Nothing seems simple when it comes to planning for your foreign assets. You may ask yourself: “Can a California attorney help me plan for my foreign property? Does my foreign investment or income require reporting to the Internal Revenue Service?” We believe addressing these matters can be simple. Just like your domestic assets are subject to reporting requirements with the IRS, so are your foreign assets. Further, estate planning for your foreign property can be done with relative ease, despite contrary belief.
People put off estate planning for their foreign property because they simply do not know how. Often people are told that they must seek professional advice in the foreign country where the property is located, which is no easy feat without being in that country and familiar with the local language. Despite common misconceptions, estate planning for your foreign property can be accomplished in the U.S. Also, it is true that many foreign countries do not recognize trusts, a common estate planning vehicle used in California. But there is a planning vehicle that can be done in the U.S that is recognized by most foreign countries: an international will. This estate planning vehicle is like a will that you would set up in California for your domestic assets, and the few different requirements of an international will are uniform and well recognized by many estate planning professionals. Thus, if you have waited to plan for your foreign property out of fear it would be too difficult, fear no more. Seek advice from your local estate planning attorney to establish your international will.
Further, investments abroad are becoming more common as the Silicon Valley grows more diverse. Often people move to the United States while retaining their assets in their country of origin. Others find foreign investments a desirable method of diversifying. Whatever the case may be, it is important that foreign investments and income are properly reported to the IRS. Reporting foreign investments and income is frequently overlooked by taxpayers, and thus the federal government has recently shifted their attention to closely monitor compliance. You should seek the assistance of a tax professional to see if your foreign investments require a Report of Foreign Bank and Financial Accounts, commonly known as an FBAR. Failure to timely file a required FBAR can result in harsh penalties, so do not delay in determining if and when you have to file an FBAR to report your foreign investment or income.
Whether you own foreign properties or invest in foreign accounts, you should take due care in making sure you are following the reporting requirements. In any one of the situations described above, the process can be relatively streamlined and straight forward. To determine if your foreign asset requires reporting and to find out what you need to file with the IRS, contact an experienced tax or estate planning professional.