Sunday, October 24, 2010

Estate Planning for US Citizens Living in Mexico or Owning Assets in Mexico

If you have assets in Mexico or in Mexico you need to plan your estate carefully. You most likely need to do a will in Mexico  which provides for the disposition of your asset in the event of your death. You also need to determine what type of taxes (inheritance or transfer tax) you heirs may occur upon your death.  In Mexico failure to do a will or trust could result in your assets being distributed under that Mexico law and could result in people inheriting the property other than those you would prefer. If you own real estate in a Fideicomiso, you can have that document drafted to provide who will receive ownership in the event of your death.  Mexico may honor your US will or trust but if it often  easier often have specific instruments drawn up in Meixco that comply with local law by a local attorney to avoid potential problems and expense later if  Mexico later  does not or has difficulties honoring a US will or trust.

Remember, if you have done a power of attorney appointing someone to handle your affairs, it Mexico that document may expire upon your death. So do not rely on that to handle the disposition of your foreign assets.

Of course, you must also prepare to US will or  living trust (which avoids probates and a lot of expense and time) to cover the disposition of your US assets and which also states the disposition of your foreign assets the same as a foreign trust or will you have had prepared.

The US will impose its estate tax on your worldwide assets, though it will allow a credit in most situations for any foreign inheritance tax you had to pay on assets located outside of the US.  Until Congress amends the law, starting in 2011 all estates in excess of $1 million will be subject to US estate tax.  If you are married special provisions can be inserted in your US will or trust to secure estate tax savings.

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