Estate Planning When Family or Assets Are Outside the United States

Many of our clients have ties to more than one country. Maybe your parents live abroad, your spouse is not a U.S. citizen, you own property overseas, or you want a sibling in another country to serve as guardian for your children.

International connections create real planning challenges — but they don't have to be overwhelming. This guide covers the most common questions we hear and how we solve them.

Quick Answers to Common International Estate Planning Questions

Can I include foreign property in my U.S. trust?

You can reference it, but a U.S. trust usually cannot directly control property in another country. You will likely need a local will or legal arrangement in that country to transfer the property at death.

Can someone who lives outside the U.S. be my trustee?

Yes, but there are practical and tax complications. We typically recommend naming a U.S.-based professional fiduciary as a backup and using a trust protector structure to manage transitions.

Can a family member abroad be the guardian of my children?

You can nominate them, but the U.S. court must approve the appointment. We include temporary guardian provisions and power of attorney documents so someone local can care for your children immediately while the permanent guardian travels to the U.S. or arranges for the children to relocate.

What if my spouse is not a U.S. citizen?

The unlimited marital deduction does not apply to non-citizen spouses. That means estate taxes could be triggered at the first death. A QDOT (Qualified Domestic Trust) or other planning strategies may be needed.

Do I need a separate estate plan in each country?

It depends on what assets you hold and where. If you own real property abroad, you likely need a local will or legal structure in that country. We coordinate with local counsel when needed.

Does the U.S. tax my worldwide assets?

If you are a U.S. citizen or domiciliary, the answer is yes — the U.S. estate tax applies to your worldwide assets, not just what you own in the United States.

What if I'm not a U.S. citizen but I live here?

If you are domiciled in the U.S. (meaning you intend to live here permanently), you are generally treated the same as a U.S. citizen for estate tax purposes. If you are not domiciled here, only your U.S.-situs assets are subject to estate tax — and the exemption is much lower (around $60,000).

1. Property Located in a Foreign Country

If you own real estate, bank accounts, or other assets in another country, those assets are generally governed by that country's laws at death — not U.S. law.

Your U.S. trust can reference foreign property and express your wishes, but it typically cannot override the inheritance laws or transfer procedures of the country where the property is located.

For this reason, we often recommend:

A local will in the country where the property is located — drafted to work alongside (and not conflict with) your U.S. estate plan
Coordination between your U.S. and foreign counsel — to make sure the two plans don't accidentally revoke each other or create conflicting instructions
Documenting the foreign property in your U.S. plan — so your trustee knows about it and can coordinate with local representatives after your passing

Common mistake: Clients sometimes assume their U.S. trust covers everything. It doesn't. If you own property in another country, you should confirm whether a separate local will or legal structure is required.

2. Trustees Who Live Abroad

Naming a trustee who lives outside the United States is legally permitted — but it creates both practical and tax issues that need to be managed carefully.

Practical Considerations

U.S. financial institutions may refuse to work with foreign trustees. Banks and brokerage firms often require a U.S.-based individual or entity to manage accounts. A foreign trustee may not be able to open accounts, sign documents, or transfer assets.
Court filings and legal proceedings require a U.S. presence. If a dispute arises or a court filing is needed, a foreign trustee may not be able to appear or respond in a timely manner.
Day-to-day administration is harder across borders. Time zones, mail delays, and differences in banking systems can slow down routine tasks like paying bills, managing investments, or distributing funds to beneficiaries.

Tax Considerations

If a trust has a foreign trustee, the IRS may classify it as a foreign trust — even if the trust was created in the U.S. and all beneficiaries are U.S. persons. Foreign trust status triggers additional reporting requirements and can create adverse tax consequences, including:

Annual filing of Form 3520 and Form 3520-A
Potential throwback tax on accumulated income
Interest charges on deferred distributions
Loss of favorable capital gains treatment

These consequences are significant and can be expensive. We generally recommend avoiding foreign trust status whenever possible.

Our Approach: Family Trust Protector + U.S. Professional Fiduciary

Instead of naming a foreign family member as trustee outright, we recommend a structure that keeps a U.S.-based professional fiduciary in the trustee role — while giving your family member meaningful oversight through a trust protector role.

The U.S. professional fiduciary handles the day-to-day administration, manages accounts, and satisfies all U.S. legal and tax requirements
Your family member serves as trust protector — with the power to remove and replace the professional fiduciary, direct distributions, and oversee key decisions
The trust stays classified as a U.S. domestic trust — avoiding the foreign trust rules entirely

This approach preserves the family connection and oversight your clients want — without the tax and administrative complications of naming a foreign trustee.

Foreign-Trust Savings Clauses

Even with careful planning, circumstances can change. A successor trustee might move abroad, or a family member might step into a role unexpectedly. To protect against this, we include aforeign-trust savings clause in every trust we draft for international families.

This clause automatically removes a trustee if their service would cause the trust to be classified as a foreign trust under IRS rules — and replaces them with a U.S.-based fiduciary. It acts as a safety net, ensuring your trust never accidentally triggers foreign trust status.

3. Guardians for Minor Children When Family Is Abroad

If the people you trust most to raise your children live in another country, you can still nominate them as guardians — but it takes more planning.

A U.S. court must approve any guardian appointment. If the nominated guardian lives abroad, the court will consider whether the appointment is in the child's best interest, which may include factors like stability, schooling, and the child's connection to the community.

To bridge the gap between your wishes and the court process, we include:

Temporary guardian nominations — A trusted person in the U.S. who can immediately step in to care for your children while the permanent guardian arranges travel or relocation
Power of attorney for minor children — Allows the temporary guardian to make medical, educational, and day-to-day decisions right away
Trust provisions for relocation expenses — If the permanent guardian needs to relocate to the U.S. or bring the children to their home country, the trust can cover travel, housing, and legal costs
Adoption support provisions — If the guardian needs to formally adopt the children (especially for international relocation), the trust can fund legal proceedings

We also recommend including a letter of intent that explains your reasoning to the court — especially if the guardian lives abroad. Courts are more likely to honor your wishes when they understand the relationship and the planning you've done.

4. Beneficiaries Who Live Outside the United States

Leaving money to someone who lives in another country is common — but there are a few things to consider:

Distributions to foreign beneficiaries are generally not subject to U.S. income tax withholding — but the beneficiary may owe taxes in their home country. We recommend they consult with a local tax advisor.
Wire transfers and international banking — The trustee may need to wire funds to a foreign bank account. Some U.S. financial institutions impose additional verification requirements for international transfers.
Currency considerations — Distributions are made in U.S. dollars. The beneficiary may need to convert funds and should be aware of exchange rate fluctuations.
Foreign trust reporting for the beneficiary — If the beneficiary receives distributions from a trust that is classified as a U.S. domestic trust, they generally do not have additional U.S. reporting obligations. However, if the trust is classified as a foreign trust, the beneficiary may have reporting requirements under their home country's laws.

5. Estate Tax When You or Your Spouse Are Connected to Another Country

Estate tax rules depend on citizenship, domicile, and the location of your assets. This section covers the three most common scenarios we see.

5.1 U.S. Domiciliaries (Citizens and Resident Non-Citizens)

If you are a U.S. citizen or a non-citizen who is domiciled in the United States, the federal estate tax applies to your worldwide assets — not just assets located in the U.S.

The current federal estate tax exemption is over $13 million per person (as of 2024, indexed for inflation)
Married couples can shelter over $26 million using portability
Domicile means the place where you intend to make your permanent home. It is not the same as residency or visa status. You can be a resident of the U.S. without being domiciled here — and vice versa.

5.2 QDOT Planning for Non-Citizen Spouses

If your spouse is not a U.S. citizen, the unlimited marital deduction — which normally allows spouses to leave unlimited assets to each other tax-free — does not apply.

This means:

Assets left to a non-citizen spouse at the first death may be subject to estate tax if they exceed the exemption amount
To defer the tax, the assets must pass into a QDOT (Qualified Domestic Trust)

A QDOT allows the surviving non-citizen spouse to benefit from the assets during their lifetime, while ensuring the estate tax is paid when those assets are eventually distributed or when the surviving spouse dies.

Key requirements of a QDOT:

At least one trustee must be a U.S. citizen or U.S. domestic corporation
The trust must meet specific IRS requirements for distributions and reporting
Estate tax is deferred — not eliminated. Tax is due when principal is distributed to the surviving spouse or when the surviving spouse dies

Annual gift exclusion alternative: U.S. citizens can make annual gifts to a non-citizen spouse of up to $185,000 (2024 amount, indexed for inflation) without triggering gift tax. This can be a useful strategy to gradually transfer assets outside the estate over time.

5.3 Non-U.S. Domiciliary Non-Citizens

If you are not a U.S. citizen and not domiciled in the U.S., the estate tax rules are very different:

Only your U.S.-situs assets are subject to U.S. estate tax — this includes U.S. real estate, tangible personal property located in the U.S., and certain U.S. securities
The estate tax exemption is only about $60,000 — far lower than the $13+ million exemption available to U.S. citizens and domiciliaries
There is no portability for non-domiciliary non-citizens — you cannot transfer your unused exemption to your spouse
Estate tax treaties between the U.S. and certain countries may modify these rules, including providing a prorated exemption or credits

If you fall into this category and hold significant U.S. assets, planning is essential. Strategies may include holding U.S. assets through foreign corporations, life insurance planning, or restructuring ownership before a taxable event.

Final Thought

International estate planning doesn't have to be intimidating. The key is identifying which issues apply to your family and addressing them with the right tools.

We work with international families every week — from dual citizens and green card holders to families with property on multiple continents. If any of the topics in this guide apply to you, we'd be happy to help you build a plan that works across borders.

About the Author

Sarah Summerall is the founder of Summerall Law, a California estate planning firm that specializes in flat fee trust and estate plans for families across the state. Sarah has extensive experience working with international families, including clients with ties to over 40 countries. She is a member of the State Bar of California and holds a J.D. from the University of San Diego School of Law.