Foreign Family Members: Will or Trust?

Several client or their spouses are immigrants who are not US Citizens or have several foreign family members. This poses several costs and challenges when choosing to pass property, and should lead one to ask if they should have property pass by a Trust or by Probating a Will. The following issues apply for people who reside overseas and do not pay US taxes, also known as “Non-US Persons.”

Remember that having/opening a Trust avoids all of these costs: A Trust does not pass through Probate, does not require a Court to approve a foreign Trustee, and assets are distributed much more quickly and at less cost.

First, any person who is a Non-US Person cannot serve alone as an Executor of a Will or asole Administrator when no Will exists. This means that if you name a foreign family member as an Executor in your Will, he shall have to find a trustworthy US Citizen or Corporate Executor to serve with him, and potentially pay him or her a fee.

Next, when a Will is Probated all parties must be put on “Legal Notice”, meaning they have to sign documents, have them notarized, often at a US embassy or consulate, then return the documents to the Executor. Otherwise, they must still be put on Legal Notice that there is a court date set for them to dispute or accept the Will, meaning your attorney needs to show up in Court. Both options incur costs.

Lastly, the Executor may have to put the beneficiary’s consulate on Notice that funds are being transferred to the beneficiary so that the country may tax them. While taxes cannot always be avoided, this step does incur additional expenses.

If any of these situations apply to your family the answer seems clear: Transfer your assets by a Trust instead of a Will.

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