Welcome to Lost in Translation: Blunders in International Estate Planning; in this blog series, I will delve into the rarified world of international estate planning, shedding light on possible pitfalls and slip-ups.
Blunder No. 1: Two Wills That Revoke Each Other
A Will drafted in the U.S. may not be enforceable in another country, and some clients may own property in multiple nations. The gold standard for international estate planning involves offshore trusts and companies. However, these structures come with hefty costs for drafting and ongoing maintenance. These costs include annual trustee fees and corporate registration expenses. Many international clients seek to avoid these costs, especially if their estates will not be subject to substantial U.S. estate taxes.
An affordable alternative involves executing two Wills, each specifying the property bequeathed under the Wills, respectively.
The Case for Having Two Wills:
While some attorneys are hesitant about using two Wills, when precisely drafted and approved separately by attorneys in both jurisdictions, they offer a concise method for bequeathing property in multiple locations. This approach simplifies probate for a U.S. Will that is limited to specific property, in contrast to the complexity of obtaining ancillary probate in the U.S. of a foreign Will that covers worldwide assets.
Potential Blunder: Revocation Conflict
One red flag to note is the revocation clause of each Will. Normally, a Will opens with a revocation statement as follows:
“I, JANE DOE, of the City, County and State of New York, publish and declare this to be my Last Will and Testament and revoke all former Wills and Codicils.”
What if a U.S. Will and a Will that bequeaths property outside the U.S. are executed? The second Will that was signed would revoke the first Will that was signed.
If both Wills are executed around the same time, there’s a risk of revocation conflict. To prevent this, revocation clauses in both Wills are crucial and must be carefully coordinated.
Proposed Revocation Clause:
A clause that clearly delineates the scope of each Will’s bequests and safeguards against unintended revocation is essential. I suggest the following clause:
“I, ANTONIO GONZALES, being a citizen of the United States of America and a resident of the City, County and State of New York, publish and declare this to be my United States Last Will and Testament, to control the disposition of the property hereinafter described and defined as my Estate, and I hereby revoke all Wills and codicils at any time heretofore made by me with respect to such Estate. This United States Will shall not revoke or otherwise interfere with the disposition of any property which is situated in the Republic of Argentina. This United States Will can only be revoked by another Will, which is later in date than this United States Will. This United States Will may not be revoked unless the revocation clause of another Will specifically refers to this United States Will by date of execution and explicitly revokes it.”
The Will continues with a clause that defines “the Estate,” which is bequeathed under this Will. In this case, it would be the individual’s worldwide assets, other than property that is located in Argentina. A complimentary Will clause would appear in Spanish, in a Will that is drafted to bequeath solely property that is located in the other country, Argentina.
The goal is to safeguard the estate and ensure that the U.S. Will doesn’t inadvertently revoke the foreign Will and vice versa, safeguarding the intended distribution of assets across jurisdictions. With precise drafting and thorough review by attorneys in the respective jurisdictions, two Wills can effectively distribute property situated in different countries. At Offit Kurman, we can assist with all aspects of international estate planning; please reach out for a consultation or if you have any questions.
Stay tuned for next month’s installment of Lost in Translation: Blunders in International Estate Planning – “Blunder No. 2 ‘Stay Out of Jail Monopoly Card’ If You File These Required International Tax Forms.”
ABOUT DIANE ROSKIES
Diane K. Roskies advises high-net-worth U.S. and non-U.S. citizens on complex trust and estate plans. A significant part of Diane’s practice includes international trust and estate planning and administration, often across multiple jurisdictions. Diane navigates global estate tax treaties and current international trust developments. She also facilitates the administration of estates for non-U.S. citizens, ensuring the smooth transfer of assets, including real property and apartments in the U.S.