Estate Planning Strategies for Retiring Abroad

by ACTEC Fellows Lyat Eyal and Natalie M. Perry

Interested in retiring abroad? Learn what estate planning information to keep in mind when moving overseas, such as if your will or trust will be valid in another country, guardianship considerations when moving with minor children, and special tax considerations and laws. ACTEC Fellows Lyat Eyal from Israel and Natalie M. Perry of Chicago offers an overview for international moves.

transcript

Hi, I’m Natalie Perry, an ACETC Fellow from Wheaton, Illinois. 

Hi, I’m Lyat Eyal, an ACTEC Fellow from Israel and admitted to practice law also in New York.

We’re here today to talk about estate planning when clients live either permanently or temporarily overseas. Sometimes people retire overseas and they might have a perfectly good estate plan in the US. If I have a client who moves to Israel and they’ve done a will or a trust here in Illinois, what do they need to do when they go to Israel?

So, it depends on where they moved to in the world. Every country has its own laws and it’s very important to get advice in the country that you move to in connection with your will or your trust to make sure that they’re valid in those countries. Some countries in the world, civil law countries, don’t even recognize trusts. So that trust that you have in the United States is not going to be valid in those countries. In Israel, the US will will be accepted but it probably makes sense to go through a process of reviewing that US plan and maybe turning it around — so having it from the Israeli perspective rather than from the US perspective.

Okay. What if they are temporarily overseas, and say they have minor children and they want to name a guardian in the United States or a trustee in the United States. What do they have to think about?

So, guardianship provisions would usually be included in somebody’s will; and if they are to come into effect and both spouses pass away, it becomes a little bit difficult if that guardian is not a resident of that country because it would mean that those minor children have to be moved back to the United States. In many countries, it’s a court procedure, and a determination has to be made whether to move the children back to the US rather than keep them in the country where they live.

What if they retire overseas but they still have assets in the United States? How does that change the planning? 

In most cases, it makes sense to have two separate plans — one from the US perspective and one from the other country’s perspective. I would say from an Israeli perspective that’s in many cases the case, but it depends on the countries that they live in. They should get advice in each relevant country in order to see what the suggestion is as to their plan.

Okay. And are there any special tax considerations depending on the size of their estate when you have assets in both countries?

So, to start off, it depends on whether the country imposes estate taxes. Israel, for example, doesn’t and therefore, the tax aspects of estate planning are more or less irrelevant; but you have to review the tax laws in the country that you moved to. Israel, for example, is unique in that respect because not on the estate tax front but on the income tax front, people who immigrate to the country enjoy ten years of non-reporting, non-tax payments, on all of their foreign source income; and therefore, it’s very unique to the country. I know that the UK has rules that are similar, but you have to get advice in the relevant country that you move to.

Well, it sounds like it’s complicated and they definitely need to get counsel.

Correct.

Thank you for your time today.

Thank you very much.