Whether your will could pass through probate without your overseas assets diminished by U.S. tax depends on a variety of factors. It also is possible that you could avoid putting some of these assets in your will by establishing a trust, thereby avoiding the probate process in most cases.
For assets you do not wish to place in trust ownership or move to the United States, you would probably want to consider a number of key points for each. It is often helpful to keep in mind that the court will likely have a different set of rules for nearly every gift you intend to bestow.
The most common concern for wills in terms of United States taxes and foreign assets is often the gift tax. Real estate, securities and other forms of wealth you intend to transfer from outside of the country may be subject to this tax if they come from certain non-treaty nations and exceed a specified dollar value.
Only a few foreign countries hold gift tax treaties with the United States. As stated on the IRS website, these select nations include some of the USA’s most dedicated business and trading partners :
- The United Kingdom
However, it is not always safe to assume that a court would your assets as foreign. It would be in your best interests to look at each line item in your will individually to determine the exact IRS definition under which it might fall.
Knowing the details of these treaties could be an important first step in developing a strategy for your foreign assets in an estate plan. however, laws change all the time and this should not be considered specific advice. It is only meant to inform and educate.