Complications may arise if a beneficiary or trustee is not a citizen of the United States. While beneficiaries who are not citizens can still inherit, they may be subject to additional taxes, and individuals creating wills and other testamentary documents must be sure to properly identify beneficiaries, especially if these people are citizens of another country.
This should not discourage a person from naming a non-citizen as a beneficiary to a will or trust. A well-versed estate planning attorney could help to explain why the citizenship of beneficiaries and trustees in Stuart estate planning is not a bar to the proper distribution of assets or the proper administration of a trust.
Any person can be a beneficiary to a will (though complications can arise when the beneficiary is a minor). The citizenship of a beneficiary does not preclude that person from inheriting.
With this in mind, it is essential to recognize potential complications that may arise with naming a foreign citizen as a beneficiary. For example, Florida does not impose an estate or inheritance tax, but many foreign nations do. A beneficiary who must claim their bequests under another country’s taxation system may end up forfeiting a substantial portion of their inheritance.
Any person over age 18 or trust company can serve as a trustee; the trustee has a legal duty to distribute the assets according to the terms of the trust. A person’s nationality has nothing to do with whether they are qualified to be a beneficiary or trustee.
However, a person creating a trust should take special care to nominate a trustee who will be able to fulfill that role. Trustees have obligations under the law, and a non-U.S. citizen may find it difficult to understand those duties and to fulfill their obligations. This could lead to substantial legal trouble for the trustee as well as diminishing the ability of the trust creator to make sure their final wishes are fulfilled. In addition, if a trustee is a non-U.S. citizen, there will likely be taxes imposed on the trust by the country in which the trustee resides.
The ability to freely distribute your assets upon death is central to state probate laws. This includes the ability of testators to distribute property without regard for citizenship. Similarly, any person can inherit money or property, regardless of where they reside or claim citizneship.
However, people who are looking to name a non-U.S. citizen as a beneficiary or trustee need to be aware of the effect that this fact can have on that person’s obligation to pay taxes. Not every country has the same inheritance laws as the United States, and many may charge estate, inheritance, or income taxes on citizens living abroad.
Similarly, laws in Stuart place significant obligations on trustees to properly administer the terms of a trust. A person living overseas with no connection to the United States may find it difficult to fulfill their legal obligations. A Stuart estate attorney could answer any questions about how the citizenship of beneficiaries and trustees affects Stuart estate planning. Call today.