Estate Planning for International Families
International families have members, assets, or citizenships connected to more than one country. Common situations include spouses with different citizenships, parents abroad leaving an inheritance to a U.S. resident, and families who own property or businesses in several countries.
The estate plan must coordinate the rules that apply to each family member and asset. These include marital deductions, inheritance rights, recognition of wills and trusts, and reporting of foreign gifts and assets.
Milvidskiy Law Group P.C. plans for international families from offices in New York, New Jersey, and Connecticut. We draft the U.S. documents, structure ownership to fit the tax rules for each family member, coordinate with counsel in the other countries involved, and handle the reporting that cross-border gifts, inheritances, and assets require.
Key Takeaways:
- Citizenship and residence decide the tax rules. U.S. citizens and domiciliaries are subject to estate and gift tax on worldwide assets; non-residents are taxed only on U.S.-situated assets, with a $60,000 exemption instead of the $15,000,000 available to citizens in 2026. Each family member’s status is determined before the plan is designed.
- A non-citizen spouse changes the plan. Transfers at death to a spouse who is not a U.S. citizen do not qualify for the unlimited marital deduction unless they pass through a qualified domestic trust, and lifetime gifts to that spouse are limited to $194,000 a year in 2026 rather than unlimited.
- Assets and heirs in another country need that country’s law addressed. A separate will, a local entity, or a choice-of-law election may be required, and the documents must be drafted so that they do not revoke each other.
Who Is Taxed on What
The United States imposes estate and gift tax on the worldwide assets of its citizens and of non-citizens who are domiciled here, meaning they live here with no present intention of leaving. Domicile for estate tax is a question of facts and intent, and it is not the same as the income tax residency test, so a person can be a resident for income tax and not domiciled for estate tax, or the reverse.
A person who is neither a citizen nor domiciled here is subject to U.S. estate tax only on assets situated in the United States, which include U.S. real estate, tangible property located here, and shares of U.S. corporations, and the exemption available to that person is $60,000 of U.S.-situated assets, against $15,000,000 for citizens and domiciliaries in 2026, with an estate tax return required when U.S.-situated assets exceed $60,000.
Estate or gift tax treaties with fifteen countries, including Canada, France, Germany, Italy, Japan, and the United Kingdom, can change which assets are taxed where and provide relief from double taxation. The starting point of every plan is a determination of each family member’s status and of what each of them owns and where.
The Non-Citizen Spouse
For couples in which both spouses are U.S. citizens, property passing to the surviving spouse at death is fully deductible and no estate tax is due until the second death. When the surviving spouse is not a U.S. citizen, that deduction is unavailable unless the property passes to a qualified domestic trust, a trust with a U.S. trustee that holds the property for the surviving spouse and pays estate tax when principal is distributed or when the survivor dies.
Lifetime gifts to a non-citizen spouse are limited to an annual exclusion of $194,000 in 2026, against the ordinary $19,000 annual exclusion and the unlimited deduction for gifts to a citizen spouse, so retitling a house or an account into a non-citizen spouse’s name can be a taxable gift.
The plan for such a couple typically includes a qualified domestic trust in the citizen spouse’s will or revocable trust, attention to how jointly held property will be treated at the first death, life insurance owned in a way that avoids the problem, and, where the non-citizen spouse intends to naturalize, a plan that changes when they do. These arrangements account for the non-citizen spouse exception to the general marital deduction and A/B trust rules.
Assets and Heirs in Other Countries
Which law governs
Real estate is governed by the law of the country where it sits. Many civil-law countries reserve a fixed share of an estate for children or a spouse regardless of what a will says, and many do not recognize trusts. A U.S. revocable trust that works for a house in Connecticut may be ineffective, or may create tax problems, for an apartment in another country. The member states of the European Union that apply the succession regulation allow a person to elect the law of their nationality to govern their entire succession, which can let a U.S. citizen with property in those countries avoid forced heirship, but the election must be made in a will and its effect confirmed with local counsel. Elsewhere the answer differs country by country.
Multiple wills
For property abroad that a U.S. instrument cannot reach effectively, a separate will governed by local law and limited to the assets in that country is often the solution. The wills must be drafted together so that neither revokes the other, the executors and the tax clauses are coordinated, and probate in one country does not wait for probate in the other. We coordinate the U.S. will with the local will, which is prepared by or with counsel in that country.
Inheriting from abroad
A U.S. person who receives gifts or bequests from a non-resident individual or a foreign estate totaling more than $100,000 in a year must report them to the IRS on Form 3520, and gifts from foreign corporations or partnerships are reportable once they exceed $20,573 in 2026. No tax is due on the receipt, but the penalty for failing to file is five percent of the amount received for each month of delay, up to twenty-five percent.
A U.S. beneficiary of a foreign trust has further reporting, and distributions from a foreign trust can create significant tax costs if the trust has accumulated income. When a client’s parents abroad are planning their own estates, we work with the family to structure what the U.S. child will receive so that it arrives with the least tax and reporting burden, which may call for changes to a trust proposed by the parents’ local advisor.
Assets abroad owned by U.S. persons
Foreign bank and financial accounts, foreign business interests, and foreign trusts owned or controlled by U.S. citizens and residents carry annual reporting obligations separate from the income tax return: a report to the Treasury when foreign accounts together exceed $10,000 at any time in the year, and a statement of specified foreign financial assets filed with the return when those assets exceed $50,000 at year end or $75,000 at any time for a single filer living in the United States, $100,000 and $150,000 for a married couple filing jointly, and $200,000 and $300,000 for a single filer, or $400,000 and $600,000 for a couple, living abroad.
Planning with foreign assets requires distinguishing the property from the income and accounts associated with it. Directly held foreign real estate is generally not itself a reportable financial asset, but the rental income is taxable here and the accounts that receive it are reportable.
Family Members Who Are Not U.S. Residents
When a parent abroad buys an apartment in New York for a child, or a non-resident sibling invests in U.S. real estate, the non-resident owner faces U.S. estate tax on that property above a $60,000 exemption, and a buyer of U.S. real estate from a non-resident seller must withhold fifteen percent of the price for the IRS, unless the buyer will use the property as a residence and the price is $300,000 or less. How the non-resident holds the property, whether directly, through a U.S. entity, through a foreign entity, or through a trust, changes the estate tax, the income tax on rent and sale, and the reporting, and the choice is made before the purchase. We evaluate these structures through coordinated cross-border estate planning and real estate advice.
Documents That Work Across Borders
Beyond the will and trust, an international family needs a power of attorney that will be accepted where the assets are, health care documents that are recognized where the person actually lives, and guardianship nominations for minor children that address the possibility of a guardian living in another country. Documents signed abroad for use here, and documents signed here for use abroad, must be executed with the formalities each country requires, which may include notarization, an apostille or consular authentication, and translation. We prepare the U.S. documents and coordinate the execution and authentication.
What Our Service for International Families Includes
- A determination of each family member’s citizenship, residency, and domicile status for income, estate, and gift tax purposes.
- Wills and revocable trusts for the U.S. estate, including qualified domestic trust provisions for a non-citizen spouse.
- Coordination with counsel in the other countries involved on local wills, forced heirship, choice-of-law elections, and the treatment of trusts.
- Structuring of gifts and inheritances from abroad, and preparation of the U.S. information returns they require.
- Planning for foreign accounts, businesses, and trusts owned by U.S. persons, including the annual reporting.
- Ownership structures for U.S. real estate held by non-resident family members.
- Powers of attorney, health care documents, and guardianship nominations drafted and executed for use in more than one country.
- Coordination with our estate tax planning and tax planning attorneys and with the family’s accountants here and abroad.
Coordinating With Foreign Counsel
Our attorneys are admitted in New York, New Jersey, and Connecticut and advise on U.S. federal and state law. We do not give advice on the law of other countries. Where a plan depends on foreign law, we identify the questions, work with local counsel the family selects or we recommend, and integrate their answers into the U.S. plan. Immigration status questions are referred to immigration counsel.
Discuss Your Family’s Estate Plan
To discuss a plan for your family, bring your existing documents, a list of assets by country, and information about each family member’s citizenship and residence. Our attorneys practice in New York, New Jersey, and Connecticut. Contact Milvidskiy Law Group P.C. to schedule a consultation.
This page is provided for general informational purposes only and does not constitute legal advice. Laws differ by state and change over time. For advice about your situation, consult a qualified attorney.
Frequently Asked Questions
Who is subject to U.S. estate tax on worldwide assets?
U.S. citizens and non-citizens who are domiciled in the United States, meaning they live here with no present intention of leaving, with a $15,000,000 exemption in 2026. A person who is neither is taxed only on U.S.-situated assets, such as U.S. real estate and shares of U.S. corporations, with a $60,000 exemption. Domicile for estate tax is a question of facts and intent and is not the same as income tax residency.
My spouse is not a U.S. citizen. Does that change our estate plan?
Yes. Property passing at death to a spouse who is not a U.S. citizen does not qualify for the unlimited marital deduction unless it passes through a qualified domestic trust with a U.S. trustee. Lifetime gifts to a non-citizen spouse are limited to $194,000 a year in 2026 rather than unlimited. The plan usually includes qualified domestic trust provisions and attention to how jointly held property is treated.
What is a qualified domestic trust?
A trust that holds property for a surviving non-citizen spouse, has at least one U.S. trustee, and meets requirements designed to keep the property within reach of U.S. estate tax. Income may be paid to the spouse without tax; distributions of principal and the spouse’s death trigger the deferred estate tax. If the spouse becomes a citizen, the trust’s restrictions can fall away.
Will my U.S. will control property I own in another country?
Not necessarily. Real estate is governed by the law where it sits, many countries reserve fixed shares for children or a spouse, and many do not recognize trusts. A separate will governed by local law, drafted so that it does not revoke the U.S. will, is often the answer, and local counsel confirms the effect.
Do I have to report an inheritance from my parents abroad?
If gifts and bequests you receive from non-resident individuals or foreign estates exceed $100,000 in a year, you must report them on Form 3520, filed with your tax return. No tax is due on the receipt, but the penalty for failing to file is five percent of the amount for each month of delay, up to twenty-five percent. Gifts from foreign corporations or partnerships are reportable once they exceed $20,573 in 2026.
Is a gift from abroad taxable to me?
Generally not. The United States taxes the giver, not the recipient, and a non-resident giver of foreign property owes no U.S. gift tax. The recipient’s obligation is to report the gift on Form 3520 if it exceeds $100,000 in the year, and to report any foreign account the gift is deposited to once foreign accounts together exceed $10,000.
Can my parents abroad leave my inheritance in a trust?
They can, but a foreign trust with a U.S. beneficiary creates annual reporting for the beneficiary, and distributions of income the trust accumulated in earlier years can create significant tax costs. It is often better for the family to plan the structure with U.S. counsel before the parents’ documents are signed.
Do estate tax treaties help?
The United States has estate or gift tax treaties with fifteen countries: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom. Where one applies, it can change which country may tax which assets, provide credits against double taxation, and in some cases give a non-resident a larger exemption than $60,000. Whether a treaty applies depends on the person’s domicile under the treaty’s tests.
What documents does an international family need besides a will?
A power of attorney that will be accepted where the assets are, health care documents recognized where the person lives, guardianship nominations that address a guardian in another country, and any local will required for property abroad. Documents for use in another country may need notarization, an apostille or consular authentication, and translation.
Do you advise on the law of other countries?
No. Our attorneys advise on U.S. federal and state law. Where a plan depends on foreign law, we identify the questions, work with local counsel the family selects or we recommend, and integrate their answers into the U.S. plan.
