Estate Planning for U.S. Citizens Living Abroad
U.S. citizens living abroad remain subject to U.S. income and estate tax rules while also navigating the laws of their country of residence. An estate plan should coordinate both systems, including taxation, inheritance rights, and recognition of wills and trusts. Documents signed before a move should be reviewed in light of the new circumstances.
Milvidskiy Law Group P.C. plans for U.S. citizens living outside the United States, for citizens who intend to move, and for citizens abroad who are considering giving up their citizenship. We handle the U.S. side of the plan, coordinate with counsel in the country of residence, and manage the documents and the reporting from a distance.
Key Takeaways:
- Citizenship, not residence, governs U.S. estate tax. A citizen living abroad for decades is taxed on a worldwide estate exactly as one living in New Jersey, with the same exemption, and the country of residence may tax the same estate under its own rules.
- Review U.S. documents and local requirements. A will and revocable trust signed before departure may not be recognized where the citizen now lives, and a local will, a choice-of-law election, or local execution formalities may be required.
- Giving up citizenship is a tax event. A citizen with a net worth of $2,000,000 or more, or an average annual U.S. income tax liability above $211,000 for expatriations in 2026, or who cannot certify five years of compliance, is treated as selling all assets on the day before expatriation, and gifts and bequests they later make to U.S. persons can be taxed to the recipient.
U.S. Tax Obligations While Living Abroad
A U.S. citizen files a U.S. income tax return every year regardless of where they live, reporting worldwide income. Two provisions moderate the result: an exclusion of up to $132,900 of foreign earned income in 2026 for a citizen whose tax home is abroad and who meets a residence or physical presence test, and a credit for income tax paid to the country of residence.
The foreign account, foreign company, and foreign trust reporting rules that apply to residents apply abroad as well. Foreign accounts are reported once they together exceed $10,000 at any time in the year, and specified foreign financial assets are reported with the return once they exceed $200,000 at year end or $300,000 at any time for a single filer living abroad, or $400,000 and $600,000 for a married couple filing jointly. The accounts the citizen opens to live an ordinary life in the new country are, from the U.S. perspective, foreign accounts.
U.S. estate and gift tax rules also continue to apply. A citizen’s worldwide estate is subject to U.S. estate tax with the same exemption available to citizens at home, $15,000,000 in 2026, and lifetime gifts of worldwide assets are subject to U.S. gift tax. The country of residence may impose its own estate or inheritance tax, sometimes on the heir, sometimes at rates that depend on the heir’s relationship to the decedent. A credit for foreign death taxes and, with fifteen countries, an estate tax treaty reduce the double taxation, but the planning has to account for both systems, and our estate tax planning attorneys work through the U.S. side.
The Documents
The U.S. will and trust
A will executed in the United States is generally valid in the United States for the citizen’s U.S. assets, and the U.S. probate and trust administration of those assets proceeds here. Whether the country of residence will recognize the U.S. will for property located there, and whether it will recognize a revocable trust at all, is a question of that country’s law. Many civil-law countries apply forced heirship to real estate and sometimes to the whole estate of a person domiciled there, and many do not give effect to trusts. The revocable trust that avoided probate in Connecticut may be ignored, or taxed as a gift, in the new country.
A local will and choice of law
The usual solution is a will governed by the law of the country of residence, limited to the assets there and drafted with local counsel so that it does not revoke the U.S. will. Where the country of residence is a member of the European Union that applies the succession regulation, a U.S. citizen may elect in a will to have U.S. law, meaning the law of the state with which the citizen is most closely connected, govern their entire succession, which can avoid forced heirship. The election has to be made correctly and its effect on the country’s tax confirmed. Elsewhere the options differ country by country. Planning with foreign assets therefore requires reviewing both the local succession rules and the U.S. plan.
Powers of attorney and health care documents
A U.S. durable power of attorney may not be accepted by a foreign bank or hospital, and a foreign document may not be accepted by a U.S. institution. A citizen abroad typically needs a U.S. power of attorney for U.S. assets, a local instrument for local assets and medical decisions, and, where the two overlap, coordination so that the agents do not conflict. Documents signed abroad for use in the United States are executed before a U.S. consular officer or notarized and authenticated with an apostille where the country participates in the convention, and translated where required.
The Non-Citizen Spouse and Family Abroad
Citizens abroad frequently marry non-citizens. 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, and lifetime gifts to that spouse are limited to $194,000 a year in 2026. Where the couple lives abroad, the qualified domestic trust must still have a U.S. trustee, which is arranged in the plan. Children born abroad may or may not be U.S. citizens, which affects whether they will inherit the same tax obligations, and the plan is drafted with each family member’s status determined. Estate planning for international families accounts for these differences in citizenship and tax treatment.
U.S. Trusts With a Foreign Trustee
A trust is treated as a U.S. trust for tax purposes only if a U.S. court can supervise its administration and U.S. persons control all substantial decisions. A citizen abroad who names a spouse or a friend in the country of residence as trustee of a trust created in the United States can inadvertently convert it into a foreign trust, with the reporting and tax consequences that follow. Trustee selection, and successor trustee provisions, are drafted with that rule in mind, often with a U.S. co-trustee or a U.S. professional trustee.
Planning Before Renouncing Citizenship
Renouncing U.S. citizenship has tax and estate planning consequences that should be reviewed before a decision is made. A person who renounces is a covered expatriate if their net worth is $2,000,000 or more, if their average annual U.S. income tax liability over the five prior years exceeds $211,000 for expatriations in 2026, or if they cannot certify under penalty of perjury that they have complied with U.S. tax obligations for the five preceding years.
A covered expatriate is treated as having sold all property at fair market value on the day before expatriation, with the gain taxed to the extent it exceeds $910,000 in 2026, and with special rules for retirement accounts and deferred compensation. Gifts and bequests a covered expatriate later makes to U.S. citizens or residents are taxed to the recipient at the highest estate or gift tax rate.
The plan for a client considering expatriation addresses the compliance certification, the timing, the measurement of net worth, gifts that reduce net worth below the threshold where they can be made without U.S. tax, and the treatment of the family members who will remain U.S. persons. Long-term green card holders who give up their status can be subject to the same regime.
What Our Service for U.S. Citizens Abroad Includes
- Review of existing U.S. documents against the law of the country of residence, in coordination with local counsel.
- A U.S. will and revocable trust for U.S. assets, drafted to coexist with a local will and to address a non-citizen spouse where there is one.
- Choice-of-law elections and local will coordination where the country of residence permits them.
- Powers of attorney and health care documents for U.S. and local use, and execution and authentication from abroad.
- Trust design and trustee selection that preserve U.S. trust status or deliberately accept foreign status.
- Planning for the combined U.S. and foreign estate tax, including the foreign death tax credit and any applicable treaty.
- An inventory of the reporting obligations that apply from abroad, and coordination with the accountant who files the U.S. return.
- Analysis and planning for a client considering expatriation, including the covered expatriate tests and the consequences for U.S. family members.
Coordinating Advice in the United States and Abroad
Our attorneys advise on U.S. federal and state law and do not give advice on the law of the country where you live. We identify the foreign-law questions, work with counsel there, and integrate their answers into the U.S. plan. The decision to renounce citizenship has consequences beyond tax, including immigration and travel consequences, and we address only the tax and estate planning side. Our attorneys can meet with clients abroad by video.
Discuss Your Estate Plan From Abroad
If you are a U.S. citizen living outside the United States, or planning to move, bring your existing U.S. documents, any documents you have signed in your country of residence, a list of assets by country, and your most recent U.S. return. 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
Do I still owe U.S. estate tax if I live abroad?
Yes. A U.S. citizen’s worldwide estate is subject to U.S. estate tax regardless of where the citizen lives or is domiciled, with the same $15,000,000 exemption in 2026 available to citizens at home. The country of residence may tax the same estate under its own rules, and a credit for foreign death taxes or a treaty reduces the overlap.
Is my U.S. will valid where I live now?
It is generally valid for your U.S. assets. Whether the country of residence recognizes it for property there is a question of that country’s law. Many countries apply forced heirship, and many do not recognize trusts. A local will drafted so that it does not revoke the U.S. will is often needed.
Can I choose U.S. law to govern my estate abroad?
In the European Union member states that apply the succession regulation, a U.S. citizen can elect in a will to have the law of their nationality govern their entire succession, which can avoid forced heirship. The election must be made correctly and its effect on local tax confirmed with local counsel. Elsewhere the options differ by country.
Will my revocable trust work abroad?
Not necessarily. Countries without a trust concept may ignore it, refuse to register property in its name, or treat a transfer to it as a taxable gift. The trust continues to work for U.S. assets, and the plan for assets abroad is designed with local counsel.
Can I name my spouse abroad as trustee of my U.S. trust?
You can, but if a non-U.S. person controls the trust’s substantial decisions, the trust becomes a foreign trust for U.S. tax purposes, with reporting and tax consequences. A U.S. co-trustee or professional trustee is often named to preserve U.S. status.
My spouse is not a U.S. citizen. What changes?
Property passing to a non-citizen spouse at death does not qualify for the unlimited marital deduction unless it passes through a qualified domestic trust with a U.S. trustee, and lifetime gifts to that spouse are limited to $194,000 a year in 2026. The plan includes qualified domestic trust provisions and a U.S. trustee.
Do I have to report my foreign bank accounts from abroad?
Yes. Foreign accounts are reported to the Treasury once they together exceed $10,000 at any time in the year, wherever you live. Specified foreign financial assets are reported with your return once they exceed $200,000 at year end or $300,000 at any time for a single filer living abroad, or $400,000 and $600,000 for a married couple filing jointly, which is higher than the thresholds for residents. Your ordinary local accounts are foreign accounts from the U.S. perspective.
What happens if I give up my citizenship?
If your net worth is $2,000,000 or more, your average annual U.S. income tax liability over the prior five years exceeds $211,000 for expatriations in 2026, or you cannot certify five years of tax compliance, you are a covered expatriate. You are treated as selling all your property the day before expatriation, with gain above $910,000 in 2026 taxed, and gifts and bequests you later make to U.S. persons are taxed to the recipient at the highest estate tax rate. Planning before renunciation can change the result.
How do I sign documents from abroad?
Documents for use in the United States can be signed before a U.S. consular officer, or notarized locally and authenticated with an apostille where the country participates in the convention, and translated where required. We coordinate the execution so that the documents are accepted where they will be used.
Can you meet with me if I live overseas?
Yes. Our attorneys meet with clients abroad by video and coordinate document execution and authentication from a distance. We advise on U.S. federal and state law and work with counsel in your country of residence on the local side.
