Document Translation Service for Estate Planning Attorneys
We’ve blogged about certified legal document translation services for estate litigation and for international estate planning. If your client is a resident non-citizen, married to a non-citizen, or has property located in more than one country, then careful estate planning needs to be done in order to minimize their tax burden. When dealing with an international estate, two specific issues must be addressed.
First, you need to plan for the distribution of property at the time of death. The Last Will and Testament should address this by including a designated fiduciary who will administer the estate, identify the beneficiaries who will receive the property, and include appropriate trust arrangements for any beneficiary who is incompetent or too young to inherit the property. Second, you need to also plan for the possibility that one may become incapacitated prior to death. Here, your client should create a Durable General Power of Attorney naming a third-party as attorney-in-fact.
You also need to consider the preparation of the actual will itself. For example, any will prepared in accordance with US laws may not be recognized in the foreign country where the property is located. Therefore, in addition to the US will, another will needs to also be prepared in accordance with the laws of that country to address the foreign property. In doing so, the will must be prepared in the language of the country and, for the US legal purposes, include a certified foreign language translation.
Then there are the tax considerations inherent in international estate planning. Not only will your client likely face US estate tax laws, but also the estate tax laws of the country where the property is located. Remember, an estate tax is a transfer tax, meaning it taxes the right of the decedent to transfer wealth to other individuals.
In the US, three factors control the application of US estate tax laws: citizenship, residency and location of the property. If one is a US citizen then they are subject to estate taxation on the global property. This, of course, raises the risk of double taxation.
When planning, one should check to see if there are tax treaties between the US and the foreign jurisdiction to avoid this double taxation. Although many have such treaties in regards to income, few have double taxation treaties applicable to estates.
Knowing this, when planning an international estate, keep the following principles in mind:
- The unlimited marital deduction allows property to pass to a surviving spouse tax free so long as the spouse is a US citizen. For non-citizen spouses, the marital deduction can only be claimed if the property passes via a Qualified Domestic Trust with a US trustee.
- The “applicable exclusion amount” will be the amount of property that can pass free of estate tax to all other beneficiaries (regardless of the beneficiaries’ domicile or citizenship). The exclusion will be $1,000,000. If the value of all of a decedent’s property is above this amount, the portion of the value above the applicable exclusion amount will be taxed at 55%.
- Resident non-citizens are subject to the same estate tax rules as US citizens, including taxation on worldwide property.
Contact our legal translation company to obtain multilingual document translation services.