Frost Law
For expats who continue to own assets in the United States, the importance of having an estate plan that addresses those assets, in the event of either incapacity or death, cannot be understated. An estate plan can be either will-based or trust-based, and when properly prepared ensures that assets pass to loved ones as intended. This article addresses some of the considerations when making a choice between using a will or a trust as the primary estate planning vehicle.
A will is a tool that directs the disposition of assets that are individually held with no automatic transfer provisions after a person’s death.1 It is administered by a Personal Representative, subject to the oversight of a probate court2 in the US county having jurisdiction over the deceased person’s assets.
A “revocable trust” or “living trust” similarly directs the disposition of assets that are held in the trust after a person’s death. Importantly, a trust can enable the management of a living person’s assets during any time that they are incapacitated or otherwise want assistance with asset management.
Which tool makes the most sense for any individual, expat and non-expat alike, depends on his or her personal circumstances. The main advantages of using a trust-based plan over a will-based plan are:
An important consideration in planning for an expat relates to what they continue to own in the United States and where it is located. Depending on the answer, the rules governing the jurisdiction of the probate courts in the United States may make it extremely challenging (read: expensive) or impossible to utilize the probate system to transfer the deceased person’s assets. This is because of the rules for “venue,” which govern where proceedings are to be held.
The “venue” for the probate of a decedent’s estate is generally: 1) the county where the decedent was domiciled at death; or, if the decedent was not domiciled in a state, 2) the county where the decedent’s property is located. In other words, living in a county gives that county’s probate court the jurisdiction to oversee your estate administration. If you do not have a domicile in a state, owning property in a US county generally gives that county the ability to probate your will. Therefore, the second option can be easily achieved when a decedent owned real estate or had tangible property. However, establishing venue based on intangible assets such as cash or an investment account is more challenging, and potentially impossible, especially if the assets are held at a large financial institution with offices all over the country or around the world. The rules governing the venue for a probate proceeding are slightly different in each state. If no court is determined to be the correct “venue,” then it may be impossible for any court to assume jurisdiction over and probate a deceased person’s will.
Americans living abroad who do not have real estate, but hold other assets in the United States, should strongly consider using a trust for their estate plans for this reason alone. Comprehensive estate plans should incorporate Advanced Medical Directives and Financial Powers of Attorney to enable decision-making authority in the event of incapacity. A qualified estate planning attorney can assist with advising on these issues and evaluate whether a trust makes sense, or is possibly necessary, to make your estate plan work. If you have any questions or concerns about estate planning for expats then please reach out to our team at (410) 497-5947 or schedule a confidential consultation.
For expats who continue to own assets in the United States, the importance of having an estate plan that addresses those assets, in the event of either incapacity or death, cannot be understated. An estate plan can be either will-based or trust-based, and when properly prepared ensures that assets pass to loved ones as intended. This article addresses some of the considerations when making a choice between using a will or a trust as the primary estate planning vehicle.
A will is a tool that directs the disposition of assets that are individually held with no automatic transfer provisions after a person’s death.1 It is administered by a Personal Representative, subject to the oversight of a probate court2 in the US county having jurisdiction over the deceased person’s assets.
A “revocable trust” or “living trust” similarly directs the disposition of assets that are held in the trust after a person’s death. Importantly, a trust can enable the management of a living person’s assets during any time that they are incapacitated or otherwise want assistance with asset management.
Which tool makes the most sense for any individual, expat and non-expat alike, depends on his or her personal circumstances. The main advantages of using a trust-based plan over a will-based plan are:
An important consideration in planning for an expat relates to what they continue to own in the United States and where it is located. Depending on the answer, the rules governing the jurisdiction of the probate courts in the United States may make it extremely challenging (read: expensive) or impossible to utilize the probate system to transfer the deceased person’s assets. This is because of the rules for “venue,” which govern where proceedings are to be held.
The “venue” for the probate of a decedent’s estate is generally: 1) the county where the decedent was domiciled at death; or, if the decedent was not domiciled in a state, 2) the county where the decedent’s property is located. In other words, living in a county gives that county’s probate court the jurisdiction to oversee your estate administration. If you do not have a domicile in a state, owning property in a US county generally gives that county the ability to probate your will. Therefore, the second option can be easily achieved when a decedent owned real estate or had tangible property. However, establishing venue based on intangible assets such as cash or an investment account is more challenging, and potentially impossible, especially if the assets are held at a large financial institution with offices all over the country or around the world. The rules governing the venue for a probate proceeding are slightly different in each state. If no court is determined to be the correct “venue,” then it may be impossible for any court to assume jurisdiction over and probate a deceased person’s will.
Americans living abroad who do not have real estate, but hold other assets in the United States, should strongly consider using a trust for their estate plans for this reason alone. Comprehensive estate plans should incorporate Advanced Medical Directives and Financial Powers of Attorney to enable decision-making authority in the event of incapacity. A qualified estate planning attorney can assist with advising on these issues and evaluate whether a trust makes sense, or is possibly necessary, to make your estate plan work. If you have any questions or concerns about estate planning for expats then please reach out to our team at (410) 497-5947 or schedule a confidential consultation.
