Friends and Relatives in Foreign Countries? They Can Still Be Part of Your Estate Plan.


The world continues to shrink as advances in technology fuel faster communication and travel to the far reaches of the globe. As a result, people are on the move now more than ever before. No longer is a move from San Francisco to Oakland or from California to Oregon considered a big deal. You may even have friends or relatives who left the United States to live or retire in another country.

As a result, you may wonder if you can include these people in your estate plan even if they no longer reside in the United States. The simple answer is “yes,” but the tax laws surrounding the distribution of your estate to them are complex.

The Foreign Account Tax Compliance Act (FATCA) was approved in 2010 but did not go into effect until 2013. The Internal Revenue Service (IRS) is now enforcing the provisions of this act to:

  • Stop income tax evasion by U.S. citizens
  • Increase tax revenue for the U.S. government
  • Require anyone with a financial account in another country to report it to the IRS
  • Require foreign financial organizations to inform the IRS regarding their American clients

If you decide to include beneficiaries in your estate who live in other countries, you should contact a California attorney experienced in creating wills and trusts. The attorney can plan your estate to comply with the complexities of the FATCA Act. For example, do you know your beneficiaries’ tax status? Depending on their status, tax withholding will vary on the amount you plan to leave them. Did you know that the IRS requires completion of specific forms to report each type of income for each beneficiary?

Sound complicated? It is.

Posted in Estate Planning | Tagged beneficiaries, estate planning, Foreign Account Tax Compliance Act, IRS

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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