One of the challenges of international estate planning is ensuring that your estate plan will be governed by the relevant country’s laws. Estate planning laws vary significantly around the globe, and attempting to apply one country’s laws to an estate plan drafted under another country’s laws can raise difficult questions of enforceability and interpretation. This is particularly true with regard to concepts such as forced heirship, which exist in some countries but are absent from other countries’ estate planning laws – including the laws of the United States.
What is Forced Heirship?
Forced heirship is a legal concept that applies to the administration of a person’s estate in many countries around the world. In countries that apply forced heirship, it is not possible to disinherit certain family members, even through the use of a comprehensive estate plan. In many countries, a person’s estate will be divided into “defeasible” and “indefeasible” portions, with the indefeasible portion passing to the deceased’s next-of-kin as a matter of forced heirship law.
How Forced Heirship Laws Apply (or Don’t) in the U.S.
In the U.S., it is well-settled that domestic courts should apply international laws in appropriate circumstances. On the federal level, this principle is expressly recognized in the Federal Rules of Civil Procedure (FRCP). FRCP Rule 44.1 states:
“A party who intends to raise an issue about a foreign country’s law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court’s determination must be treated as a ruling on a question of law.”
The commentary for FRCP Rule 44.1 makes clear that the requirement to give notice is not intended to impose any conditions on the right to request that a U.S. federal court apply foreign law, but rather to avoid any “unfair surprise” for the other parties regarding the application of foreign governing law. State courts will apply international laws in appropriate circumstances as well, including in probate and estate administration proceedings.
Unique Considerations for Real Estate Located in the United States
However, determining which country’s (or in the United States, which state’s) law applies to a decedent’s estate is not necessarily a straightforward process. There are some well-recognized general principles, but even these principles are subject to exceptions, and they are not necessarily uniform in all 50 states nationwide. These general principles are:
- When a will or trust includes a governing law provision, that provision should generally be enforced (although, in some circumstances, some courts will first apply local law in deciding whether a governing law provision is enforceable).
- When a will or trust provides for the disposition of a piece of real estate but does not specify which jurisdiction’s law should govern the document’s interpretation, the will or trust should be interpreted in accordance with the law of the jurisdiction where the property is located.
- When a piece of real estate is subject to inheritance but there is no estate plan directing distribution of the property, the law in the jurisdiction where the property is located should be applied.
As a result, while U.S. courts will apply international estate planning laws when a will or trust calls for such application, they generally will not apply foreign laws to the distribution of a person’s real property in the absence of an estate plan. This result is particularly likely in cases involving real estate located in the United States. If the property is located in New York, the New York courts are likely (under most circumstances) to apply New York law. If the property is located in another state, the New York courts will generally apply the law of the “situs” of the property. Additionally, in the absence of an estate plan, in addition to filing for probate in New York, it may also be necessary to initiate an “ancillary” probate proceeding in the jurisdiction where the property is located.
Important Considerations for International Estate Planning and Estate Administration
Due to these types of complexities, for U.S. expats and foreign nationals residing in the United States, careful estate planning is critical to preserving your wealth for future generations and ensuring that your final wishes will be observed. Regardless of whether a foreign forced heirship law reflects your final wishes (for many people, they will not), having a comprehensive estate plan will ensure that no important questions are left unanswered.
To illustrate, let’s consider a hypothetical scenario:
A U.S. citizen retires and moves to Colombia from the home she owns in California. She rents out her home in California and buys a new home on the outskirts of Bogota. She works with a Colombian attorney to prepare an estate plan, leaving her California home to her son and her Bogota home to her daughter (who both live in New York where they grew up). Her will states that it should be governed by Colombian law. After she signs her will, she buys another home by the beach in Barranquilla.
At death, what happens? Most likely, the son and daughter will file for probate in New York, seeking to have their mother’s will interpreted consistent with Colombian law. The New York court will most likely apply Colombian law; and assuming the will is valid, it will grant the California home to the son and the Bogota home to the daughter. But, what does each child need to do in order to transfer title into his or her name? Will the local courts in California and Colombia respect the New York court’s decision? What will the New York court do (if anything) about the home in Barranquilla? Will Colombia’s forced heirship law apply? These questions do not have easy answers, and the son and daughter may be facing a long (and expensive) road to winding up their mother’s final affairs.
All of these challenges can be avoided with careful international estate planning. In many cases, it will make sense for individuals living overseas (whether in the U.S. or another country) to prepare two estate plans – one governed by the local law in their home country, and the other governed by the law of their current country of residence. An estate plan can also be drafted to cover future-acquired assets (such as the Barranquilla home in the hypothetical example above), so that laws of forced heirship and intestate succession do not come into play. In fact, all of this can be done fairly simply, and the costs of creating a comprehensive international estate plan pale in comparison to the costs involved in dealing with cross-border probate matters.
More Free Resources on International Estate Planning
If you are living abroad or own property in another country, it is important to have an estate plan that protects your wealth and provides certainty for your loved ones. To learn more about key considerations for international estate planning, we encourage you to read:
- Who Should Consider International Estate Planning?
- International Estate Planning: Differences Between Common Law and Civil Law Systems
- The Best Ways to Own Real Estate Overseas
- Country-specific estate planning considerations for Korea, Panama, and Thailand
Speak with an International Estate Planning Attorney in Confidence
Jiah Kim & Associates is an international law firm that represents U.S. citizens and foreign nationals in estate planning matters. If you need to put together an estate plan, if your estate plan needs updating, or if you have questions about what is best for your situation, we are here to assist in any way we can. To schedule an appointment with attorney Jiah Kim, please call (646) 389-5065 or inquire online today.
This blog post is written for educational and general information purposes only, and does not constitute specific legal advice. You understand that there is no attorney-client relationship between you and the blog publisher. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.