A Last Will and Testament likely serves as the foundation of your estate plan. If you have already executed a Will, you know what a Will can accomplish. You probably also know that you may need to modify the terms of your Will from time to time as your family and your estate grow. What you may not know, however, is that you may need a second Will at some point. If your estate assets grow to include assets located in a foreign country, you may need to execute a separate Will in that country or execute an International Will. To help you better understand, a Westport estate planning attorney at Nirenstein, Horowitz & Associates, P.C. explains why you might need more than one Will.
Do You Own Property in Another Country?
If the answer is “yes.” You need to understand that owning assets outside of the U.S. complicates estate planning in several ways. As you may already know, foreign assets and income are typically treated differently for tax purposes. The tax ramifications of any asset transfers, including those that occur at the time of death, must be considered in your estate plan. Moreover, when you own real property in another country your U.S. Will may not be honored in that country.
Estate Tax on Foreign Assets
When you die, your estate assets are subject to federal gift and estate taxation in the United States. What happens, however, if some of those assets are located in another country? Which country has the right to tax the transfer of assets? Although subject to change, the United States has estate tax treaties in place with the following countries: Australia, Austria, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, South Africa, Sweden, Switzerland, and the United Kingdom. The treaties in place with these countries allow the country where property is located to tax the estate, provided that it is the non-domiciliary country. Further, if the domiciliary country taxes the estate for the foreign property, it must then provide a credit to the estate to cover the foreign country’s tax. For example, if a U.S. decedent owns property in Italy, Italian estate tax laws will apply. The United States will then provide a credit in the U.S. estate tax to cover the Italian estate tax. The estate will pay the higher of the two countries’ estate taxes. Only the domiciliary country may tax the personal property, such as vehicles and any furniture. In these treaties, the United States also reserves the right to tax the estates of its citizens as though the treaty was not in effect at all.
Is an International Will Necessary?
If you own property in another country, you may be under the impression that the property can simply be included in your U.S. Will. Sometimes another country will honor a U.S. Will; however, more often than not they don’t. Executing a second Will in that country is frequently not a viable solution because doing so can serve to invalidate your United States Will. As you can see, careful estate planning is necessary for those who own foreign property.
Often, the best solution is to execute an international Will. In 1973, the International Institute for the Unification of Private Law (UNIDROIT) held a Convention Providing a Uniform Law on the Form of an International Will. The purpose of the convention was to create guidelines to be used to determine when a Last Will and Testament may be considered an “international” Will. The guidelines agreed upon are as follows:
- The will may not be a disposition of more than one person;
- The will shall be in writing (may actually be handwritten or typed), need not actually be written by the testator, and may be in any language;
- The will must be signed in the presence of and signed by two witnesses and an authorized person (the only authorized persons are attorneys—a notary is not sufficient);
- All signatures must be at the end of the will;
- If the will is more than one page, each page must be numbered and the testator must sign each page;
- If the testator is unable to sign the will, the reason shall be noted on the will;
- A certificate must be attached signed by an authorized person, attesting that the requirements and procedures for drafting and execution of an international will have been satisfied.
Not all countries have enacted the Uniform International Wills Act. In fact, only about half of the states within the U.S. have done so to date. If you own property abroad, however, it is imperative that you discuss creating an international Will with your estate planning attorney to ensure that your property will be protected after you are gone.
Contact a Westport Estate Planning Attorney
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about what type of Last Will and Testament you need, contact an experienced Westport estate planning attorney at Nirenstein, Horowitz & Associates, P.C.by calling (860) 548-1000 to schedule an appointment.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021, 2022 and 2023.
- Legacy Planning In the Age of the Silver Tsunami - November 21, 2023
- Estate Planning Neglect: Unraveling the Risks - November 2, 2023
- When Is a Trust Preferable to a Will? - October 17, 2023
