Texas and Arkansas have always been diverse states, with different regions having their own distinct cultures, quirks, and communities. Today, this trend remains on the rise, with more immigrants coming into the Texarkana area and more Americans electing to invest in and purchase property abroad. In an increasingly connected world, mobility matters, both in terms of new opportunities and, potentially, unexpected challenges.
If you live in Southwest Arkansas or Northeast Texas and own foreign property, you may well assume that your Estate Plan protects your interests, no matter where they be. And, more often than not, you’d be right—provided, of course, that you’ve done the legwork to ensure that your Estate Plan includes the language and changes necessary to accommodate the complex reality of international Estate Planning.
At Ross & Shoalmire, our experienced team of Estate Planning Lawyers knows what it takes to keep assets safe and sound, at home and overseas. If you have questions about making your Estate Plan international, we’re ready to help.
Foreign Property in a Texarkana Estate Plan
Every state has its own laws detailing who has the right to make decisions about their estate.
As a general rule, throughout the country, most people over the age of 18 are entitled to write a will, establish a trust, and condition inheritances. Exceptions exist, particularly for those who, because of incapacity or cognitive decline, are no longer capable of understanding how their choices could affect their property and their loved ones.
However, this general rule can’t always be applied to other countries.
Instead, if you have executed an Estate Plan in Texas or Arkansas, its ability to protect your international interests is very much dependent on the laws of the country in which your property is held. This could make your life easier—or, in some places, all the more difficult.
Many European countries, for instance, have special agreements with the United States. A good example is the Hague Convention of 1961, which formalized will-related rules across dozens of countries. Of course, countries in other parts of the world have their own rules—and these rules are a common cause of Estate Planning crises.
5 Big Reasons You Should Never Cut Corners on an International Estate Plan
If you didn’t know you’d have to jump through a dozen hoops and cut through a mile of red tape to keep your Estate Plan valid, it could leave your loved ones without a way to receive the inheritance you’d have wanted them to have. Here are five of the biggest reasons you should never cut corners when it comes to international estate planning and foreign property:
1. Your Inheritance Decisions Might Not Be Valid in Another Country
In the United States, the simplest way to keep your assets safe from the threat of an intestate succession is by executing a last will and testament. Your will lets you do many things, including, but not limited to, the following:
- Designate heirs
- Determine the distribution of your estate assets
- Nominate a guardian for your minor children
You may be able to use your current will to direct probate abroad, but fine print can cause big problems. In some countries, like Mexico and India, non-citizens cannot always inherit or own certain types of property. Others also impose special requirements on guardians, adoptions, and custody transfers, which could leave a child or vulnerable family member without support.
2. Probate Can Quickly Become Complicated
If you live in Southwest Arkansas or Northeast Texas, you probably already know that Texarkana is split down the middle between both states. People who own assets in Texas and Arkansas must often initiate probate claims in each state. Sometimes probate proceedings are just a formality—your executor goes to court, validates your will, and is free to distribute your estate assets under the laws of your state of residence. In other cases, your family will be required to go through full probate in both states.
A similar principle applies to foreign property—except, instead of driving across State Line Avenue, your executor may have to travel internationally and spend weeks trying to find a foreign Estate Planning Lawyer who knows how local law interacts with the American legal system.
3. Different Countries Have Different Rules for Trusts
If you own multiple properties, control complex assets, or simply wish to keep your estate out of probate, a trust could help you structure inheritances while minimizing a variety of succession-related risks. However, as with wills, not every country recognizes trusts established in the United States, even if they were executed in accordance with local law. For instance, some foreign states require that a citizen of that country serve as a trustee, necessitating collaboration with a local lawyer or trusted partner.
4. Your Estate Could Be on the Hook for Double Taxation
Cross-border inheritances can cause a real mess when it comes to taxes, particularly if the other country doesn’t have a taxation agreement with the United States. Depending on the size, value, and complexity of your estate, your estate could be liable for:
- Federal estate tax in the United States
- Estate tax in another country outside the United States
- Income taxes for estate or trust assets that generate profits
- State-level inheritance taxes, if you hold property in another state, like New York
- Any creditor claims or money judgments against you, your business, or your estate
Furthermore, even if a taxation agreement is in place, your executor and overseas attorney may have to file different types of returns in both countries—even if your estate doesn’t end up owing money in one or the other.
5. Transferring Liquid Assets Is Sometimes Easier Said than Done
If you live in the United States, you can typically transfer or remit money to family living abroad without opening a special bank account or verifying your identity with the federal government. This isn’t always the case in other countries, especially when your Estate Plan involves moving liquid assets from a foreign state back to heirs in your home state.
A good example of this principle at work is India, which has a “restricted currency.” Like Nigeria, Argentina, and Russia, India doesn’t let anyone—not even citizens—transfer large amounts of money abroad without first going through a lot of red tape. This problem can be solved in India by opening a joint NRO account, but different jurisdictions require different solutions.
Critically, these kinds of processes should always be completed before you pass away. If your Estate Plan is incomplete, heirs who aren’t residents or citizens of the foreign country may be unable to send, receive, or transfer inherited money without traveling cross-country for multiple embassy appointments.
How Our Texarkana Estate Planning Lawyers Could Help You Make International Estate Planning Easy
If your Estate Plan deals with assets in different states or countries, you can’t afford to overlook the many differences between each legal system. Even if you don’t think your Estate Plan is complex, it must still be tailored to the laws, rules, and expectations of courts in different jurisdictions. If you make a mistake, no matter how minor, it could cost your estate money and detract from your heirs’ inheritances.
Since the structure of an international Estate Plan depends on a combination of local law, the complexity of your assets, and potential liabilities, there isn’t a one-size-fits-all solution. However, you don’t have to take chances with your legacy. The law firm of Ross & Shoalmire has spent years helping people on both sides of the Texas-Arkansas border protect their assets and secure peace of mind. We could help you, too, whether that means drafting a brand-new estate plan or touching base with an expert overseas to ensure succession stays simple.
