign country with no affiliation or office in the United States. Hence, to help you protect your assets and your loved ones from what may happen to you in the future, international trust and estate planning will be one of your best options. 

Jurisdiction in Which the Decedent and Assets are Situated

In the typical law jurisdictions, the decedent’s estate is usually taxed before the wealth distribution to the chosen beneficiaries or heirs. However, if the decedent failed to make a will that is valid and legal, including trust or other parts of the pre-immigration estate planning when applicable, the decedent’s assets and properties will be distributed according to the state intestacy laws of the country. 

Moreover, the estate planning of someone living in the U.S. with assets offshore or a U.S. person residing abroad can have different complications and issues, which aren’t usually present in a purely domestic estate plan. The difference lies in the imposition of an inheritance tax instead of it having an estate tax. It means that if you receive the assets, you have to pay the tax instead of the estate. So the law governing inheritance taxes greatly varies in its scope, limitation, and rules. Hence, having advanced estate planning can give more certainty, even though navigating laws that other countries have implemented are more complicated.  

Nationality, Residency, Domicile and Situs Rules

You should have a complete understanding of the different issues in creating International Estate Planning related to residency, nationality, domicile, and even situs rules when you deal with your assets from different jurisdictions. You also have to check the relevant details about the local laws since the set of requirements can vary from a different country. Besides that, other jurisdictions have their unique way of identifying what and who may be subject to inheritance or estate taxes. 

Moreover, the U.S. estate tax law applies to the immigrants in the country based on domicile. It means that if you’re residing in the United States with no intention of leaving, you are domiciled in the country for the purposes of gift and estate taxes. The same thing goes for people who have acquired green cards or permanent residency in the country. They are also subject to estate and gift taxes in the U.S. 

In addition, there’s also a tendency that you can be considered domiciled in two or more counties, resulting in your assets being subject to gift or estate tax in those countries. However, the tax treaties can use the special tie-breaker rules to identify your legal domicile to get rid of you getting multiple taxations. 

On the other hand, the particular property you want to transfer can be affected by the situs rules. As mentioned earlier, the situs is the property’s physical location for legal purposes. For example, if you’re a U.S. citizen currently residing in Los Angeles, California and you own a vacation home in Canada, it means that your vacation home is considered a Canadian situs property and be subject to transfer and inheritance laws in that country. However, may have their restrictions and rules on who you can pass your property to and may have incurred a legal transfer tax. 

Non-U.S. Citizen Spouses/Family

International Estate Planning can be more complicated and specialized when you are a citizen in the United States and you married someone who is a non-citizen in the country. It’ll also require you to have external collaboration with tax and legal professionals on immigration and international laws. It’s because you need to have a complete understanding of the inheritance and tax laws in different jurisdictions to carefully plan the distribution of your assets and overall wealth during life and at death. 

Moreover, the transfer laws of where you’ve invested a property may affect how you can distribute it to your chosen beneficiaries or loved ones, as mentioned above. Besides that, the country where your property is located may not recognize the Last Will and Testament you’ve made with a situs in the U.S. Hence, one of the best things you can do is create multiple wills. You can have one for your money or bank account and the other is for your properties. Besides that, again, it’ll give you so much convenience and advantage if you hire a tax and legal professional in the U.S. and in the foriegn country to further assist you with whatever you need. These experts can significantly help create a “geographic will” to determine the particular asset or property to pass on under the intestacy laws of the foreign country. 

Gift and Inheritances from Foreigners

The U.S. doesn’t impose taxes on anyone from the inheritance on bequests. Besides that, if you’re a U.S. citizen and you received property as a gift from someone who is not domiciled in the United States and the transfer of the property didn’t happen in the U.S., it’s also not subject to U.S. gift taxes. 

You can have one for your money or bank account and the other is for your properties. Besides that, again, it’ll give you so much convenience and advantage if you hire a tax and legal professional in the U.S. and a foreign country to further assist you with whatever you need. These experts can significantly help create a “geographic will” to determine the particular asset or property to pass on under the intestacy laws of the foreign country. 

Why is It Important to Prepare International Estate Planning Documents in Advance?

international estate planning

Preparing your documents and other relevant information ahead of time is very important when you prepare your International Estate Planning. It’s because it can make it even more difficult and complicated, especially when you are a U.S. expat with different properties and foreign assets. Besides that, since the common law’s legal foundation in the country is open to subjectivity and interpretation, your intentions in creating your estate plan will be interpreted correctly and clearly if you can provide all of your documents in advance. 

Moreover, determining your domiciliary status may take longer because it’s also subjective and based on various important factors. It includes the location of the home country, length of stay in the U.S., where the person votes, visa status, and many others. So the longer you provide your requirements to process your International Estate Planning, the longer the process will take, and the more time you need to finish your estate plan. 

Why is It Important to Review Your International Estate Planning Periodically?

When you acquire new assets and properties in different jurisdictions and move across borders, it’s important to review and make necessary updates on your International Estate Plans periodically. It’s because your estate plan offshore may have unexpected changes and undesirable consequences when you execute them in the U.S. That’s why it’s crucial to review and even update your International Estate Planning regularly to make sure that everything is in place and you can solve any issues that may happen in the future. 


How do I prepare an international will?

In 1973, there was an attempt to have a harmonized law in International Estate Planning when creating an International Will.  Under the “Washington Convention” or the “Convention Providing a Uniform Law on the Form of an International Will”, there’s a set of established minimum requirements to accept a particular through the Uniform International Wills Act. So if your well-written will complies with the said requirements, the jurisdiction will legally accept it that signs up to the said convention. Hence, if you want your will to be accepted, it must be made in writing, it should not be written by the testator, it can be written in any language, and it should be dated and signed in front of two witnesses. 

What can I do to plan my Estate in advance?

To start your estate plan in advance, you have to do a few important things. You have to inventory all of the tangible and intangible assets that you own. After that, you need to think about how to protect your family and your assets when you’re gone. Then, you have to establish your directives, like medical care, trust, financial power you give to your attorney, and many others. After that, you have to review your list of beneficiaries and note your estate tax laws. Besides that, you have to know the value of getting professional help and plan for reassessment. 

How to do International Estate Planning for cross-border families?

For you to create International Estate Planning for cross-border families, you have to review the basics of the gift and estate tax laws in the U.S. and your home country. Then, you also need to have a complete understanding of the jurisdiction of the country you’re domiciled in and where your assets are located. Besides that, you have to pay attention to residency, nationality, and situs and domicile rules. You also need to check the relevant estate tax treaties in the U.S., and regularly review and update your International Estate Plan. 

What are some types of international estate planning issues?

Since International Estate Planning is a long process and it can sometimes be complicated, you may deal with different issues. It may include in the transfer tax rules, credits, and treaties. The cross-borders issues can also amplify any challenges and complexities in your estate tax planning. On top of that, the tax treaties, transfer tax situs rules, and foreign tax credits are some of the things that may make the whole thing complex. Hence, make sure to do your research and it’ll also be best for you to hire an expert tax professional to help you along the way regarding International Estate Planning.

What is pre-immigration estate planning?

Many people from different countries want to move to the U.S. for various reasons. It could be for career growth, business opportunities, and many others. Hence, if you’re one of them, make sure to create a pre-immigration estate planning for tax purposes and for you also to avoid any conflict or consequences in the future in your home country.


There are a lot of things you need to know if you want to create International Estate Planning. Hence, if you have any confusion on how and when to start and even fear if you do it wrong, you can go ahead and begin your research and gather important and relevant information you need. Go through them and understand everything so that you would have a clear idea of what to do next. On top of that, as mentioned earlier, it’ll still be best for you to hire a tax professional to help and guide you along the way.

Subscribe to our newsletter for updates that will save you tax

Related topics

fbar mistakes

Top 7 FBAR Mistakes

Don’t fall victim to the top FBAR mistakes. Some are very easy to catch (and other easy to miss!)