How Offshore Accounts and Real Estate Factor Into Your Estate Plan

Holding wealth in an offshore account is often perceived as an illicit practice meant to hide money or avoid taxes. This is a common misconception as a high number of individuals hold offshore bank accounts for a variety of legitimate, legal reasons.

Many hold financial interests abroad or seek to diversify their wealth through various currencies. But, how do these accounts and assets transfer to beneficiaries at your time of death or incapacitation? Offshore accounts require a particular level of care and attention in your estate plan in order to protect the assets and avoid certain taxes and penalties that otherwise diminish the value of your estate.

Documentation is Key

Before delving into strategies for managing offshore bank accounts in estate planning, it’s critical to emphasize the importance of thorough documentation. Executors of your estate, particularly those based solely in the United States, lack the responsibility or authority to access offshore accounts. This creates the risk of losing those assets entirely when you die.

Regular documentation of your offshore assets and providing detailed access information to trusted individuals are crucial. Designating someone with residency or citizenship in the country of the account as a trustee or co-owner can mitigate the risk of asset loss.

Know Foreign Laws (Or Hire Someone Who Does)

Each country has its own set of regulations governing offshore accounts (or, in the case of the country in question, accounts held within their territories). It’s essential to understand and comply with these laws or hire a trustee or financial advisor who does.

Questions such as the country’s policies on U.S. citizens accessing and inheriting non-U.S. accounts, the validity of a Power of Attorney over these assets, and the recognition of survivorship clauses need to be addressed. Understanding these regulations is a crucial step in ensuring the protection and advancement of offshore accounts in your estate plan, particularly in countries with more stringent privacy laws surrounding financial institutions than what you’re used to here.

Offshore Real Estate

If you own real estate in another country, it’s important to know how this is governed within your estate plan. These investments are handled by the laws of that country which means your U.S.-based estate plan does not help unless you are eligible to sign an international will.

An international will allows your estate to manage international properties as long as the country is part of the Washington Convention. This convention is part of an effort to standardize the requirements for a will that is legally valid and accepted between countries. It’s important to work with your attorney to review the necessary laws in California and in the country in question to protect your offshore real estate investments.

Rely on Experienced Tax and Estate Planning Attorneys 

Despite the advantages of Revocable Living Trusts in the U.S., they may not apply to your real estate or offshore accounts in foreign countries – but you may still have options (for example, with an international will). Furthermore, the taxation of those assets can be tricky dring your life.On top of that, these accounts still need to be included in the total estate tax calculation in the United States. It’s vital to understand the structure and tax implications within your estate plan when dealing with foreign accounts and real estate. The team at Dahl Law Group is well-equipped to offer legal guidance in planning and safeguarding your offshore accounts. For personalized advice and legal support in managing your offshore accounts within your estate plan, contact the Dahl Law Group.

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Dahl Law Group

At Dahl Law Group, we’re not just a law firm. We’re your trusted advisor for your business and family from beginning to end. As your family and business grow, we will be there by your side. Our passion is providing you with peace of mind and protection through personalized estate and business planning.

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