The Western Union Business Solutions Learning Center is a blog provided for general informational purposes only and should not be construed as legal, financial, tax or accounting advice. Consult your own independent advisors regarding your particular needs and circumstances.
When foreign property is included in an estate, individuals need to learn about inheritance laws that may be very different from the ones they encounter at home.
In the U.S., U.K. and Canada, legal systems are based on common law, which relies on precedents in similar cases. Regions such as Europe and Latin America, meanwhile, are regulated by civil law, a series of codes with their own methods of determining ownership.
In addition, it's important to plan to hire a foreign attorney who specializes in estate planning for the applicable country. Paying a foreign attorney can be accomplished through a trusted online foreign exchange service that provides transparent international bank transfers and the ability to submit international payments at preferred exchange rates, which can help to avoid extra complications during a difficult time.
— Dan Prescher, special projects editor of InternationalLiving.com
Estate planners and industry experts recommend the following steps to ensure foreign property and international payments are handled correctly.
Internet guides published by consultants and legal groups provide an overview of inheritance laws worldwide. Ernst & Young's personal tax service, for example, offers a regularly updated guide to laws in 27 countries.
The International Bar Association, which includes more than 200 bar associations, also gives background on inheritance laws in specific countries. The association can help clients find a foreign attorney, but individuals should also seek referrals from friends and colleagues, or from a lawyer in their home country.
Some countries now accept an international will, which can simplify the foreign estate-planning process. Still, drafting a local will can be the easiest way to avoid problems when estate planning. "Local laws always apply first," says Dan Prescher, special projects editor for InternationalLiving.com and an American who has lived in Mexico and Ecuador. "If you have a U.S. will, it will have to go through probate in a foreign court to be executed, and that is a long and painful process." Probate is the legal process of settling someone's estate after they die.
To comply with local inheritance laws, individuals may also need to designate a different executor than at home because foreign property issues are usually settled in the country the property is owned in, according to Prescher. In addition, individuals will also need to find out where their estate would go through probate.
It's often valuable to hire an attorney to draft a will in another country or guide an estate through probate. If two attorneys are needed, fees may be lower if the lawyer in the home country negotiates directly with the foreign attorney, says Vicki Levy Eskin, an estate planner in Longwood, Fla., who frequently deals with international properties.
Individuals should ask their attorneys how to structure property ownership to minimize estate taxes and income taxes, says Michael J. Romer, partner at Romer Debbas LLP, a New York law firm specializing in real estate purchases by buyers in the foreign market. For European owners of U.S. property, "depending on the tax treaty the U.S. has with their country, if they buy property in their own name and pass away, they are potentially subject to an estate tax in excess of 50 percent depending upon where the property is located," he says.
Individuals can ensure wishes for their foreign estate are followed by taking steps to simplify the probate process abroad. By locating the right resources and talking to the right professionals, it's possible to simplify the process of estate planning.
Example: 1USD = xx INR
Have an ideal rate in mind? Set up a Market Alert, and we’ll email you if your rate becomes available.Set Rate Alert