International Considerations for Cross-Border Inheritances

Overview

Cross-border inheritances arise whenever assets or beneficiaries sit in more than one legal jurisdiction. That can mean a U.S. resident inheriting a property in France, a nonresident owning bank accounts in the United States, or a decedent with passports from two countries. These situations combine differences in succession law, tax rules, probate practice, and documentation requirements. Without early planning and local advice, heirs can face delays, double taxation, forced heirship claims, and unexpected fees.

In my practice I’ve seen three recurring driver issues: (1) which country’s court has authority (jurisdiction), (2) whether local law limits testamentary freedom (forced heirship or community property rules), and (3) how taxes and reporting rules interact across borders. Each question changes how you plan and what documents you need.

Key legal issues to watch

• Jurisdiction and applicable law: Generally, immovable property (real estate) is governed by the law where it’s located, while movable assets (bank accounts, securities) are often governed by the decedent’s domicile or nationality. That creates split estates that can require multiple probate proceedings.
• Probate and estate administration: Multiple administrations may be necessary — for example, a formal probate in the country of residence and a separate estate procedure where property sits. Some countries allow a foreign certificate of probate to be recognized; others require full local procedures.
• Forced heirship and marital property regimes: Many civil-law countries (e.g., France, parts of Latin America) have forced heirship rules that guarantee a portion of the estate to certain relatives. Community property regimes (common in parts of Europe and some U.S. states) can also determine what passes automatically to a spouse.
• Conflicts of law: Courts decide which country’s law governs particular assets. A competent cross-border estate plan tries to align these rules or at least make the heir’s path predictable.

Taxes: what can surprise heirs

• Different tax types: Countries use different labels and systems — “estate tax,” “inheritance tax,” or transfer duties. Estate taxes are typically levied on the deceased’s estate; inheritance taxes are levied on recipients. Both can apply in different jurisdictions to the same pool of assets.
• Double exposure: If two countries claim tax, treaties or unilateral credit rules may reduce double taxation, but not always. U.S. persons, for example, may be subject to a foreign inheritance/estate tax and to U.S. estate tax rules; foreign tax credits can sometimes offset U.S. liabilities (see IRS guidance for estate and gift taxes).
• Reporting obligations: U.S. persons receiving certain foreign inheritances or gifts must report them (for example, Form 3520 is used to report certain gifts and inheritances from a foreign person or foreign estate) — failure to report can trigger steep penalties (see IRS Form 3520 instructions: https://www.irs.gov/forms-pubs/about-form-3520).
• Valuation and timing: Taxable value is usually the fair market value at the date of death, but countries differ on valuation rules, acceptable appraisers, and whether probate values are final for tax purposes.

Sources: IRS estate and gift tax pages (irs.gov), Form 3520 instructions, and country tax authorities for local rules. For consumer guidance on inheritance problems see the CFPB (https://www.consumerfinance.gov).

Practical administration steps

1. Identify all assets and their location(s).

• Produce a global inventory with title documents, account numbers, and local contact info for banks, brokers, and registries.

1. Determine the decedent’s situs for each asset.

• Real estate: country where the property sits.
• Bank accounts or securities: often where the account is held or where the custodian is domiciled.

1. Pull local probate and tax rules early.

• Find whether a local probate or succession court must be opened and whether local executors or administrators are required.

1. Assess treaty protections.

• Tax treaties and estate-related agreements can change outcomes; verify their scope and any residency tie-breakers.

1. Manage exchange-rate and liquidity issues.

• Estates with illiquid foreign assets may need bridge financing or sale approvals; consider local tax-withholding on sales.

1. Secure original documents and centralized translations.

• Many countries require original death certificates, notarized powers of attorney, apostilles, or certified translations.

Estate planning and mitigation strategies

• Use targeted titling: Holding assets in vehicles (trusts, foreign corporations, nominee arrangements) can sometimes simplify local succession consequences, but these structures must be set up with both jurisdictions in mind to avoid unintended tax or anti-avoidance rules.
• Cross-border wills: You can draft a will that covers domiciliary personal property while leaving immovables to local-law wills. The Convention providing a Uniform Law on the Form of an International Will (Hague Convention) can help in some jurisdictions but is not universal.
• Life insurance and beneficiary designations: In many jurisdictions, life insurance proceeds pass by contract rather than probate — naming beneficiaries clearly can speed access and may avoid some local succession claims.
• Gifting and phased transfers: Lifetime transfers can reduce taxable estates in one country but may create gift taxes or reporting in another. Timing and residency matter.

See our related pieces on broader planning approaches: International Estate Planning: Managing Assets Across Borders and Cross-Border Estate Planning: Navigating Multiple Jurisdictions.

Case vignettes (lessons learned)

• Real estate in civil-law country: A U.S. heir inherited property in France and assumed U.S. law controlled. Local forced heirship and succession formalities required a French notary, legal fees, and a distribution that differed from the decedent’s U.S. will. The lesson: local succession law can override foreign wills for immovable property.
• Reporting gap: A U.S. beneficiary received cash from a foreign estate worth over six figures and didn’t file Form 3520. When identified during an audit, the estate faced penalties that significantly reduced net value. The lesson: reporting matters as much as tax payment.

Common mistakes to avoid

• Relying on a single-country plan: A will drafted exclusively under one country’s law may fail or cause unintended results elsewhere.
• Assuming probate is the same everywhere: Timelines, fee structures, and documentation vary. Some countries require notarized inheritance inventories and can withhold transfer until taxes are paid.
• Ignoring forced heirship: In some jurisdictions you cannot disinherit certain relatives; planning must respect these rules or use legal structures that are recognized locally.
• Missing reporting deadlines: Penalties and interest can accumulate quickly if foreign inheritances or gifts are not timely reported.

Practical checklist for heirs and executors

• Make a global asset list and locate original title documents.
• Ask for local legal and tax advice in each country with significant assets.
• Check for applicable tax treaties and credit mechanisms between countries.
• Confirm whether the will requires a local probate or whether a foreign grant can be recognized.
• Establish who can act as local representative and whether powers of attorney or apostilles are needed.
• Review beneficiary designations on insurance, retirement accounts, and bank accounts.
• Plan for currency conversion and repatriation costs.

For an executor-focused procedural guide, see our Executor’s Checklist for Filing Estate and Final Individual Returns.

When to hire specialists

Hire local counsel and a tax advisor when any of the following apply: substantial foreign real estate, business interests in multiple countries, estate values close to local tax thresholds, complex family structures (multiple marriages, stepchildren), or when forced heirship or foreign probate formalities appear likely. A coordinated team (U.S. counsel, local counsel in the asset country, and an international tax advisor) avoids contradictory advice and helps ensure filings are timely.

Common FAQs (short answers)

• Do I always owe tax on a foreign inheritance? Not always — tax depends on the country, the asset type, and the beneficiary’s residence. Check local rules and treaties.
• Must I report foreign inheritances to U.S. authorities? U.S. persons may need to file Form 3520 and other disclosures. See IRS guidance (irs.gov) and consult a tax advisor.
• Can a U.S. will control European real estate? Often not. Immovable property is usually governed by the law of the country where it sits; a local will or succession plan may be necessary.

Sources and further reading

• IRS — Estate and Gift Taxes (https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes)
• IRS — Instructions for Form 3520 (https://www.irs.gov/forms-pubs/about-form-3520)
• Consumer Financial Protection Bureau — Inheritance Issues (https://www.consumerfinance.gov)
• Local tax and succession authorities (consult the appropriate government site for the asset’s country)

Professional disclaimer

This article is educational and does not constitute legal or tax advice. Cross-border succession and tax outcomes rely on facts, dates, treaty text, and local law changes. Consult qualified attorneys and tax professionals licensed in each relevant country before acting.

If you’d like, I can adapt this guidance into a short checklist tailored to one country (for example, France, the UK, Canada, or the U.S.)—tell me which country and I’ll generate a country-specific action plan.