When compared to citizens born in the United States, non-citizen immigrants are put in a position where there are more challenges to encounter when it comes to estate planning. Just because someone is an immigrant does not mean that you can pay any less attention to your estate or planning for matters related to the creation of a will or trust. Many times, what an immigrant needs more than anything when it comes to legal advice and perspective is the help of an attorney who will teach them something rather than tell him or them what to do.
The attorneys with the Law Office of Bryan Fagan are proud to be able to represent a diverse array of clients here in southeast Texas. If you are an immigrant to the United States or have a family member such as a parent who is an immigrant, then today's blog post should be a great introduction to you regarding issues that may be near and dear to your heart. If you have any questions or would like to schedule a free-of-charge consultation with one of our estate planning attorneys, please reach out to the Law Office of Bryan Fagan today. We would be happy to meet with you or with you and your parent to discuss your questions and provide clarity on this estate planning process.
Relevant issues for immigrants trying to plan their estate
Natural-born United States citizens often have simpler issues to encounter when it comes to estate planning. The property that native citizens own is usually in the United States. Family members usually live in the United States and are citizens themselves. In short, there is not as much that can complicate the estate planning process as there is with foreign-born immigrants who would like to plan their estates. The goals of both groups can be similar, but the process involved with planning can be quite different.
This is true whether you are a citizen of the United States or not. There is a certain level of fear or even mistrust from some immigrants (and citizens for that matter) when it comes to the legal system. Especially if you or a family member are not citizens there is a widely held belief that availing yourself of the laws and courts in the United States can lead to issues down the line as far as opening yourself up to deportation or other consequences. However, this is not the case. Planning for your future and the future of your family is a responsible decision to make and one that can be looked at as being among the most responsible a person can make.
For instance, do you own property in another country? Some immigrants who come to the United States intend to remain in this country long-term but still own property elsewhere. That property could be family land, a farm, a home, or another type of real estate. Depending on the country where the real property is located there may be a range of different issues to consider. There may be security issues with protecting the land and even the people who live on the land. You could have to create a will in your native country. The reason for this is that you can consider that property in your American estate planning but there is no guarantee that a foreign nation would give much consideration to an American will. Most countries would not necessarily honor an American will when it comes to passing down property.
With that said, it is a good idea to see if hiring an attorney or going through some estate planning in your native country is a good idea. It is difficult to try and guess what the result will be if you promise real estate in another country to another person in your American will. For example, what if you try to leave your farmland in Bolivia for a church or other charity here in the United States? Have you considered how the recipient of the property would be able to get their hands around the property and use it? That is what you need to think about now when you still have time. Because tomorrow is not promised, and you will not necessarily have an extended period to think about these things you need to strike while the iron is hot.
What factors matter most for immigrants when creating an estate plan?
When it comes to creating an estate plan as an immigrant there are specific considerations that matter more to someone in your situation than to a natural-born, US citizen. Your immigration status, the immigration status of the people who will be receiving property from you after you die, and the location of the property that you are leaving to other people in your will. These are the issues that we are going to be discussing in today's blog post.
If you are a citizen of the United States, then the tax laws of the United States will be impactful to you and your property. Specifically, the estate and gift taxes under federal law can and will impact you if you qualify based on the size of your estate and the type of gifts that you have given during your life. If you are gifting property to your spouse and he or she is a citizen, then the estate and gift tax laws matter to him or her. Even if he or she is not a citizen then it would matter to anyone that your spouse eventually leaves this property to. You may need to consider creating a trust where you can leave the property and your spouse can take out payments over time if he or she is not a citizen of the U.S.
You must be able to work with an attorney or multiple attorneys who have experience both with domestic laws on estate planning also regarding estate planning laws in your native country. For example, contacting the Law Office of Bryan Fagan is a good idea in this instance because our attorneys can give guidance on American laws on estate planning but can perform the research needed to help guide you on international laws from your home country when it comes to planning your estate there. It may be a good idea for you to reach out to an attorney in your home country but an attorney with our office would be able to give you basic guidance and perspective on the issues that may be facing you as you prepare an estate plan related to property located in the United States or another country.
Who you are leaving your property to in a will or trust matters, as well. When you are trying to create an estate, plan related to various types of property you may not be able to do this without first thinking through the consequences of your decisions both based on American law and based on the laws associated with another country. This is a lot to keep track of. Depending upon the person that you transfer your property to the tax laws of this country (and possibly another) country will be impacted.
An example of this that we run into quite a bit as estate planning attorneys has to do with the estate tax. Texas does not have a state estate tax but there is a federal estate tax. If you and your spouse are both United States citizens, then you can leave your entire estate to your spouse and not incur any estate taxes. On the other hand, if your spouse is not a citizen of the United States then that is not true. There is no unlimited deduction for non-citizen spouses when it comes to inheriting property from their spouse. There are major consequences to this reality and may cause you and your spouse to plan your estate matters differently. International tax advice may be necessary. The Law Office of Bryan Fagan can help you corral the sort of advice and perspective that you need to make wise decisions. We can help you get in contact with professionals who can provide you with that advice if need be.
How is property treated that is located in the United States versus outside the USA?
Assets don't just mean cash or personal property. You may also be in a position where you can leave real estate like land or a home to your family or anyone else for that matter. In that case, you need to be confident that the steps you have taken in your estate planning are in line with your goals as well as the needs of your family. It is not enough to think that you are on the right track or that your family may be able to benefit from your hard work. Rather, you need to be diligent and intentional about your planning so that you and your spouse are not limited as far as how you can pass down your property and benefit the people in your life. This means transferring ownership to others and avoiding taxes where possible.
Where is the property located that you want to pass on in your will or trust? The location of the property will have a lot to do with your exposure to taxes and other fees that may be involved with transferring ownership at your passing. You can investigate whether there are any laws in the country where the property is located that tax your estate to transfer property into another person's name. It may also be that if your spouse is a citizen of that country he or she may not incur these costs if the property is left to him or her. This may make a difference when it comes to who you decide to leave the property to in your estate planning.
If you do have to concern yourself with taxes and the transfer of this property upon your passing you may need to investigate whether any tax credits exist that may allow you to only pay one of those taxes levied against you. Again, this would require some knowledge of the country's tax code and laws, and that may be beyond the knowledge that you possess right now. Additionally, the United States has a relationship regarding taxes between itself and a handful of other countries. This can make the estate planning process simpler, or at least provide you with some knowledge as to the type of taxes and costs which may be a part of this situation.
Taxes in the United States are far-reaching
The United States Treasury Department will seek out taxes from its citizens who leave the country to live and work in another country. While we may hear more about other countries that tax citizens of the United States in various ways, it is also true that the United States taxes its citizens regardless of whether a citizen lives in the United States or abroad. American citizens can exclude income earned in a foreign country from their income tax filings. However, the same cannot be said for American citizens who go to work in another country. If you leave the country as a citizen, you should expect that the government will tax your estate at your death for all assets owned around the world. This would include life insurance money, retirement assets (401Ks and IRAs), and other personal property that you own. We have already spent a great deal of time talking about real estate and this is a relevant subject for taxation purposes, as well.
Most Americans do not concern themselves too much with the federal estate tax because it impacts only those who have relatively large estates. The federal estate and gift tax lifetime exclusion amounts have also increased higher in recent years. As of 2022, you can exempt up to $12.06 million in lifetime gifts and property transfers. Additionally, if you transfer property to your spouse (or vice versa) upon your death or even before your death there are no limits that can be placed on your doing so if your spouse is also a citizen of the USA.
An interesting thing for you to know is that your unused gift exemption can be transferred to your spouse. When you pass away whoever files a tax return for your estate will need to preserve your ability to do so. Combined, you and your spouse have more than $24 million to exempt from taxes for interspousal transfers of property. This is, frankly, more than most Americans will ever own in property so it is reasonable to expect that you and your spouse may not be overly concerned with this area of the law.
However, if you are a US citizen but you are married to someone who is not a US citizen then you need to pay closer attention to this subject than you maybe would have otherwise. If your spouse survives you and is not a citizen, then the unlimited marital deduction will not be available to you and your chances of being taxed on property transfers at your death increases a great deal. You can mitigate this exposure by transferring more money to your spouse during your life but there are limits to how much property you can transfer to your spouse during your lifetime.
Where does this leave you as an immigrant or spouse of an immigrant?
Whether you are an immigrant, your spouse is an immigrant, or you are the child of an immigrant there are several considerations for you to take away from the information contained in our blog post. We will be writing again on information related to estate planning for immigrants and their families. This is a complex subject with a lot of moving pieces. Additionally, the laws in the United States on taxes are changing on a seemingly year-by-year basis. As a result, you need to be aware of those changes and keep up with them as best you can.
The best way for you to do this is to work with an experienced estate planning attorney. The attorneys with the Law Office of Bryan Fagan are ready and willing to help you with whatever estate planning circumstances you run into. We have the experience, knowledge, and willingness to teach what you need to prepare your estate.
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