Cross-border estate planning: A complete guide for US expats and foreign nationals (2026)

A person can live abroad for decades and still leave an estate subject to US federal estate tax. For people dying in 2026, a US citizen or US domiciliary generally has a $15 million federal basic exclusion amount, while a nonresident who is not a US citizen can face Form 706-NA filing once US-situated assets exceed $60,000, subject to treaty rules.

That difference is why estate planning for US citizens living abroad cannot stop at a domestic will. Citizenship, domicile, asset location, a spouse’s citizenship, foreign succession law, reporting forms, and estate tax treaties can all change the result.

What is cross-border estate planning and why does it matter for expats?

Cross-border estate planning coordinates tax, inheritance, ownership, and succession rules in 2 or more countries. For 2026, US citizens and US domiciliaries can face US estate tax on worldwide property, while nonresident noncitizens are generally exposed only on specified US-situated assets.

Cross-border estate planning coordinates the laws of two or more countries so assets pass under the intended succession rules while US and foreign estate-tax exposure is identified before death.

For US citizens abroad, this means combining cross-border financial and estate planning with the US rules that can follow citizenship overseas. Review TFX’s guide to estate tax for expatriates alongside the IRS rules for US citizens and residents abroad.

The following 4 groups have the clearest need for coordinated planning:

• US citizens or US domiciliaries owning property, investments, or business interests abroad.
• Dual citizens whose 2 countries may assert inheritance or estate-tax jurisdiction.
• Foreign nationals who own US real estate, US-company shares, or other US-situated property.
• Multinational families whose beneficiaries, executors, trusts, and assets are spread across jurisdictions.

For these households, estate planning for expats is partly a legal-document exercise and partly a tax-mapping exercise. Country-specific succession advice should come from attorneys licensed in the relevant jurisdictions, while US tax reporting should be reviewed separately.

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US estate tax basics: Worldwide reach for citizens and residents

For deaths in 2026, the federal basic exclusion amount is $15 million, and the estate-tax rate schedule reaches 40%. US citizens and people domiciled in the United States use Form 706 when the filing rules apply, even if part of the estate consists of property located overseas.

A US citizen’s federal gross estate can include worldwide assets even when the citizen has lived abroad for years.

This is one reason estate planning for US citizens living abroad needs a worldwide asset schedule rather than a list limited to US accounts. Foreign real estate, brokerage accounts, closely held companies, valuable personal property, and certain trust interests can all affect the federal estate-tax analysis.

TFX’s guide to US gift tax rules for expatriates provides useful context because lifetime taxable gifts can affect the estate-tax computation. The relevant estate return is Form 706, which also handles elections such as portability and QDOT reporting.

 

 

Nonresident alien estate tax: US-situs assets and the reduced exemption

A decedent who was neither a US citizen nor US domiciliary generally files Form 706-NA when US-situated assets plus adjusted taxable gifts exceed $60,000. That threshold remains dramatically lower than the $15 million 2026 basic exclusion applicable to US citizens and domiciliaries, although a treaty can change the result.

A foreign national can have a US estate-tax filing obligation with only $60,000 of covered US-situated property.

The following 5 categories commonly matter when analyzing US estate tax for non residents:

• US real estate.
• Stock issued by US corporations.
• Tangible personal property physically located in the United States.
• Certain US debt interests that do not qualify for a statutory exclusion.
• Interests whose situs treatment is modified by an applicable estate-tax treaty.

The IRS specifically treats US real property, tangible property, and shares of US corporations as US-situated property, while certain deposits, debt obligations, and life-insurance proceeds can be excluded from the US estate.

For a fuller explanation, see TFX’s guide to the nonresident alien estate tax exemption and US-situs assets and the IRS rules on transfer certificates for estates of nonresident noncitizens.

This is a central issue in estate planning for foreign nationals, especially where a foreign investor directly owns US real property or US-company shares.

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Domicile vs. residence: The distinction that determines your estate tax exposure

For US estate tax, domicile vs. residence is not the same test used for income tax. A person is a US resident for estate-tax purposes when they live in the United States, even briefly, with no definite present intention of moving elsewhere.

A person can fail the US income-tax residency tests yet still be treated as US domiciled for estate-tax purposes if the facts show an intention to remain.

The following 4 facts can help establish where a person is domiciled:

• Immigration status, including lawful permanent residence.
• Location of family and the principal home.
• Location of business and economic interests.
• Statements and conduct showing an intention to remain permanently or leave.

A green card or substantial physical presence is therefore relevant but not automatically decisive for transfer-tax domicile. TFX’s discussion of the substantial presence test for foreign nationals addresses the separate income-tax test, while the IRS explains taxation of nonresident aliens.

An expatriate estate planning strategy should document domicile assumptions because those assumptions determine whether the US starts with worldwide property or only US-situated assets.

The unlimited marital deduction and the QDOT: Planning for a noncitizen spouse

The unlimited federal estate-tax marital deduction normally protects qualifying transfers to a US-citizen spouse. If the surviving spouse is not a US citizen, a qualified domestic trust QDOT can preserve a marital deduction when the statutory and regulatory requirements are met.

Assets passing to a non-US-citizen spouse do not automatically receive the unlimited marital deduction merely because the couple is legally married.

The following 5 QDOT points should be reviewed before relying on the structure:

1. The property must pass to or be transferred into a trust satisfying QDOT requirements.
2. At least 1 trustee must satisfy applicable US-trustee requirements.
3. The trust must permit collection of US estate tax when section 2056A applies.
4. The executor must make the QDOT election on the estate-tax return.
5. Additional security and administrative rules can apply depending on the value and composition of the trust.

Read TFX’s QDOT trust guide for the mechanics.

A QDOT generally defers rather than eliminates the transfer tax. Form 706-QDT is used to report tax on certain principal distributions and on property remaining in the trust when the surviving spouse dies.

 

 

Estate tax treaties: How bilateral agreements reduce double taxation

The United States has estate or estate-and-gift tax arrangements with a limited group of countries, including Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom. Treaty language varies by country.

A foreign estate tax treaty can change situs rules, provide credits, or expand relief that would not exist under the Internal Revenue Code alone.

The treaty network includes the following examples:

• Australia.
• France.
• Germany.
• Japan.
• The Netherlands.
• United Kingdom.
• Canada, through estate-tax provisions in the US–Canada income-tax treaty.

This means cross-border estate tax planning must identify the treaty before calculating tax. A treaty provision can be more important than the domestic $60,000 NRA filing threshold or the default situs rule for a particular asset.

TFX discusses these issues in its guide to federal estate-tax considerations for foreign investors in the United States. The IRS also publishes data on nonresident alien estate-tax returns by treaty status.

 

 

Foreign trusts in cross-border estate planning: Grantor vs. non-grantor structures

A foreign grantor trust and a foreign non-grantor trust can produce very different US income-tax and reporting outcomes. A US person treated as the owner of a foreign grantor trust generally reports the trust’s income under the grantor-trust rules, while a foreign non-grantor trust is treated separately for US tax purposes.

Choosing the wrong foreign-trust structure can create unexpected income tax and Forms 3520 or 3520-A reporting exposure.

For a US owner, a foreign grantor trust generally does not shift current US income taxation away from that owner merely because the trust is offshore.

 

Read TFX’s guides to foreign grantor trusts and foreign non-grantor trusts before treating either structure as part of foreign trust estate planning.

Form 3520 and foreign trust reporting: Penalties and compliance requirements

Forms 3520 and 3520-A carry separate reporting obligations. Current IRS instructions state that an initial Form 3520 penalty can equal the greater of $10,000 or 35% of certain transfers or distributions, while a Form 3520-A failure can trigger the greater of $10,000 or 5% of the relevant trust assets.

The following 5 events deserve a Form 3520 foreign trust review:

• A US person creates or transfers property to a foreign trust.
• A US person receives a distribution from a foreign trust.
• A US person is treated as the owner of part or all of a foreign trust.
• A foreign trust has a US owner and therefore has a Form 3520-A obligation.
• A US person receives certain large foreign gifts or bequests that fall within Form 3520 reporting rules.

Reasonable-cause relief can apply in appropriate cases, but it depends on facts and documentation. TFX also explains the limited relief from Forms 3520 and 3520-A for certain tax-favored foreign trusts.

FBAR and FATCA compliance: Reporting foreign assets in your estate plan

The FBAR requirements use a $10,000 aggregate foreign-account threshold at any point during the calendar year. Form 8938 uses different thresholds – for qualifying taxpayers living abroad, they can reach $300,000 for nonjoint filers and $600,000 for joint filers.

Foreign asset estate planning should include current reporting records because executors and heirs may otherwise inherit accounts they cannot readily reconcile with prior US filings.

The following 5 compliance items belong in the estate file:

• FinCEN Form 114, or FBAR.
• Form 8938 for applicable specified foreign financial assets.
• Forms 3520 and 3520-A for relevant foreign trusts.
• Form 5471 or other entity reporting where foreign corporations are involved.
• Prior returns supporting basis, ownership, and disclosed account balances.

TFX’s FBAR filing guide and its guide to foreign asset disclosure and FATCA compliance explain the ongoing reporting rules.

 

 

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Situs of assets: Which country has the right to tax each asset class?

For a nonresident noncitizen, situs of assets determines which property enters the US gross estate. US corporate stock is generally US-situated even if the owner lives abroad, while certain bank deposits, debt obligations, and life-insurance proceeds can receive different treatment.

For US estate-tax purposes, US-company stock is generally US-situated property even when the shareholder lives abroad and holds the shares through an overseas brokerage account.

The table below shows the default federal situs rule for 7 common asset classes before treaty modifications are considered.

 

TFX’s discussion of foreign investment tax implications provides related investment context, while the IRS covers US real property owned by nonresident aliens.

Portability election and the stepped-up basis: Key tools for cross-border estates

A portability election can preserve a deceased US citizen or resident spouse’s unused exclusion, but the Form 706 timing rules matter. A normal Form 706 is due 9 months after death, with a 6-month extension available, and Rev. Proc. 2022-32 can provide simplified late portability relief through the fifth anniversary for qualifying estates.

The “9 months, extendable to 15 months” rule referenced by many sources is incomplete because qualifying late portability elections may remain available for substantially longer.

The following 4 rules belong in a cross-border estate plan:

• File Form 706 timely when an estate is required to file.
• Consider portability even when no estate tax is currently payable.
• Apply special QDOT rules where property passes for a noncitizen spouse.
• Preserve valuation records supporting inherited-property basis.

A noncitizen spouse does not automatically receive unrestricted current use of DSUE. Regulations contain special timing rules for QDOT property, and a nonresident surviving spouse who remains a noncitizen generally cannot use DSUE except as a treaty permits.

The stepped-up basis rule is separate. Inherited property generally takes fair market value at death or the alternate valuation date when properly elected.

Forced heirship and conflicting succession laws across jurisdictions

Forced-heirship rules can reserve part of an estate for children, spouses, or other relatives regardless of what a US-style will says. For Americans in participating EU jurisdictions, Regulation (EU) 650/2012 also allows a person to choose the law of a nationality they possess to govern succession as a whole.

A US will cannot be assumed to override mandatory succession rights imposed by the law governing foreign property or the succession itself.

The following 5 jurisdictions or systems illustrate where local succession review is especially important:

• France.
• Spain.
• Germany.
• Civil-law jurisdictions in parts of the Middle East.
• Louisiana, which has its own forced-heirship rules in specified cases.

For estate planning across multiple countries, local counsel should determine which law governs real estate, movable property, testamentary form, reserved shares, and executor authority.

 

 

International will requirements: Making your will valid in multiple countries

There is no single global will rule that automatically validates one document everywhere. The international will requirements depend on local testamentary law, conflict-of-law rules, asset location, and applicable conventions, so a US will covering property in 2 or more countries should be reviewed jurisdiction by jurisdiction.

The following 6 steps help structure estate planning with property abroad:

1. Inventory assets by country and identify where each asset is legally situated.
2. Determine which jurisdiction’s succession law governs each asset class.
3. Ask local counsel whether separate jurisdiction-specific wills would reduce probate friction.
4. Draft each will so it does not unintentionally revoke another country’s will.
5. Check witness, notarization, translation, apostille, and registration requirements.
6. Confirm whether a local executor or representative should be appointed.

Using one unreviewed domestic will for assets in multiple countries can create conflicting revocation, probate, and succession problems.

Various sources referenced the 1989 Hague Convention on the Law Applicable to Succession to Estates of Deceased Persons. That convention is not in force and has 0 contracting parties, so it should not be presented as an operative recognition mechanism.

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Ancillary probate: The hidden cost of owning property in multiple countries

Ancillary probate refers to an additional probate or estate-administration process required outside the primary jurisdiction because the decedent owned property there. Whether it applies and how long it takes depends on local law rather than a single US federal rule.

A property ownership structure that works for US probate may still require a separate foreign succession proceeding.

The following 4 techniques can be considered, but each must be tested under local tax and property law:

• Local entities used to hold real estate.
• Revocable trusts where the foreign jurisdiction recognizes their ownership and succession effect.
• Joint ownership or survivorship arrangements where valid locally.
• Beneficiary-designated assets such as qualifying insurance or financial accounts.

An entity is not automatically a probate solution. It can add Forms 5471, 8858, 8865, 8938, FBAR, or local-company reporting depending on the facts.

Read TFX’s guide to offshore corporation benefits and disadvantages before restructuring ownership merely to address probate.

Offshore estate planning strategies: Structures that may change cross-border tax exposure

Offshore estate planning can use trusts, entities, insurance, or charitable arrangements, but moving an asset offshore does not by itself eliminate US income, gift, estate, or reporting obligations. Forms 3520, 3520-A, 5471, 8938, and FBAR can become relevant depending on ownership.

The tax result of an offshore structure must be compared with its US reporting cost, foreign-law treatment, control rules, and estate inclusion.

The following 5 structures appear regularly in offshore assets estate planning discussions:

1. Foreign grantor trust. For a US grantor, income can remain taxable to the grantor under sections 671–679. It should not be described as automatic “income shifting.”
2. QDOT. A QDOT can preserve a marital deduction for property passing to a qualifying noncitizen surviving spouse.
3. Offshore life insurance. Policy classification, ownership, investor-control rules, diversification rules, and local regulation require specialist review.
4. Foreign LLC or corporation. An entity can alter ownership and succession mechanics but may create corporate or information-return filings.
5. Charitable structures. Charitable remainder trusts and similar arrangements require US qualification rules plus review of foreign recognition and withholding.

See TFX’s introduction to foreign trusts before treating any trust as a default planning tool.

 

 

Dual citizenship estate planning: Two tax and succession systems at once

A dual citizen can be subject to US worldwide estate-tax rules while another country taxes based on domicile, residence, nationality, inheritance received, or asset location. The US–France estate-tax treaty is one example of a bilateral instrument designed to coordinate overlapping claims.

Dual citizenship estate planning should begin by identifying which country taxes the decedent, which taxes the beneficiary, and which taxes property because of its location.

The following 5 issues require separate review:

• Treaty residence and treaty tie-breaker provisions.
• Domicile and local succession rules.
• Coordination of exemptions and foreign tax credits.
• Consequences of changing citizenship or long-term resident status.
• Need for counsel in every country whose law affects the estate.

A US citizen considering renunciation should not treat it as an estate-planning shortcut. IRC §877A can impose mark-to-market taxation on a covered expatriate, and section 2801 can affect certain later gifts or bequests to US recipients.

TFX’s article on US citizenship renunciation and Social Security provides related expatriation context.

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Choosing the right cross-border estate planning strategy: A decision framework

Choosing an estate planning strategy for cross-border assets starts with 6 facts: citizenship, domicile, spouse citizenship, asset situs, treaty coverage, and total estate value. A strategy should not be selected before those facts are mapped because each can change the tax return, deduction, credit, or legal document required.

The first step in cross-border estate planning is a complete worldwide asset inventory mapped to legal ownership and situs.

Use the following 6 decision factors:

1. Citizenship and domicile of the owner. This determines whether US worldwide estate taxation or NRNC situs rules are the starting point.
2. Citizenship of the surviving spouse. A noncitizen spouse can change marital-deduction and QDOT analysis.
3. Location and type of each asset. Real estate, company shares, bank accounts, trusts, and insurance can have different situs rules.
4. Applicable treaty. Treaty benefits can modify domestic results.
5. Estate size. Compare the estate with the $15 million 2026 US basic exclusion or, for an NRNC, the $60,000 domestic filing threshold before treaty relief.
6. Number of jurisdictions. Each additional country can add succession, probate, inheritance-tax, or reporting rules.

Based on our client scenario at TFX: A US citizen living in Germany with a German spouse, German real estate, and a US brokerage account needs US worldwide-estate analysis, German succession and tax advice, spouse-citizenship review, and US–Germany treaty analysis before documents are drafted.

That is choosing estate planning strategy for cross-border assets in practice – facts first, structure second.

TFX’s guide to choosing an investment advisor as an expat with foreign investments can help with the financial-advisor side of cross-border financial and estate planning.

Common international estate planning mistakes

The most expensive international estate planning mistakes tend to come from treating a multi-country estate like a domestic one. A $15 million US exclusion does not fix an invalid foreign will, a missed Form 3520, an unusable marital deduction, or a $60,000 NRNC filing threshold.

The following 7 mistakes have a practical fix:

1. Using one uncoordinated will – have each jurisdiction review revocation and validity.
2. Ignoring QDOT rules – address a noncitizen spouse before the estate-tax return is due.
3. Missing portability – consider Form 706 even when the estate otherwise owes no federal estate tax.
4. Missing Form 3520 reporting – review foreign-trust activity annually.
5. Assuming a foreign will automatically works in the United States – obtain US legal review.
6. Ignoring ancillary probate – examine ownership before death.
7. Treating the $60,000 NRNC threshold as a “tax exemption” without checking treaty relief – model the actual Form 706-NA result.

Most cross-border failures are coordination failures: the tax rule, document, ownership structure, and local succession law were each reviewed separately instead of together.

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International estate planning checklist

An international estate planning checklist should be reviewed at least annually and after a change in citizenship, domicile, marriage, property ownership, or country of residence. For US taxpayers, the checklist should also connect estate documents to recurring Form 1040, FBAR, Form 8938, and foreign-trust reporting.

Use these 10 action items:

1. Inventory worldwide assets and determine situs.
2. Document estate-tax domicile.
3. Identify every applicable estate or gift tax treaty.
4. Review beneficiary designations.
5. Determine whether a QDOT is relevant.
6. Review foreign trusts and Forms 3520/3520-A.
7. Confirm FBAR and FATCA filings are current.
8. Update jurisdiction-specific wills.
9. Review any foreign executor appointment under local law.
10. Repeat the review after any major residency, citizenship, marital, or asset change.

This checklist is a starting point – every international plan must be adjusted for the countries, citizenships, asset classes, and family relationships involved.

For an American expat estate planning review, keep tax returns and information returns with the legal estate file so executors can trace ownership and basis.

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Working with TFX on the US tax side of an international estate

TFX can help with the US tax and reporting side of a cross-border situation, including expat income-tax filings, FBAR/FATCA issues, foreign-trust reporting, and other international tax forms. Drafting wills, interpreting foreign succession law, and giving country-specific legal advice should be handled by appropriately licensed counsel.

For clients needing estate planning for clients with offshore or international assets, the tax work should be coordinated with the legal plan rather than treated as a substitute for it.

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