Professional Translation and Estate Taxes in an International Setting

Professional translation services are important not only in the context of foreign-language wills and probate, but also for estate planning in an international setting. One of the major concerns of many Americans living abroad is the lack of an Estate Tax Treaty between the US and their country of residence. The Economic Growth and Tax Relief Reconciliation Act of 2001 gradually reduced the top tax rates and raised estate tax exemption levels through 2009.

As of January 1, 2010 the estate tax and the generation-skipping transfer taxes (GSTT) have been reduced to zero. However, the statute also specifies that if no Congressional action occurs, in 2011 those taxes will return to their 2001 level.

What this means is there is no estate tax today, but next year the top rate will go back to 55%, with an exemption of $1 million. Legislative action is at an impasse. Late in 2009, a bill passed the House of Representatives that would make the 2009 estate tax levels permanent – meaning a top estate tax rate of 45% with an exemption of $3.5 million. However, it is far from certain the House version will meet Senate approval.

This puts all practitioners in a quandary: how do you give advice on estate planning if you do not know what the rates and exemptions are going to be? And, in the current situation, a foreign-based resident may end up paying estate taxes twice if, as is often the case, the two nations lack an estate tax treaty. In order to ensure you provide your client with sound advice, you should have a foreign language translation of all relevant tax codes, along with any wills, trusts or other estate-related documents.

Up Next: Language Translation and Pension Funds in the International Setting