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Estate planning challenges for the expat and/or multinational family:

Succession and forced heirship dominate civil law and other regimes:  Civil law countries tend to follow a succession regime, also known as forced (or Napoleonic) heirship. This is analogous to the intestate succession rules followed in common law when the decedent has otherwise failed to legally direct the distribution of wealth upon death. These regimes are obviously quite different, for the decedent in a civil law country may have little or no say in the distribution of all (or most) of the wealth accumulated (or previously inherited), during her lifetime. Moreover, civil law succession regimes tend to prefer to impose tax upon inheritance (i.e., upon the heirs) at the time of distribution of the decedent’s estate rather than impose tax upon the estate of the decedent prior to the distribution of the decedent’s estate. Finally, the concept of a trust is likely to be of little or no legal validity in a succession regime.

Given the critical fundamental legal differences in the distribution and taxation regimes around the world, it should come as little surprise that a family’s existing estate plan (designed for one legal system) may quickly become outmoded, ineffective, and even counter-productive once the family relocates overseas (and becomes subject to a completely different legal system).

Concepts of Citizenship, Residency and Domicile

Concepts of citizenship, residency and domicile have crucial significance in determining the exposure of a person to the transfer tax regime of any particular country. An expat should understand the particular definitions and requirements under the laws of the country(ies) in which they live, work, or own property. Naturally, the likelihood that the effectiveness of an American’s existing estate plan will deteriorate will depend not only on where the family relocates, but also on how much the family integrates its wealth/assets/investments into the new country of residence, and for how long the expat family remains (or plans to remain) in the new country of residency. For ex-ample, the UK has three residence statuses that impose different rules based on length of residency or election of status: resident, domiciliary, or deemed domiciliary. The particular status of the taxpayer will have significant income and transfer tax consequences, and of course, the particular distinctions vary by country.