Question:

I am a US citizen, living in California. I am planning to return back to the Czech Republic, where my son lives. He is a non US citizen. My assets are my savings account, CDs, my pension, Social Security, and 401k investments at work. I do not have any real estate. How do I make sure my son inherits my assets? What taxes he will have to pay? I was told at the bank that my beneficiary can be only a US citizen. Does it mean my son cannot inherit my savings?

Response:

Legally, you can leave anything and everything to your son no matter where he lives and whatever his citizenship may be. That is, everything except for your Social Security, which will end at your death. However, the bank may have its own rules, especially with respect to naming your son as a beneficiary to any accounts at the bank. For this reason and to avoid other potential complications, you may be best off using a revocable trust, naming a U.S. resident as the trustee. This may also be useful for you with respect to any assets you do not move to the Czech Republic when you return there. You will be able to transfer all your savings and investments other than your 401(k) plan into the trust. For retirement plans, you can name the trust as beneficiary.

There should be no taxes for your son other than income taxes for withdrawals from the 401(k) investments, which apply to anyone.

Even if you do use a trust, it’s best to check with your bank and other financial institutions to confirm their rules. They each treat foreign owners and trusts a bit differently. And, to make matters worse, they can always change their policies after the fact.

 

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