Cross-Border Estate Planning for Americans Living Abroad

Estate planning can be complex for U.S. citizens, and living abroad adds another layer of intricacy. With different tax laws in each country and potential exposure to both U.S. and foreign estate taxes, expatriates need a well-structured plan to protect their assets and minimize tax liabilities.

Understanding U.S. Federal and State Estate Taxes

The federal estate tax exemption for 2025 is $13.99 million per individual, meaning estates valued below this amount are not subject to federal estate tax. For estates exceeding this threshold, tax rates can reach up to 40%. However, strategic estate planning tools such as trusts, lifetime gifting, and charitable donations can help minimize tax burdens.

In addition to federal estate taxes, several states impose their own estate taxes, with exclusion limits significantly lower than the federal threshold. Some states, including Oregon, Rhode Island, and Massachusetts, have exemptions as low as $2 million. New York’s estate tax exclusion stands at $7.16 million, but estates exceeding this amount may face steep tax rates due to the state’s "cliff tax" rule.

A few states, such as Iowa, Nebraska, Kentucky, Maryland, New Jersey, and Pennsylvania, also impose inheritance taxes, which are based on the value of the inheritance and the beneficiary’s relationship to the deceased.

Navigating European and International Inheritance Taxes

For U.S. citizens residing in Europe or other foreign countries, estate planning must consider not only U.S. tax obligations but also local inheritance tax laws. Many European countries impose higher inheritance taxes with lower exemptions compared to the U.S. In some cases, expatriates may be taxed by both the U.S. and their country of residence.

To mitigate double taxation, it’s important to check whether the U.S. has an Estate and Gift Tax Treaty with your country of residence. These treaties may allow tax credits to offset payments made in one country against obligations in another.

Key Estate Planning Considerations for Expats

• Gifting Strategies: U.S. citizens can gift up to $19,000 per recipient annually without triggering gift taxes. Some countries also allow tax-free lifetime gifting, but the rules vary depending on the relationship between the giver and the recipient.
• Trusts and Legal Recognition: Some estate planning structures, such as trusts, may be effective in the U.S. but not recognized in other countries. Expatriates should ensure that their trusts comply with both U.S. and foreign laws to avoid unexpected taxes.
• Will Compliance: A U.S. will may not be legally valid in another country. Expats should review their estate documents to ensure compliance with the laws of their country of residence.

Protecting Your Assets Across Borders

Estate planning for Americans living overseas requires a customized, multi-jurisdictional approach. By working with professionals experienced in cross-border estate planning, expatriates can ensure their assets are structured efficiently while complying with both U.S. and international laws.

At The Werner Law Firm, we help Americans abroad navigate the complexities of estate planning, ensuring their wealth is protected and tax liabilities are minimized. Our experienced estate planning attorneys work closely with clients to create tailored strategies that provide peace of mind for both themselves and their families.

If you have any questions, schedule a free appointment with us through our online appointment page.

You can also read reviews from some of the hundreds of clients we have helped over the years.

Reference: Tax Management International Journal/Bloomberg Tax (Jan. 28, 2025) “Americans Living Overseas Need Cross-Border Estate Planning”