Legal Translation Services for Real Estate Attorneys
We’ve blogged about financial document translation services in the context of enforceability of US wills in foreign countries. When a client owns property located in a foreign country, several unique issues arise. For instance, there is the issue of taxation and, in particular, double taxation. This is because in some cases when a foreign property is transferred via an estate, US estate taxes will apply in addition to any tax due to the country where the property is located.
In other words, when a US citizen who owns property in a foreign country dies, that property is subject to US estate tax. However, the US has estate tax treaties with numerous countries that allow the country where the property is located to tax the estate so long as it is the non-domiciliary country. When the domiciliary country taxes the estate of the foreign property, it must provide a credit to the estate to cover the foreign tax. Thus, if a US citizen dies owning property in country with an estate tax treaty with the US, then the foreign country’s estate laws will apply. The US will then provide a credit in the US estate tax to cover these foreign taxes
To ensure that double taxation is avoided, careful estate planning is required. When purchasing a property in a foreign country, it is essential that one understand both property and estate laws there. This will likely require a foreign language translation of relevant laws, regulations and the contract itself.
Another common practice for handling foreign property is to draft a will in each jurisdiction where property is owned. Of course this practice requires the use of a foreign language translation of all wills into the language of the jurisdiction, it still does not guarantee protection of your property. The main risk is that a will in country Y will revoke your will in the US, meaning your entire will and estate will be governed by the laws of country Y. To avoid this, you should only create a supplemental will covering only the property owned in that jurisdiction (i.e., a foreign codicil to a domestic, or US will).
Sometime people leave the foreign property out of all wills – such as when they purchase the foreign property after the will is executed and he or she fails to update the will. When this occurs, intestacy rules apply, meaning the desires of the client will not be realized. This is an issue when foreign intestacy laws apply as they vary significantly from common US intestacy laws.
So what can be done? When providing estate planning to a client with foreign property, one of the best strategies is to execute an international will in accordance with the Washington Convention. In order for a will to be considered an ‘international will’, specific requirements must be met, including:
- The will may not be a disposition of more than one person
- The will shall be in writing (may actually be handwritten or typed), need not actually be written by the testator, and may be in any language
- The will must be signed in the presence of and signed by two witnesses and an authorized person
- All signatures must be at the end of the will
- If the will is more than one page, each page must be numbered and the testator must sign each page
- If the testator is unable to sign the will, the reason shall be noted on the will.
If a will satisfies these requirements it will be valid in any jurisdiction that has signed or enacted the Convention’s Uniform International Wills Act.