Estate Planning for Dual Citizens

About Estate Planning for Dual Citizens in the U.S.

Dual citizens and their families face a unique challenge when they live abroad and maintain assets within the United States, such as brokerage accounts, Retirement Accounts, Real Estate etc. Even if the dual citizen has a Will, upon the death of the dual citizen, the surviving family members must probate the Will in the United States – an expensive and lengthy process – in order to gain access to the US based assets. This is further complicated when the surviving family members are unfamiliar with US financial institutions, the US legal system and are not physically present for the Probate Process.

US based Brokerage Accounts/ Retirement Accounts and Bank Accounts:

If a dual citizen passes away in a foreign country, the US Financial Institution will freeze the account until the surviving family members obtains IRS transfer certificate Form 5173. In recent years the process to obtain this transfer certificate has taken months, not weeks. This delay has caused an undue burden on family members who need the funds to pay taxes, bills, funeral home arrangements and other expenses.

US based Real Estate

If the dual citizen passes away owning US real property in their individual name, the property becomes part of the his or her estate. The surviving family members will have to go through Probate process in order to appoint a fiduciary to transfer/sell the real property. Furthermore, the real property may be subject to an automatic estate tax lien.

We help our clients avoid these burdensome issues by creating a Revocable Living Trust.

Revocable Living Trust

A Revocable Living Trust is an estate planning vehicle that is widely used to avoid Probate. During the Grantor’s lifetime assets are placed in the name of the Trust. Since the Trust is revocable and amendable during the Grantor’s lifetime, the Grantor has complete control over the Trust assets. Furthermore, no additional tax reporting is required, as the income generated from trust assets are reported on the Grantor’s individual tax return.

Upon the Grantor’s death, the assets pass pursuant to the Trust provisions. This function similar to a Will. When drafting the Trust, the Grantor can dictate whether the Trust assets should be paid outright to their surviving family members or be held in further Trust until the beneficiaries reach an age that they stipulate. Since the Trust holds the assets, and not the dual citizen, there is no need for the surviving family members to go through the Probate Process or obtain IRS transfer certificate Form 5173.

If you would like to discuss how a Revocable Living Trust can help you and your family to avoid probate, gain access to your US assets without court or IRS interference, book a call with the Law Firm of Benjamin D. Eckman.