Estate Planning for U.S. Citizens Living Abroad

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U.S. citizens live abroad for many reasons. Perhaps, a job posting took them there. Maybe they serve in the military. Or, as many Americans are finding out these days, the U.S. dollar goes a long way in other countries. Retiring abroad has become a rather popular option, be it for a better quality of life, getting healthcare that is more affordable or for better climate. It is important for U.S. citizens living in other countries to know that they need to file a U.S. tax return if they are living abroad and earning more than $10,000 a year.

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This also includes expats who have chosen to retire in another country or settle there for some other reason. There are exemptions that expats can claim so they are not taxed in both countries. However, they must still file a tax return in the U.S. to claim those exemptions. Americans living abroad must also report any other investment accounts they might have in banks abroad or other foreign assets. In addition to tax implications, Americans living abroad should also understand what effects that could have on their estate planning.

Wills and Inheritance

U.S. tax law states that the location of the asset determines who inherits it while the personal property inheritance is determined by the laws of the nation where the individual is currently residing. Estate planning for Americans living abroad depends on where the individual lives. Expats who reside in a nation whose legal system is based on common law such as the United States would be well advised to draft two separate wills, one in the country where they are residing that takes care of foreign assets and personal property and the other in the U.S., which covers their property and assets stateside.

When you decide to move to another country, you will generally be subject to local laws with regard to estate planning and inheritance. However, as U.S. citizen, you will still be subject to U.S. tax laws. This can make things rather complex and challenging.

Avoiding Double Taxation

U.S. estate tax is applied to global income and assets including any property you may own in another countries or any assets or investments you may be holding abroad. If you live in a country that does not have estate taxes, you can simply plan as if you live in the United States. Be sure that you have a will that is legally valid in the U.S. and establish a trust here to help protect your assets, if it is necessary.

If the country you live in has its own estate taxes, there is a possibility that you will have to pay tax on the same assets twice. The United States has tax treaties with several countries. So, it is important to look into the provisions of the specific tax treaty that affects your situation before you begin estate planning. In many cases, the United States will give a tax credit if you’ve already paid estate tax to a foreign country.

If you are considering writing a will and are an American living abroad, it would be in your best interest to contact an experienced Baltimore estate planning lawyer who is familiar with these complex laws and help guide you through the process of Estate Planning for U.S. Citizens Living Abroad.


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