Recently, the world was stunned when the United Kingdom voted narrowly to leave the European Union. This exit of Britain, often called “Brexit”, could have many consequences, mainly in Europe, but some in the United States, as well.
- E.U. nationals may need to leave the U.K.
- U.K. nationals may need to leave E.U. countries
- Goods might no longer flow freely between the U.K. and E.U. countries
As a result, there is likely to be increased movement of Americans and nationals of the U.K. and the E.U.
For example, businesses which had located European operations in London might move in order to ensure access to E.U. markets. As a result, Americans who had been in the U.K. may move home. Some of these people may have property in the U.K. or elsewhere.
It’s difficult to foresee all the implications. But, a review of some concepts of international estate planning might be helpful:
- Never put non-U.S. assets-situs assets into a U.S. trust without consulting with an attorney in that jurisdiction
- Non-U.S. citizens living in the U.S. get a full $5.45 million exclusion
- But, they are estate taxed on worldwide assets
- Non-U.S. citizens living outside the U.S. get an exclusion of only $60,000
- But they are estate taxed only on assets within the U.S.
- There is no marital deduction with a non-citizen spouse, even if a resident
- Unless a Qualified Domestic Trust is used
- But, can leave the exclusion amount to anyone, even a non-citizen spouse without a QDOT
- A lifetime gift to a non-citizen spouse can qualify for an annual gift tax exclusion of up to $148,000 in 2016
There are many other nuances to international estate planning. For Academy members, I will be hosting a Classroom Conference Call in July on this timely topic.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
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