If your life stretches beyond one state or country, you are not alone. Many people own a family cabin across the border, a rental home in another state, or inherited property overseas. So, how do you handle out-of-state or foreign assets in your estate plan?
Each state or country will have its own legal rules. Unfortunately, that can make estate planning a bit more complicated. Let’s look at what you can do to protect those assets and make the transitions smoother for everyone.
Start by Taking Inventory
This might sound easy. However, many people skip this step or underestimate what counts as an asset. You want to write down every property, account, investment, business interest, bank account, or valuable item you own outside your home state.
If something is titled in another jurisdiction, it counts. Once you have the list, review how each asset is titled. For example, do you own it yourself, or is it a joint share with a spouse, parent, or business partner? The more clarity you bring to the table, the easier the rest of the planning is for you.
Pay Close Attention to Out-of-State Real Estate
Real estate is a big issue. If you own property in another state, your estate may face ancillary probate. That is a second probate process handled in the state where the property is located. Nobody wants to leave their family juggling two probate courts.
You can avoid that headache by placing the property into a revocable living trust. Since the trust becomes the technical owner, the property no longer needs to go through that separate probate track. This is an efficient process that spares your family a lot of stress.
Consider Local Laws for Foreign Property and Accounts
Once you cross international borders, things get interesting. Many countries have very different estate laws, especially when it comes to forced heirship, marital rights, or taxation.
Some nations require certain assets to pass automatically to a spouse or child, no matter what your U.S.-based will states. You want to work with an estate planning attorney who can help with the legalities spanning two countries.
Update Beneficiary Designations and Powers of Attorney
Out-of-state or foreign assets could have their own rules about beneficiary designations. Retirement accounts, insurance policies, and some foreign financial institutions require local forms or regulations.
Remember that your power of attorney may not automatically work in another state or country. If you want someone to manage or sell property on your behalf if you become incapacitated, you may need additional legal documents in those jurisdictions.
Mind the Tax Implications
U.S. citizens are taxed on worldwide assets, but that does not mean everything is taxed the same way. Some countries impose inheritance or property taxes on foreign owners. You don’t want your heirs blindsided by a bill from a government they have never met.
Additionally, states differ in how they tax out-of-state property, rental income, and business holdings. Working with a tax professional can help you reduce or eliminate duplicate taxes.
Keep Everything Coordinated Under One Plan
When your assets stretch across borders, you do not want a patchwork plan. You want something cohesive that doesn’t conflict with each other. When your plans, titles, and beneficiary designations match your intentions, your loved ones will not be left stuck trying to untangle a mess of an estate plan.
Review and Update Regularly
Life, laws, and foreign regulations like to change. You want to make a habit of reviewing your estate plan every couple of years, especially if you buy new property or inherit something. No one looks forward to going over their documents but skipping it can lead to some trouble in the future.
We Can Help with Your Estate Plans
Now that you know how to handle out-of-state or foreign assets in your estate plan, you can get started. With a clear inventory, coordinated documents, and the use of tools like trusts, you can make sure everything passes smoothly to the people you love.
If you are looking for help with setting up an estate plan or want to make sure your plan includes out-of-state assets, Collins Law Firm is ready to assist. We can help protect your legacy for future generations. Schedule a consultation today.