If you own property in another country and you are a U.S. citizen or lawful permanent resident (Greencard holder), you have to be aware of tax and other adverse consequences of not only owning that property, but transferring it into a Living Trust.
If you have a Revocable Living Trust, also referred to as an intervivos trust because you set it up during your lifetime, and transferred the property into your trust, you must be careful about doing so without the advice of legal counsel. Certain countries will charge a stamp duty or cause income taxation to be due in that country. Canada will cause income tax to be due on any Canadian property transferred to a U.S. Revocable Living Trust.
The Bahamas charges a stamp duty, which is a tax that is levied on documents, which includes the majority of legal documents such as checks, receipts, military commissions, marriage licenses and land transactions. The Bahamas will allow an asset to be transferred by testamentary trust, which is often seen in a Last Will and Testament.
France and Louisiana have “forced heirship” laws that state that a person cannot dispose of property at death and exclude certain family members or favor certain family members by providing larger shares. The estate is divided into two separate estates, one that goes to next of kin and one that can be distributed according to the decedent’s wishes.
If you are not a U.S. Citizen or Lawful Permanent Resident, determining whether an asset you own is located within the U.S. can be harder than it seems. Certain non-real property assets, such as life insurance and bank deposits, although made with a U.S. bank, are not considered U.S. situs property. Also, if you are not a U.S. citizen or Lawful Permanent Resident, you may be subject to U.S. income taxation.
Making sure your attorney is familiar with or willing to seek out an attorney in that particular country or jurisdiction to assist with estate planning is crucial to the success of your plan and the avoidance of adverse consequences.
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