Cross-Border Estate Planning: International Asset Considerations for Probate Attorneys

The Growing Complexity of International Estates

Roughly 44.9 million foreign-born individuals resided in the United States as of 2023, per the Migration Policy Institute — many with property, bank accounts, and business interests back home. International estate planning has moved from niche specialty to routine probate work, and you're going to see it.

Globalization, immigration, cross-border investment, and the ease of buying foreign real estate mean a growing share of decedents — particularly in metro areas like New York and Los Angeles — own assets in multiple countries. Millions of U.S. citizens also hold vacation properties, investment accounts, or business interests abroad.

For the probate attorney, international assets introduce a layer of complexity that domestic-only estates do not present. Which jurisdiction’s law governs the disposition of the asset?

Which country has the right to tax it? Are there forced heirship rules that override the decedent’s testamentary wishes?

Is ancillary probate required, and if so, what are the procedural requirements in the foreign jurisdiction? These questions require not just domestic expertise but familiarity with conflict-of-laws principles, bilateral tax treaties, and the estate planning frameworks of other countries.

This article provides a practitioner’s framework for identifying and addressing international asset issues in estate planning and probate. It is not a substitute for consultation with foreign counsel—which is almost always necessary for significant cross-border matters—but it will equip you to spot the issues, advise your client on the governing rules, and coordinate effectively with international counterparts.

Domicile vs. Situs: The Jurisdictional Framework

The threshold question in any international estate matter is jurisdictional: which country’s law governs the disposition of a particular asset? The answer depends on the distinction between domicile (the decedent’s permanent home) and situs (the physical location of the asset). Under both U.S. domestic law and most international frameworks, the law of the decedent’s domicile governs the disposition of personal property (bank accounts, securities, tangible personal property), while the law of the situs governs the disposition of real property.

This bifurcation creates immediate planning challenges. A U.S. citizen domiciled in California who owns a villa in France will have their California assets governed by California probate law and their French property governed by French succession law.

France imposes forced heirship rules (réserve héréditaire) that assure children a minimum share of the estate, potentially overriding the testamentary provisions of the California will. The European Union’s Succession Regulation (EU 650/2012) allows the testator to choose the law of their nationality to govern their entire estate, but this election must be made explicitly and does not automatically apply.

For U.S. attorneys, domicile determination is critical because the United States imposes estate tax on the worldwide assets of citizens and domiciliaries. A foreign national who dies domiciled in the U.S. is subject to the same estate tax regime as a citizen, including the unified credit (currently $13.61 million).

A foreign national who dies domiciled abroad is subject to U.S. estate tax only on U.S.-situs assets, with a much smaller credit of only $60,000 absent treaty relief. The distinction between domicile and residence can turn on subjective factors—the decedent’s intent to make a particular place their permanent home—making it a frequent area of dispute between taxpayers and the IRS.

U.S. Estate Tax Treaties and Their Impact

The United States has estate and gift tax treaties with approximately 16 countries, including the United Kingdom, Germany, Japan, France, Australia, Canada, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, Norway, South Africa, Sweden, and Switzerland. These treaties can dramatically alter the estate tax outcome for cross-border estates by modifying the situs rules, providing enhanced credits, and resolving double taxation issues. The full text of these treaties is available through the IRS treaty database.

The U.S.-UK Estate Tax Treaty, for example, provides that a citizen or domiciliary of one country who holds assets in the other country can credit the estate tax paid to the situs country against the tax owed to the domiciliary country, effectively eliminating double taxation. The treaty also modifies the situs rules for certain types of property: for example, shares of a UK company held by a U.S. decedent may be treated as U.S.-situs property for treaty purposes even though their situs under domestic law would be in the UK.

For countries without an estate tax treaty—which includes most of the world—the risk of double taxation is real. A U.S. citizen who dies owning real property in Brazil, for example, may face both U.S. estate tax on the property (as part of the worldwide estate) and Brazilian succession tax on the same property (as Brazilian-situs real estate).

The U.S. allows a credit under IRC §2014 for estate taxes paid to foreign countries, but this credit is subject to complex limitations and may not fully offset the foreign tax. Strategic planning—including the use of foreign or domestic trusts, LLCs, or other entities—can mitigate this exposure, though each approach carries its own tax and compliance implications.

Forced Heirship and Civil Law Succession Regimes

One of the most significant differences between U.S. and foreign succession law is the concept of forced heirship. In common law jurisdictions like the United States (with the exception of Louisiana), a testator generally has the freedom to dispose of their estate as they wish, subject to spousal elective share rights. In most civil law jurisdictions—including France, Germany, Italy, Spain, Japan, and much of Latin America—the law reserves a mandatory portion of the estate for certain heirs, typically children and the surviving spouse, regardless of the testator’s wishes.

French law, for example, provides that one child is entitled to at least one-half of the estate, two children to at least two-thirds, and three or more children to at least three-quarters (Code Civil, Articles 913–913-1). The testator may freely dispose only of the unreserved portion (quotité disponible). A will that purports to disinherit a child or leave the entire estate to a non-family member will be partially overridden by the forced heirship rules as applied to French-situs assets.

For U.S. practitioners, the practical implication is that a client’s domestic estate plan may not be fully effective for assets located in forced heirship jurisdictions. The solution typically involves one of three strategies: restructuring ownership to remove assets from the forced heirship jurisdiction (e.g., holding foreign real estate through a U.S. LLC), making an explicit choice-of-law election where available (as permitted under EU Regulation 650/2012 for EU-situs assets), or drafting the estate plan to accommodate the forced heirship rules.

Each approach has trade-offs, and coordination with foreign counsel is essential. For guidance on managing assets across multiple U.S. jurisdictions, see our article on ancillary probate in multistate estates.

FATCA, FBAR, and International Reporting Obligations

The administration of an estate with foreign assets triggers a range of reporting obligations that many probate attorneys overlook, sometimes with devastating consequences. The Foreign Account Tax Compliance Act (FATCA) requires U.S. persons (including estates and trusts) to report specified foreign financial assets if their aggregate value exceeds certain thresholds.

For estates, the threshold is $50,000 at the end of the tax year or $75,000 at any time during the year. The report is filed on IRS Form 8938, attached to the estate’s income tax return (Form 1041).

Separately, the Bank Secrecy Act requires any U.S. person with a financial interest in or signature authority over foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year to file a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114. The personal representative of an estate steps into the decedent’s reporting shoes and must file FBARs for any year in which the decedent had reportable accounts, as well as for any year in which the estate itself holds such accounts.

The penalties for non-compliance with FATCA and FBAR are severe. Willful FBAR violations carry penalties up to the greater of $100,000 or 50% of the account balance per violation.

Even non-willful violations can result in penalties of up to $10,000 per account per year. The IRS has access to foreign account information through information-exchange agreements with over 100 countries and through FATCA reporting by foreign financial institutions.

The IRS international tax page provides current guidance on these reporting requirements. Failure to advise your client of these obligations is a malpractice risk that probate attorneys handling international assets cannot afford to ignore.

International Trust Structures and Entity Planning

Trusts present unique challenges in the international context because many civil law countries do not recognize trusts as legal entities. While the Hague Convention on the Law Applicable to Trusts (1985) provides a framework for the recognition of trusts across signatory nations, many important jurisdictions—including France, Germany, and Japan—have not ratified or implemented the Convention. An irrevocable trust established under U.S. law to hold French real estate may not be recognized by French courts, potentially resulting in the trust being disregarded for French succession and tax purposes.

Alternative structures include foreign holding entities (such as a Société Civile Immobilière in France or a GmbH in Germany), U.S. LLCs or corporations used to hold foreign real estate, and bilateral planning that coordinates the domestic estate plan with a separate testamentary disposition governed by foreign law. Each structure has distinct tax, liability, and succession law implications. For example, holding French real estate through a U.S. LLC may avoid French forced heirship rules but could trigger adverse French tax consequences, including a 3% annual tax on the fair market value of the property if the LLC does not disclose its shareholders.

The decision to use trusts, entities, or a combination of both must be made in coordination with qualified counsel in each relevant jurisdiction. U.S. tax counsel must analyze the entity classification under the check-the-box regulations (Treas. Reg. §301.7701-3), the CFC or PFIC implications if a foreign entity is used, and the impact on the decedent’s U.S. estate tax return. Foreign counsel must confirm that the structure is respected under local law and does not create adverse local tax or succession consequences. For guidance on domestic trust strategies that may complement international planning, see our article on irrevocable trusts and asset protection.

Dual-Track Probate: Domestic and Ancillary Proceedings

When a decedent dies owning real property or other situs-specific assets in a foreign country, it is typically necessary to conduct probate or succession proceedings in both the domiciliary jurisdiction and the situs jurisdiction. This dual-track process requires coordination between domestic and foreign counsel on timing, documentation, and distribution.

The domestic proceeding typically addresses the decedent’s movable property worldwide and serves as the primary probate. The foreign proceeding addresses the immovable property (and sometimes movable property) located in that country.

The procedural requirements for foreign probate vary enormously by country. Some countries (like the United Kingdom and Canada) have probate systems similar to the U.S. and will generally recognize a U.S. will or grant of probate.

Others (like France, Germany, and Japan) require compliance with local formality requirements and may not recognize a U.S. will that does not meet local form requirements. A U.S. will that is perfectly valid under the Uniform Probate Code may be rejected in a French court if it does not comply with French formal requirements for testamentary dispositions.

Practical tips for managing dual-track proceedings include: obtain multiple certified copies of the death certificate (with apostille certification under the Hague Apostille Convention), have the will translated into the language of the foreign jurisdiction by a certified translator, engage foreign counsel early in the process (before filing the domestic petition if possible), and coordinate the timing of distributions to ensure that all creditor claims in both jurisdictions are resolved before assets are distributed. For domestic multistate considerations, see our article on estate tax planning in multistate environments. State-specific probate timelines differ significantly—compare New York with Florida for example.

Working with Foreign Counsel and Practical Considerations

Effective cross-border estate administration depends on building a reliable network of foreign counsel. When selecting foreign counterparts, look for attorneys who have experience working with U.S. clients and understand the interaction between their local law and U.S. tax and estate law. Professional organizations like the International Academy of Estate and Trust Law (IAETL), the Society of Trust and Estate Practitioners (STEP), and the International Bar Association’s Private Client Tax Committee maintain directories of qualified practitioners worldwide.

Communication with foreign counsel requires patience and cultural sensitivity. Legal concepts that are fundamental in the U.S.—such as the personal representative’s fiduciary duty, the probate court’s supervisory jurisdiction, and the distinction between legal and equitable ownership—may have no direct equivalent in civil law systems.

Take the time to explain the U.S. framework to your foreign counterpart and ask them to do the same. A shared understanding of both systems is essential for coordinating an effective administration.

Finally, manage your client’s expectations regarding cost and timeline. Cross-border estate administration is inherently more expensive and time-consuming than domestic administration.

Foreign counsel fees, translation costs, apostille certifications, international courier charges, and the delays associated with coordinating across time zones and legal systems can add $10,000–$50,000 or more to the cost of administration, depending on the jurisdiction and the complexity of the foreign assets. Disclose these anticipated costs in your engagement letter and budget for them at the outset of the representation. For guidance on structuring your engagement letter to address international matters, see our article on fee agreements in probate practice.