Most individuals look forward to retirement for many years. The chance to enjoy the hard work you have put forth throughout your lifetime is appealing, and being able to do so without being tied down by work or other responsibilities often sweetens the potential possibilities that await you in retirement. For some people, retiring abroad is one of their life goals. Maybe they visited a place they simply fell in love with or maybe they want to take advantage of more favorable economic situations that can exist for some individuals in other countries. Whatever the reason for desiring a retirement abroad, there are some important estate planning considerations to keep in mind.
Double Taxation
If you remain a United States citizen, you will still be subject to U.S. taxes. That means you need to be aware of the tax policy in any country you might be considering retiring in outside of the United States. If the country you want to retire to will also impose taxes on you, you may end up paying double the taxes on your income and potentially on your assets. This can significantly reduce the size of your estate, in turn hindering your ability to leave as much of your assets as possible to your heirs. While you can renounce your U.S. citizenship, doing so carries a wide range of consequences. It may become more difficult to visit loved ones in the United States, and you may even be subject to the U.S. expatriation tax.
Unfamiliar Rules Governing Inheritances
If you are retiring abroad, you will need to consider whether or not U.S. law will still govern the terms of your Will. The inheritance rules of individual countries can vary widely, with such variances and nuances having a significant impact on the terms of your Will. For instance, some countries require certain superiority rights when it comes to your beneficiaries. This could result in your children receiving a larger portion of your assets than your spouse, or even in one child predominantly receiving the bulk of your inheritance because of such rules. Consulting with an experienced U.S. estate planning attorney can help you understand U.S. rules governing this type of scenario and might be able to help you find legal resources in the country you are considering to map out an estate planning strategy that takes their laws into consideration.
Real Estate Concerns
The U.S. has some hurdles to real property ownership that foreign nationals must endure in order to acquire real estate in the United States. Similarly, many foreign countries have similar restrictions on foreign nationals owning real estate in those countries. Some countries heavily regulate their real estate market, even prohibiting foreign nationals from owning property or potentially restricting the locations where foreign nationals can own property. This is an important consideration if you are planning on leaving real property investments abroad to your heirs, whether you are considering retiring abroad or simply acquiring additional property abroad.