Inheritance tax

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So many persons may happen to have estates across countries with families and loved ones elsewhere or in some situations where some get married to a foreigner or invest in foreign countries and all these could make estate planning quite challenging. However, synchronizing your international estates will require legal experts with vast knowledge, understanding and wealth of experience in such issues as estate succession and tax laws in the relevant countries that will affect the effectiveness of a will in the event of death. Difficulties In Estate Planning For Expatriates And Multinational Families In spite of the different estate tax laws in different states in America, however, these differences are barely noticeable because they all are founded on the same foundation in legal matters. But the contrary is the case across nations or internationally. While the Americans use the common law, the Europeans and Africans use the civil law. The common law is a legal system developed by judges through decisions of courts and similar tribunals (also called case law), as distinguished from legislative statutes or regulations promulgated by the executive branch. Whereas civil law is Roman law based on the Corpus Juris Civilis; it is the body of law dealing with the private relations between members of a community; it contrasts with common law. It contrasts with criminal law, military law and ecclesiastical law as well. Common Law Offers Significant Planning Pliability As regards estate planning, common law allows or gives an individual (the trustor) the freedom to decide who and who to receive what and what, he or she has the liberty to decide how his or her properties or estates should be distributed when he or she dies. Hence, a will is very vital as it determines how the estate of the decendent is to be distributed via the probate process. However, a trust can help avoid the probate process and the taxation of the estate likewise. Also based on common law, the estate is normally taxed before it is transferred to the beneficiary or named heir. Meanwhile, in a situation where there's no will, the estate becomes intestate and it is distributed based on the state laws. Civil Law Operates Based On Succession This is similar to the intestate laws followed in common law in the absence of a will when an individual dies. This implies that even while alive an individual cannot determine how his or her estate should be distributed in the event of his or her death. So, a will is almost of no use in civil law unlike in common law. Again, taxation of the estate takes place during distribution unlike in common law where the estates are taxed before distribution. That is, the heirs or beneficiaries of the estate are being taxed in civil law. Meanwhile, a trust is of no relevance when civil law is in operation. Citizenship and Residency An expatriate should have a good understanding of the laws and requirements concerning citizenship and residency in any country he lives and in which he possess properties. The estate plans of an expatriate will not only be altered by relocating to a new place with different laws, but also how long he or she intends to stay in the new location is another contributing factor and likewise how much of his riches he invests in the new location. International Transfer of Tax Credits The transfer tax for an expatriate is determined by the following factors; 1. The type of assets 2. The location of the assets 3. The accessiblity of tax credits in significant areas where there is an overlap of levied taxes 4. The relevance of an estate tax agreement or protocol between the US and the country of residence Usful techniques for international tax estate planning includes; Wills, Trusts, Life insurance, Gifting, personal investment companies, college savings etc. Estate Planning In The Case Of A Non-citizen People live, work and own properties overseas and happen to marry from their country of residence or a foreigner altogether. Sadly, the difficulties in taxation faced by American expatriates also occurs in a situation where they marry foreigners. In spite of having a permanent resident in the US, spouse who are foreigners do not enjoy the unlimited marital deduction on gifts and inheritance transferred to them by their spouse. Although they enjoy the 2019 $11.4 million lifetime exclusion.

Having a will and planning your estate is important. Here we are going to consider why. Before we delve into that, let’s look at what estate planning is.

What is Estate Planning?

Estate planning has a lot of definition. You see, if you understand the concept behind estate planning, you would be able to create a definition yourself. Estate planning in simple terms is a plan done to ensure that one’s assets is well managed and distributed after death. An estate plan can also ensure that you are well taken care of should you become incapacitated

Who needs estate planning?

The word “estate” may make you believe that an estate plan is for the wealthy alone. But, an estate consists of all that you own, such as real estate, cars, cash, including other assets. That said, I you want your assets to be transferred to one or more surviving loved ones after you pass away, you should consider creating an estate plan. This essential set of legal documents can make it easier for your family to make sure that your wishes and needs are met if you become incapacitated.

It is never too early to create an estate plan

When it comes to estate planning, there is no such thing as “too early.” Provided you are eligible to make an estate plan, and you have a few assets you would love to transfer to certain individuals after your death, it is best you contact an estate planning attorney make a plan.

You can always update your estate plan if you acquired a new house, a car, business, or got divorced. An estate planning attorney can help you update your estate plan, so, there is no excuse as to why you shouldn’t make that plan early.

Estate planning often begins with a will

Before you think of contacting an estate planning lawyer and planning your estate, you need to think of the content of your will. Who will be named as beneficiaries in your will? If you aren’t sure of what a will is, you might want to ask “What is a will?”

What is a will?

No doubt, a will is one of the most important estate planning documents. It determine who gets your assets after your death. This document also consist of the names of your estate beneficiaries, including the assets you want to transfer to each of the beneficiaries.

Having understood what a will is, let’s consider its importance.

Importance of a will

The importance of a will is numerous. Aside from those mentioned above, a will can also help you designate guardians for your minor children (If you have any). In addition, with a will, you can select your personal representative also known as an estate executor or executrix.

The job of your estate executor is to handle everything regarding your estate, including the distribution of your possessions, paying your final bills, filling your final tax return, and shutting your accounts.  If you fail to create a will, the government of your state will step in. I bet this is something you wouldn’t want. Thus, it makes sense to contact our office, schedule a free consultation and create a will.

Now, let’s delve into probate, and the importance of a probate plan.

What is probate?

Put simply, probate is a legal procedure your estate undergoes after you pass away. During the probate proceeding, a court will begin the process of sharing your estate to the right heirs.

Probate is always simpler if you own a will and/ or Living Trust that explicitly states your wishes. These documents help most by naming your beneficiaries and an executor. An executor is the individual charged with supervising your ultimate wishes.

If you have created an estate plan, you are smart. Creating a will or living trust makes a hard life-event just a little easier for your loved ones.

Importance of a probate plan

Probate is a complicated process designed to determine the authenticity of your will and settle your estate. To ensure that your estate doesn’t go through this process, it makes sense to have a probate plan. A probate plan (which involves planning to avoid this process) can include creating a living trust, and other setups designed to avoid this process.  Failure to create a probate plan, will make things difficult for your loved ones, which we bet isn’t something you want.

Do you have any questions about how probateworks, or would like help with estate planning, please feel free to contact us to schedule a consultation. Our team of professionals are here to help.

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

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