Introduction - Why Estate Planning Becomes More Complex When You Live Internationally
Estate planning is an important part of long-term financial organisation for many individuals. For U.S. citizens living abroad, the process can become more complex because:
- U.S. estate and gift tax rules continue to apply regardless of where a person resides
- many countries tax estates, inheritances, or gifts differently
- assets may be located in multiple countries
- foreign property, pensions, and accounts may follow different rules
- beneficiaries may live in different jurisdictions
- U.S. situs asset rules may apply to certain holdings
- cross-border reporting may be required
U.S. expats often ask:
- “Does U.S. estate tax still apply if I live abroad?”
- “How are foreign assets treated when I pass away?”
- “What happens to my U.S. retirement accounts?”
- “Are my heirs taxed differently if they live outside the U.S.?”
- “Do foreign wills interact with my U.S. will?”
- “Is there a tax treaty for estate tax where I live?”
This guide provides a neutral, factual overview of estate planning considerations for U.S. citizens living overseas. It is not legal, tax, or investment advice, and estate planning outcomes depend heavily on individual circumstances, asset types, and jurisdiction-specific laws.
What This Guide Helps You Understand
Estate planning becomes significantly more complex when your life, assets, or family span multiple countries. This guide explains the major considerations U.S. expats should be aware of and helps you understand:
- Why U.S. estate tax still applies to U.S. citizens living abroad
- How worldwide assets, including foreign property and pensions, may be treated under U.S. rules
- How foreign inheritance laws, forced heirship, or probate systems interact with U.S. planning
- What U.S. situs assets mean for non-U.S. spouses or children
- How estate tax treaties may reduce exposure or coordinate cross-border taxation
- How domicile is evaluated differently from residency for estate tax purposes
- How 401(k)s, IRAs, and Roth IRAs fit into estate planning for globally mobile families
- How multi-country ownership, titling, and joint assets may affect inheritance outcomes
- What reporting requirements continue even while living abroad
- Why liquidity, currency, and location of assets matter for long-term planning
This guide is educational and does not constitute personalised legal, tax, or investment advice.
U.S. Estate Tax Applies to U.S. Citizens Regardless of Residency
A key principle:
U.S. estate tax applies to U.S. citizens and U.S. domiciliaries, even if they live abroad.
This means:
- A U.S. citizen’s worldwide assets may be included in the gross estate for U.S. estate tax purposes
- U.S. residency status does not remove estate tax exposure
- foreign assets may be taxed under U.S. rules
The location of the asset does not remove it from U.S. estate tax consideration.
Common worldwide assets included:
- U.S. and foreign real estate
- bank accounts (U.S. and foreign)
- brokerage accounts
- business holdings
- private companies
- retirement accounts
- life insurance (depending on ownership structure)
- foreign pensions (depending on structure)
Estate planning for U.S. expats may require evaluating each asset type across jurisdictions.
Understanding the U.S. Federal Estate Tax System
U.S. estate tax applies to the value of the decedent’s worldwide estate at death.
Components:
- Gross estate: total worldwide assets
- Deductions: debts, expenses, certain taxes, marital deduction
- Taxable estate: gross estate minus deductions
- Estate tax: calculated after applying exclusions and credits
Key concepts:
Unlimited marital deduction (for U.S. citizen spouses only)
Transfers to a U.S. citizen spouse are generally deductible.
Marital deduction does not automatically apply for non-U.S. citizen spouses
This requires special planning (e.g., QDOT structures in some cases).
Not all individuals use these depending on personal circumstances.
Lifetime exemption
The exemption amount may change based on legislation.
Gift tax and estate tax are unified
Lifetime gifts may affect the remaining exemption at death.
Beneficiaries’ residency does not change estate tax liability
The estate of the U.S. citizen is what is taxed, not the beneficiary.
For U.S. expats, estate tax applies regardless of where they live at death.
How Foreign Assets Are Treated Under U.S. Estate Tax
Foreign assets may be included in a U.S. citizen’s gross estate.
This may include:
- foreign real estate
- foreign bank accounts
- foreign brokerage accounts
- foreign investment property
- interests in foreign corporations
- certain foreign pensions
- foreign life insurance (depending on ownership and structure)
Local country laws also apply
Many countries have:
- inheritance taxes
- succession rules
- forced heirship
- legal requirements for wills
- local reporting rules
- domicile-based taxation
U.S. expats often review whether local laws impact:
- inheritance
- probate
- distribution
- taxation
- documentation requirements
Cross-border coordination is often required.
U.S. Situs Assets for Non-U.S. Persons (Why This Matters for Expats With Non-U.S. Family)
Many U.S. expats have non-U.S. spouses, children, or parents.
This introduces additional considerations.
For non-U.S. persons, certain assets considered “U.S. situs” may be subject to U.S. estate tax.
Examples include:
- U.S. real estate
- U.S.-domiciled stocks
- U.S. brokerage accounts
- U.S. partnerships
- certain U.S.-situated tangible property
For individuals with non-U.S. family members, it may be relevant to understand how these rules apply to the estate of a non-U.S. person.
(Specific structuring is personal and depends on legal guidance; this article remains educational only.)
Estate Tax Treaties and Their Role for U.S. Expats
The United States has estate tax treaties with a limited number of countries.
These treaties are different from income tax treaties.
Countries with estate/gift tax treaties may include:
- United Kingdom
- France
- Germany
- Canada (limited form)
- Japan
- Switzerland
- Netherlands
- Italy
- Denmark
- South Africa
- others in certain cases
Estate tax treaties may:
- provide tie-breaker residency rules
- prevent double estate taxation
- allocate taxing rights
- define situs rules
- provide credits
- coordinate between systems
Whether a treaty applies depends entirely on:
- the decedent’s status
- the countries involved
- the nature of the assets
- domicile rules
Many U.S. expats live in countries without estate tax treaties (UAE, Singapore, Hong Kong, Thailand, Malaysia, Qatar, etc.).
In these cases:
- U.S. rules apply to the worldwide estate
- local rules apply depending on jurisdiction
- there is no treaty mechanism to coordinate the two
Domicile vs. Residency: Key Distinction for Estate Planning
Domicile and residency are distinct concepts.
- U.S. estate tax applies to citizens regardless of domicile
- For non-citizens, U.S. estate tax exposure depends on domicile
Factors that may influence domicile classification:
- intention to remain in a country
- permanent home
- family location
- property ownership
- time spent in jurisdictions
- personal ties
Estate planning often requires understanding domicile status from the perspective of multiple jurisdictions.
How Retirement Accounts Fit Into U.S. Expat Estate Planning
401(k)s, IRAs, and Roth IRAs remain U.S. assets regardless of where an individual lives.
Key points:
- 401(k) and Traditional IRA balances are generally includible in the estate
- Roth IRA balances are generally includible in the estate
- Beneficiary designations may override wills
- Distribution rules depend on U.S. tax law
- Local country rules may apply to beneficiaries
- Future residency of heirs may influence outcomes
Beneficiary planning may require:
- confirming beneficiary designations
- reviewing non-U.S. beneficiary tax rules
- coordinating with estate documents
Because retirement accounts are governed by U.S. law, cross-border coordination may be particularly important.
Joint Ownership, Titling, and Property in Multiple Countries
Many U.S. expats own:
- property abroad
- U.S. property
- jointly held property
- business interests
- foreign accounts
- multi-country financial relationships
Different countries have different rules on:
- joint tenancy
- survivorship
- community property
- forced heirship
- disclosure
- probate
Title and local law may influence how assets pass to heirs.
Beneficiary Planning for U.S. Expats
Beneficiary planning may involve:
- retirement accounts
- life insurance
- foreign pensions
- foreign accounts
- trusts
- wills
Considerations for globally mobile individuals may include:
- whether beneficiaries are U.S. persons
- whether beneficiaries reside in different jurisdictions
- how each country taxes inheritance
- documentation requirements across borders
- probate requirements in different jurisdictions
- local law recognition of foreign wills
A U.S. will may not automatically apply to foreign property, depending on local rules.
Trusts and U.S. Expats: General Considerations
U.S. trusts can have different cross-border implications compared to foreign trusts.
- U.S. trusts remain subject to U.S. tax rules
- Foreign trusts may require special reporting
- Beneficiary residency may influence reporting
- Distributed income may be taxed differently
- Local country rules may view trusts differently than the U.S. does
This article remains general; trust suitability varies significantly depending on legal guidance and personal objectives.
Multi-Country Inheritance Rules
Each country approaches inheritance differently.
Examples of differences (general themes only):
- U.S. – will-based system
- France, Spain, Italy – succession rules and forced heirship
- UAE – Sharia-based inheritance unless opt-outs apply in certain circumstances
- Singapore, Hong Kong – probate-based systems
- UK – inheritance tax may apply to certain assets
- Switzerland – canton-specific inheritance rules
Understanding local rules is often part of multi-country estate planning.
Currency, Location, and Liquidity Considerations
Estate planning often involves evaluating:
- which currency assets are held in
- where bank accounts are located
- which assets pass through probate
- how liquidity is accessed by heirs
- whether assets must be sold to pay estate tax
- cross-border banking considerations
Globally mobile individuals often hold assets across:
Currency exposure may matter for long-term distribution planning.
Reporting Requirements for Foreign Financial Assets
U.S. citizens may need to report:
FBAR (FinCEN Form 114)
Foreign financial accounts > $10,000 aggregate
FATCA Form 8938
Foreign assets exceeding certain thresholds
Form 8621
For PFIC holdings
Form 3520 / 3520-A
For certain trust or foreign gift situations
(depends heavily on structure)
These reporting obligations continue regardless of residence and may interact indirectly with estate planning.
Hypothetical Case Studies
These examples do not represent actual clients.
Example 1 - U.S. Citizen Living in the UAE
Profile:
- Lives in a no-income-tax jurisdiction
- Holds U.S. retirement accounts and UAE property
Considerations:
- U.S. estate tax may apply to worldwide assets
- UAE inheritance rules differ from U.S. rules
- Coordinating wills may be relevant depending on circumstances
Example 2 - U.S. Citizen Living in France
Profile:
- Owns property in France
- Has U.S. investment accounts
- Has children in multiple countries
Considerations:
- French succession rules may apply
- U.S. estate tax rules apply
- Treaty may influence outcomes depending on circumstances
Example 3 - U.S. Citizen With Non-U.S. Spouse
Profile:
- Spouse is not a U.S. citizen
- Worldwide assets include U.S. and foreign property
Considerations:
- marital deduction rules differ depending on citizenship
- local rules may impact inheritance rights
- beneficiary designations may need review
Practical Checklist for U.S. Expats Reviewing Estate Planning
- Understand U.S. estate tax rules for worldwide assets
- Review whether your country of residence has an estate tax treaty with the U.S.
- Confirm how foreign property passes under local law
- Review titling and joint ownership rules
- Review beneficiary designations
- Understand how foreign pensions may pass to heirs
- Consider multi-currency and multi-country liquidity
- Review reporting requirements (FBAR, FATCA)
- Understand residency and domicile rules
- Coordinate U.S. and foreign wills where appropriate
- Review long-term retirement location for future tax implications
How Skybound Wealth USA Supports Individuals
Skybound Wealth USA assists individuals with:
- understanding U.S. retirement account considerations in estate planning,
- coordinating cross-border financial planning with estate professionals,
- evaluating global asset structures,
- identifying U.S.-domiciled investment options,
- supporting long-term planning across jurisdictions,
- providing cash flow and retirement modelling using MoneyMap.
Conflict Disclosure:
Skybound Wealth USA may receive compensation when individuals choose advisory services involving assets under management. Individuals should evaluate all available options before making decisions.
Next Steps
If you wish to understand how estate planning interacts with your cross-border financial situation, you may schedule a discussion with Skybound Wealth USA to review your circumstances.
Disclosure
This material is for informational purposes only and does not constitute personalised financial, legal, tax, or estate planning advice.
Tax and estate rules vary by jurisdiction and may change.
Hypothetical examples do not represent actual clients or outcomes.
Estate planning requires legal guidance specific to each individual’s situation.
Skybound Wealth USA, LLC is an SEC-registered investment adviser; registration does not imply any particular level of skill or training.
Please review Form ADV Part 2A, Part 2B, and Form CRS for further disclosures.
