Cross-Border Estate Planning Flags of U.S. and Mexico

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The estate planning process becomes significantly more complex when citizens of Mexico have investments and assets in both Mexico and the United States, and they also have spouses, children, or grandchildren who may be U.S. citizens. Here, we provide a brief guide to international estate planning for cross-border families.

1. Work With an Experienced International Estate Planning Attorney

Domicile and residency considerations can substantially impact your overall estate planning strategy, which is why it’s vital to work with an estate planning attorney who has the specialized knowledge necessary to meet the needs of cross-border families like yours. Request a complimentary copy of our guide, 5 Ways Your International Estate Plan Can Be Pulverized by a Lawyer With No International Experience, to learn more about the dangers of hiring an estate planning attorney who is unfamiliar with the unique needs of Mexican or Latin American investors doing business in the United States.

2. Start Early and Revise Often

It’s best to consider the potential consequences for your estate plan before making any significant changes to your investments. This can help you avoid errors that are time-consuming and costly to correct. For example, there are several options to consider when a foreigner wants to own property or real estate in the United States—and making the right choice depends on factors such as whether the property is commercial or residential, whether you are planning on renting it or wish to use it personally, and if you have any plans to sell the property in the future.

You may also remember that estate plans need to be revised on a regular basis to maintain their effectiveness. Your personal circumstances may change, or there may be changes in tax law that necessitate working with an estate planning attorney to implement strategies such as decanting an irrevocable trust to change its jurisdiction.

3. Use Life Insurance Effectively

It is a common strategy to purchase a life insurance policy in the United States that can be used to pay for estate taxes. However, if you purchase life insurance to pay for estate taxes, keep in mind that further planning could be needed in order to avoid income taxes. Under Mexico’s tax code, beneficiaries of U.S. life insurance policies may be subject to income tax when they live in Mexico. Request our complimentary whitepaper, How Should Mexico Residents Hold Life Insurance Policies in the United States?, to learn how to work around this limitation.

4. You May Need Two Wills

If you have assets on both sides of the border, such as a home or business in Mexico and a second home in the United States, you may need one will for each country. The courts or judges of one country do not necessarily have jurisdiction over assets located in another country, especially when it comes to real estate. As long as each will is limited exclusively to the assets located in a single country, this is a sound estate planning strategy for cross-border families.

5. You May Also Need a Trust

High-earners with cross-border interests generally need to utilize a combination of strategies and instruments or vehicles for proper planning and protection. This means you may need to create one or more trusts in addition to your wills in each country where you own assets.

There is no “magic bullet” when it comes to estate planning, but attorneys Antonio Gastélum and María Elia Gastélum have the expertise necessary to handle the specialized estate planning needs of cross-border families. To schedule a consultation with MEG International Counsel, contact us online or call us today at (800) 694-6604.

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