Whether you’re moving to another country for work-related
reasons, retirement or simply want an opportunity to experience a new culture,
it’s important to understand the potential tax and estate planning
implications. If you don’t, you could be hit with some unpleasant surprises. Here
are three possible pitfalls:

Double taxation. If you’re
a citizen of the United States, U.S. taxes will apply even after you move to
another country. So if your estate is large, you might be subject to gift and
estate taxes in your new country and
in the United States (possibly including state taxes if you
maintain a residence in a U.S. state). You also could be subject to estate
taxes abroad even if your estate isn’t large enough to be subject to U.S.
estate taxes. In some cases, you can claim a credit against U.S. taxes for
taxes you pay to another country, but these credits aren’t always available.

One option for avoiding U.S. taxes is to relinquish your U.S.
citizenship. But this strategy raises a host of legal and tax issues of its
own, including potential liability for a one-time “expatriation tax.”

Real estate issues. If you
wish to purchase a home in a foreign country, you may discover that your
ability to acquire property is restricted. Some countries, for example,
prohibit foreigners from owning real estate that’s within a certain distance
from the coast or even throughout the country. It may be possible to bypass
these restrictions by using a corporation or trust to hold property, but this
can create burdensome tax issues for U.S. citizens.

Unfamiliar inheritance rules. If you
own real estate or other property in a foreign country, your heirs may run up
against unusual inheritance rules. In some countries, for example, your
children have priority over your spouse, regardless of the terms of your will.

Review before you relocate

If you’re considering a move overseas, discuss your plans with
us before making a move. We can review your estate plan and finances and make
recommendations to help avoid tax pitfalls after you relocate.