When You Move Abroad, Do You Need to Change Your Trust?

If you move to another country from the United States, you may need to change your trust or your overall estate plan. You simply cannot count on laws applying to your trust in the same way when you change the place that you live.

What Are the Potential Consequences of Not Changing Your Trust?

The potential negative consequences of not changing your trust abound. For example:

• The trust may owe taxes when you obtain residency in the new country
• Property you intended to put in the trust may pass by forced heirship to children
• The new country may not recognize your trust at all

These consequences can vary significantly, depending on factors such as which country you move to and how long you stay there. The type of trust you formed and its exact language could have an impact too.

Do Other Countries Have Different Laws About Trusts?

Absolutely, other countries treat property ownership and trust law very differently than the United States does. For example, trusts may not have the same effect in countries with civil law or forced heirship laws. Distributions from a trust go to a chosen beneficiary, not necessarily to relatives. The intended distributions may conflict with gift and inheritance laws in some countries, which require a set portion of someone’s estate to go to relatives. As a result, the trust or the beneficiaries may have to pay expensive and unnecessary taxes.

Further, even relocation to non-civil law or non-forced heirship countries can affect trusts. Trust laws are different in other countries, and so those countries may not recognize a particular trust structure. In addition, other countries may impose taxes on unrealized gains or capital gains for trust investments. The U.K. or Canada, for example, could assess capital gains taxes if a resident trustee dies or if the trust holds local property.

The effects on a trust when you move to another country could vary widely, so you need to seek estate planning and tax advice first. Talk to an attorney with experience doing international planning for help.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.