The International Side of Estate Planning

Living in a tourist mecca attracts a worldwide community of residents. Often parents relocate from another area to be near their family here in wine country. How they do it has implications for many things, including their estates.

In the realm of estate planning, this means that issues abound relating to the interplay of domestic and international inheritance laws. To the re-locatee, these questions seem simple. To the planner, they are anything but often requiring in depth consideration of the client’s goals, assets, location and legal parameters.

Generally speaking, there are two types of succession law structures, civil and common law. Speaking in very broad brushstrokes, common law areas give individuals the freedom to gift their property to chosen individuals. This is in direct contract to civil law countries, many of which follow an implemented system limiting the ability to freely dispose of property. Depending upon the country, there may be further requirements specifying layers of individuals with rights to inherit.

Let’s take Italy for example. In addition to having excellent gelato, Italy has forced heirship laws pertaining to community property. Germany is similar as are other areas. Some countries are signatories the Hague Convention on the Law Applicable to Trusts. This shows an intent to allow trusts to be used, although does not necessarily mean that such estate vehicles are valid.

Some wonder what happens if these rules aren’t followed? There can be a multitude of consequences from excessive taxation to the risk of a claw back from a disgruntled heir. The US has similar features though they are tied to a type of wrongdoing such as undue influence.

The moral of the story here is like anything informed action creates security. For these reasons, it is of critical importance that international clients seek specialized counsel.

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