How Can I Leave My Estate to My Non-Citizen Sibling Who Lives Overseas?
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Question:
I am a American citizen and want to leave my house/money in bank/stock and life insurance benefits to a sibling in another country. Who would I talk to get this process started? A lawyer? I have a close friend in U.S. I don’t understand the term “Trustee” – is it more like a person/close friend to hep my money and all remaining financial asset to transfer to my sibling.
Response:
It seems like you have three separate questions. I’ll try to respond to each in turn.,
First, in terms of leaving your property to your sibling who lives outside the United States, this is really no different from leaving assets to someone in the United States. You can simply name your sibling in your will, your trust, or as beneficiary of any of your retirement accounts or investment accounts that permit the naming of a beneficiary. It can, however, be a bit more difficult for people outside the United States to gain access to accounts after your death due to communication and language challenges and because some financial institutions are skittish about dealing with people overseas due to various anti-terrorism laws in the United States. So it would make sense to name your close friend as executor or trustee, which I’ll discuss a bit more below.
Second, I would recommend consulting with an estate planning lawyer to help set everything up. You don’t say whether you yourself are in or outside of the United States, but I assume you have property, whether real estate or accounts, in the United States. So, I would recommend using an American attorney. There are a number of ways to find a qualified attorney. I always recommend starting by asking around to people you know, whether friends, relatives, or trusted advisors, such as other attorneys, accountants, or financial planners. Such people will have had experience working with lawyers and know who to recommend. Otherwise, a good place to look is the American College of Trusts and Estate Counsel (ACTEC).
Third, I would recommend naming your friend as personal representative or executor of your will and as your agent under a durable power of attorney. It may also make sense to set up a trust and name him or her as your co-trustee. A trust is a separate financial entity that can be used to avoid probate and manage your assets, whether during your life if you become incapacitated or after your death for the benefit of your sibling. You can read more about trusts in my new book, The Baby Boomers Guide to Trusts: Your All-Purpose Estate Planning Tool.
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I have a $500k life insurance. I married a woman in India. I want to set up a trust with Schwab to invest in offshore companys and wire my wife a capped amount of money per month. Is this a good idea?
Chris,
Yes. A trust is an excellent solution for many estate planning situations and especially when a beneficiary is overseas. Many investment firms impose restrictions on non-U.S. account owners or beneficiaries, so it’s always good to have a U.S.-based trustee.
Harry
Hi, I live in Houston Texas. I am from the Caribbean. All my family is still in the Caribbean. Is it best for me to do a revocable living trust to put my house in so I can leave it to my brother? I have one brother and his two son that I want to leave everything to in case something should happen. I just don’t know where to start.
Roshanee,
Either a will or trust will work to pass your house to your brother and his two sons. In either case, the process will work more smoothly if you name someone in the United States to act as your personal representative in the case of your will (also known as executor or executrix) or as your successor trustee in the case of a trust.
The advantage of using a trust over a will is that your estate will not have to be probated at your death. This can save time and money. But to make it work, you need to make sure that all your assets, including your home and any bank or investment accounts you may have, are retitled into the name of the trust.
While your brother could be your successor trustee with respect to your home, many financial institutions – Fidelity Investments being a case in point – restrict trading unless all trustees are U.S. residents. In fact, this may not be a big problem if your brother’s only role upon your death is to liquidate and distribute the holdings. But it would be problematic if you wanted him to serve as co-trustee with you or as your successor trustee during your life in the event of your incapacity.
Again, your brother could serve as your personal representative in your will even though he is not a U.S. citizen or U.S. resident. He would know doubt hire a probate attorney to do most of the work. But it would still be more cumbersome because there are activities that are more easily accomplished in person, whether adding names to bank and investment accounts or signing papers at a closing on the sale of real estate. For the latter, signatures typically need to be notarized which can be difficult to accomplish outside of the United States.
In short, either a will or a trust will work. A trust will make the process more efficient for your brother (or his sons if he does not survive you), but means more work for you now in terms of retitling your house and your various accounts. The trust can provide other benefits, such as management of your affairs in the event of your incapacity. In either case, the process will run more smoothly if you name a U.S. resident as your personal representative or trustee.
Harry