Whether we like it
or not, the world is getting smaller, and we are all part of what is
increasingly a Global Community. Many U.S. citizens now reside abroad, whether by
choice, employment, or military assignment. A U.S. citizen residing overseas faces unique
estate planning challenges. Among them
is the possibility that the person may be required to pass assets on to people
other than those whom he or she would have chosen.
A recent article
in the
New York Times highlighted this issue of forced heirship, which applies
“in many parts of the world, notably the Middle East, where Islamic law
predominates, and continental Europe.” Forced-heirship
rules mandate that proportions of an estate be left to certain family members,
and in some countries, these rules apply to all residents, even U.S. citizens
who are temporary residents.
U.S. citizens
residing overseas are well-advised to consult with a U.S. attorney as well as a
local lawyer in the foreign jurisdiction. One bit of advice that would probably be given
is for the U.S. citizen to keep as little wealth as possible in the country of
temporary residence.
Another set of issues comes into play when you take consider that every jurisdiction with a possible claim against a person's assets may want to tax the person's worldwide holdings upon the person's death. The effect of double (or more) taxation is sometimes minimized by way of treaties, but the U.S. does not have transfer tax treaties with every other nation on the planet. Being a citizen of more than one nation may make travel easier, but it may also seriously complicate a person's estate.