Estate Planning for US Expats
By I.J. Zemelman, EA, Taxes for Expats October 25, 2011
Losing a loved one is hard enough. Losing a loved one who has not left behind basic directional documents is not only heartbreaking, but is also complicated and confusing. The matter of handling a loved ones estate and burial arrangements are even more complicated for expats (or children of expats). Why is it, then, that so many expats, especially, have failed to put their estates in order and prepare for an untimely death?
To save your family members from the heartache that would inevitably follow your dying without a legal will, it is important that both you and your spouse execute a Will (and other legal documents that can direct decision making in even that you become somehow incapacitated). The following is a listing of the basic documents that everyone should have in order to protect their assets and ensure that their wishes are carried out after death.
WillA Will is a document that specifically spells out what is to be done with your property and other assets when you die. A Will also specifies what should happen if you and your spouse die simultaneously. Wills, when laid out specifically and legally, can save your family heartache and prevent unnecessary arguments amongst family members. If you are a parent of minor or severely disabled children, a will is also an important tool for setting up trusts and establishing guardianship.
If you or your spouse were to die without a legal Will, your affairs would most likely be handled in a way contrary to your wishes. And, if left to the courts, the distribution of your assets might take years. Being completely sure that you and your spouse both have valid and legal Wills in every jurisdiction in which you have assets is vital to the swift and accurate carrying out of your wishes. Of course, there is no asset more valuable than one–≤–Р–£–≤–Щ¬І–≤–Р–£вАУвА†–≤–Р–£¬ђ¬©s children, and dying without a Will can jeopardise their future and cause their guardianship to be determined by a judge.
Maybe expats avoid Wills simply because of their complexity, but if you have assets in multiple countries, you should consider taking the time to execute a Geographic Will. A Geographic Will is drawn to include the laws surrounding the geographic location of each asset or property. Seek legal advice before tackling such a complex process to be sure the Will is not only executed correctly but is necessary for your situation. Additionally, if your family members live in other countries, which is usually the case with expats, be sure they are updated as to the changes in your Will and how to access your legal documents after you are gone.
Living Will or Advance Health Care DirectiveA Living Will (also referred to as an Advanced Health Care Directive) gives specific, written instructions to your loved ones regarding how they are to handle your care if you are incapacitated due to illness or accident. This document will handle matters such as which types of medical treatment to use and which to refuse, the question of life-support, how your last days and moments should be handled religiously, whether you prefer to die in a hospital or at home, and other issues that would simply be unfair to leave up to your family members. You can use this form to select one person who will retain your decision making rights in the event you can no longer do so. As with your standard Will, make 100% sure that the information contained within is fully disclosed (as you write and possibly change things throughout the years) to everyone involved, and that several family members know how to access your Living Will in the case that it becomes needed.
Living Wills save family members from the heartbreaking process of having to think for another person, and a person they love deeply, regarding matters of great and emotional importance. Many legal battles, and family wars as well, can be avoided by providing the gift of a thoroughly written and legally prepared Living Will.
As an expat, however, it is wise to be completely sure that your Living Will will be honored in your resident country before taking the trouble to prepare it. You may be required to draw up a U.S. Living Will and a document in another format to satisfy your country of residence. Simply ask your local health care provider for direction in this matter.
Durable Power of Attorney for Health CareA Durable Power of Attorney (POA) in regards to health care allows a chosen individual to make medical decisions on your behalf, and it even allows said individual to hire/fire your physician or caretaker. A Durable POA for Health Care goes into effect as soon as your doctor determines that you are no longer able to make sound decisions for yourself. It is common for a Durable POA and a Living Will to be combined within a single document.
You and your spouse should both have a Durable POA to determine your heath care. Doing so will allow you and your loved ones to bypass the horrible intrusion of the court system into an already difficult time. By pre-establishing a Durable POA for Health Care you will ensure that you and your spouse will be allowed to act and make decisions on behalf of the other instead of leaving these monumental moments to the will and determination of medical and legal professionals. Additionally, you will use your Durable POAs to select an alternate individual to retain POA in the event that both you and your spouse are simultaneously incapacitated.
As is the case with Living Wills, you will want to be sure that a Durable POA from your home country will be recognized in your country of residence.
Durable Power of Attorney for FinancesA Durable Power of Attorney for Finances is a document that selects a specific individual to act on your behalf in regards to all of your financial decisions. This may take effect as soon as you write it, or it may be set to take effect in the event that you can no longer make such decisions for yourself. The latter is referred to as a –≤–Р–£–≤–Щ¬І–≤–Р–£вАУвА†–≤–Р–£вАФ–¢springing–≤–Р–£–≤–Щ¬І–≤–Р–£вАУвА†–≤–Р–£–≤–ЩвА† POA, and will be activated by the medical opinion of your attending physician.
It is wise to establish Durable POAs for the handling of finances between spouses, even for simple every day matters. If one spouse is out of town, the other should be able to take care of financial matters without hassle. But, a springing Durable POA for Finances is absolutely necessary to ensure proper handling of your assets in the event of incapacitation. Without such minimum precautions, the courts will inevitably become involved.
Seek a ProfessionalWe realize that it is tempting to save money by downloading prewritten forms or hand-drafting your own Wills. It is too important a process to be left to a non-professional, however. And no prewritten document can truly handle the uniqueness of each individual situation (especially regarding the life and assets of an expat). Contacting an estate planning expert in your home country will ensure properly laid out and legal documents. A little expense and hassle now is certainly worth saving your loved ones the monumental expense and hassle that results from not leaving behind these literally priceless documents.
|I.J. Zemelman, EA is the founder of Taxes for Expats
She may be reached at: +1-646-397-2887
Web site: www.taxesforexpats.com