Estate Planning for Expatriates

To develop an effective estate plan, expatriates must carefully consider the unique circumstances of living in another country. Here are a few tips.

Select an Attorney-in-Fact to Manage Your Stateside Property

If you still own assets in the United States, one of the first things you'll want to consider using is a power of attorney to name an "attorney-in-fact." An attorney-in-fact (often called an "agent") is someone you empower to make financial decisions on your behalf while you are out of the country. Ideally, this person will be physically near your assets to help you manage them from abroad.

You should be careful about whom you choose to be your agent. Select someone you trust to manage your finances. Because a power of attorney gives your agent the authority to act in your place, a dishonest agent could use the power of attorney to steal from you.

You can give your agent the power to:

• pay your bills, such as your homeowner's insurance or registration for your vehicle
• handle bank transactions
• sell larger assets like your home or car
• deal with creditors
• apply for loans
• complete tax returns and pay taxes, and
• manage investments.

Your power of attorney document may include specific instructions to the person you choose for this role. For example, you could instruct your agent to provide you with a summary of your finances, prepare accountings for you, or check with you before making major decisions.

Your agent will be legally required to act according to your instructions and in your best interests. So, you will still control your finances, but you'll do so through your agent.

Make Health Care Directives

The laws that regulate health care differ in every country, so to make sure you get the medical care you want, make health care directives in your home state and in your new country. In your health care directive, you can name an agent to make medical decisions on your behalf and you can also describe the kind of medical care that you want (or don't want) if you can't speak for yourself. You can usually get health care directives in a local medical facility, but if you can't find one, contact a local attorney to draft these documents for you.

Wherever you can, name your agent as your emergency contact and put that person's contact information in places where it would be found in an emergency: in your purse or wallet, on an emergency contact card, in your day planner, in your cellphone, and in other documents you carry with you or in your vehicle. If you have a primary health care provider, give that doctor the name and contact information for your emergency contact and a copy of your health care directive.

Prepay Burial and Funeral Expenses

You might have strong feelings about where you would like to have your funeral and where you want to be buried. You might decide that your new country is your new home, or you might decide to return stateside.

Consider making these arrangements during your lifetime, rather than delegating the task to someone who might be in another country. You can either make arrangements—including plans for shipping your body to the United States if you desire—directly with the service providers or purchase an insurance policy for this specific purpose. Share this information with the executor of your will, who will likely carry out your final wishes after death.

Create a Will Fit for an Expat

Estate planning is often more complicated for expats who own property in more than one country.

The kind of will you need might depend on where your property is located. If you own property only in the United States, you can use a will designed for use in the United States. If you own property only in your new country, you need a will that is valid in that country. However, if you own property in more than one country, you might consider more sophisticated options like an international will or multiple wills. In that case, you will likely need the assistance of one or more attorneys.

International Will

An international will is designed to be used in multiple countries. Only countries and legal jurisdictions that have adopted the Washington Convention consider international wills legally valid. These include:

• Australia
• Belgium
• Bosnia-Herzegovina
• Canada (not all provinces)
• Ecuador
• France
• Italy
• Libya
• Niger
• Portugal
• Slovenia
• United States (however, for the will to be valid, the specific state where it is probated must have signed the Washington Convention)

Determining whether a country accepts international wills can be confusing. Some countries signed the Washington Convention but technically don't recognize international wills because they haven't passed laws to formally accept them. The International Institute for the Unification of Private Law (UNIDROIT) has a helpful list and a map showing which countries have signed the Washington Convention or enacted laws to recognize international wills.

International law can be complicated, so it's best to contact an attorney who is familiar with international wills before deciding to use one. Some estate planning lawyers in the United States are familiar with these wills, so you might be able to have a local attorney prepare this type of will without having to learn about the laws of your new country or dealing with language barriers.

Multi-Jurisdiction Will

A multi-jurisdiction will covers property in several different jurisdictions. This type of will must be carefully drafted so that the wording doesn't cause problems in either country, so get help from an attorney who has experience drafting these kinds of wills for your countries. Sometimes an attorney in one country might work together with an attorney in another country to make sure the will properly addresses the laws and property in both countries.

Primary Will + Situs Will

A situs will works together with your primary will. Your primary will is based on the laws of the country where you live and it covers the property that you own there.

Your situs will covers the property you own in other countries or jurisdictions. This can be a useful strategy in case the country where some of your property is located doesn't recognize your primary will.

Additionally, some countries will allow someone to be named an executor only if they are a resident of that country. So, you can name a local executor for your situs will if the executor of your primary will lives somewhere else. A situs will must comply with the requirements of that specific jurisdiction, so it's important to have an attorney familiar with the laws of that country draft the will.

Get Advice on Tax Issues

Even if you don't need to worry about U.S. federal estate taxes (which affect only the very wealthy), you might be subject to estate tax in your new country. Some countries base estate taxes on your domicile (where you currently live) rather than your official country of residence. Get help from a financial adviser or tax specialist to learn about your potential tax liability. Also, ask your American attorney about whether you might still be subject to U.S. income and capital gains tax laws while living abroad.

Consider a Trust

Putting your property in a living trust might help minimize estate planning complications because property that passes through a trust doesn't have to go through probate. The probate process is often complicated, time-consuming, and expensive—even for people who don't have property in multiple countries.

You can also use a living trust to provide clear instructions on what should happen to your property after you die or become incapacitated while you're living abroad. Further, using a trust also might help you avoid some of the drawbacks of confronting the laws in your current country. For example, some countries have forced heirship laws that require you to split your estate by percentages between certain family members. If your trust owns your property (instead of you), you might be able to escape these laws.

Trust laws vary by country, and every trust document will be based on the laws of a specific country. For property you own in the United States, use a trust based on the laws of the state where that property is located. Talk to an attorney in your new country to create a valid trust there, or get help from an experienced international attorney to make an international trust that addresses property in more than one foreign jurisdiction.

Get Help

If you live abroad, talk to a local attorney about your situation and to find out what kind of estate planning you might need. Depending on the property you own, you also might need to get advice from an attorney in the United States. These lawyers can help you determine which rules might apply to your situation and can help create a plan that works to protect you and your property.