Many New Jersey residents will spend a portion of their lives living abroad. Known as expats, Americans who live outside of the country for extended periods of time have a number of unusual legal needs. Creating a solid asset protection plan is an example, and individuals and families must take care to ensure that their wishes are properly documented prior to setting out on an extended trip abroad.
One issue that can be problematic involves the rules of residency in both one’s home country and the country where a new home base will be established. For example, if one or more trusts have been put into place in New Jersey but a death occurs while living abroad, high estate taxes could be levied against one’s heirs, based on the rules of the foreign country. One way to avoid this scenario is to retain one’s legal “domicile” in the U.S. while taking on “residency” status in the other country.
Another matter that deserves consideration involves the laws that pertain to the distribution of one’s estate. When living abroad, it is possible to become subject to the estate laws of that country if a death occurs within those borders. This can mean that the ultimate distribution of assets can be far different than one intended.
For those in New Jersey who are considering spending an extended period of time living abroad, it is important to work with an estate planning attorney to ensure that one’s wishes are properly provided for. As with all aspects of creating an estate plan, there is a solution for virtually every set of asset protection needs. Understanding how such a move could affect the distribution of assets is a good starting point for the creation of a solid estate plan.
Source: The Wall Street Journal, “6 Estate-Planning Tips for U.S. Expats“, Jonathan Lachowitz, March 25, 2015