We’ve blogged about the importance of professional legal translation services for international estate planning. When one owns property in a foreign country and they are a resident non-citizen, this will have an impact on both their US and foreign estate taxes. Under US law, three factors effect estate tax: citizenship, residency and the location of the property. All US citizens are subject to taxation on all property located anywhere in the world. Needless to say, this opens the door to the risk of double taxation, as the property located in the foreign country may also be subject to taxation by that country’s laws. More so, estate taxes often fall outside double taxation treaties.
Further, the marital deduction that allows property to pass to the surviving spouse tax free does not apply to non-citizen spouses. Likewise, the unlimited charitable deduction does not apply to foreign charitable organizations.
Clearly, when planning one’s estate as a foreign national, it is essential to have a clear understanding of the laws of all involved jurisdictions. This will require the extensive use of foreign language translations.