An effective estate plan must be personalized to meet individual needs, but a great number of lawyers, accountants, and financial advisors in the United States are ill-equipped to deal with the circumstances of Mexican and Latin American foreign investors. To ensure you have a plan that protects your assets and provides for your loved ones, you need to take it upon yourself to learn the fundamentals of effective international estate planning before seeking out a professional who speaks your culture.
The Meaning of Residency Isn’t What You May Think
One of the most important considerations for estate planning—and one of the issues that can cause the most confusion—is the definition of residency.
For U.S. income tax purposes, residency refers to a physical presence regardless of immigration status. However, with regard to estate, gift, and generation-skipping transfer taxes, “residence” should be interpreted as “domicile,” which has been defined as “the fixed and permanent place of a person that functions as the center of his legal and domestic relations without the intention to move somewhere else.”
Individuals can have multiple residencies, but only one domicile. A common mistake for foreign businesspeople is believing that keeping a house in their home countries while continuing to pay taxes there will prevent them from being considered “domiciled” in the United States and obligated to pay estate, gift, and generation-skipping transfer taxes for assets located in the U.S., as well other property located in Mexico or anywhere else in the world.
All of the Puzzle Pieces Need to Fit Together
International estate planning is essentially a large jigsaw puzzle. Each strategy needs to be considered in terms of its broader impact. For example, Canadian limited partnerships are growing in popularity, but they are just one small piece of the puzzle. You can get your strategy on steroids by adding a U.S. foreign trust as opposed to a U.S. trust or foreign trust alone.
Regularly Updating Your Plan Is Essential
Any estate plan, regardless of your income, must be updated frequently to ensure it still protects your interests. However, Mexican or Latin American foreigners traveling to the United States in search of the American Dream tend to be much more upwardly mobile than the typical estate planning client. Instead of updating your plan every few years, you may need to schedule regular reviews to ensure changes in income, investment type, and residency won’t necessitate a new strategy.
Get the Information You Need to Make Smart Decisions
At MEG International Counsel, we are committed to providing our clients with estate planning services personalized to their unique needs as Mexican or Latin American investors. Request our book, The Definitive Blue Book of Estate Planning for Foreign Millionaires, to familiarize yourself with key estate planning concepts, then contact us to request a consultation