Introduction

Who among us does not have clients with ties to another country? These international connections often raise special considerations in estate planning. This article offers an overview of key U.S. estate tax rules that apply when clients have cross-border ties, while putting aside, for now, the related (and complex) topics of gift tax, income tax, and reporting requirements. It also highlights practical considerations around wills and ancillary documents for clients with property or presence in multiple jurisdictions.

Citizens and Residents or Not

As lawyers, we know that U.S. citizens and residents (more on “residents” below) are subject to the estate tax (IRC §2001(a)) on their worldwide assets. They are afforded an applicable exclusion amount (IRC §2010), which is the amount they can pass to others without paying estate tax. In 2025, this amount, also known as the estate tax exemption, is close to $14 million and the OBBBA bumps it to $15 million in 2026, adjusted for inflation in subsequent years (IRC §2010(c)(3)(C)). On an estate tax return, practitioners determine the potential tax on the estate and deduct the unified credit amount to get the tax due.

Suppose Jane Smith is a U.S. citizen or resident with a $15 million net estate (all located in the U.S.) when she tragically dies on Jan. 16, 2026. Since the potential tax on her estate is $5,945,800 and deducting the unified credit amountof $ 5,945,800 equals $0, no estate tax is due.

In contrast, nonresidents who are not citizens (NRNC, formerly called “nonresident aliens” or “NRA”) are subject to an estate tax under IRC §2101 for that part of their estate which is situated in the U.S. only (IRC §2103). NRNCs have a unified credit amount of $13,000 (IRC §2102(b)(1)), which means their applicable exclusion amount is $60,000 and their U.S.-situated estate over $60,000 is taxed. §2001(c).

Say Clarissa Cordero is a citizen and resident of Mexico (which has no “death tax treaty” with the U.S.). She owns a small cabin outside of Memphis, TN, a modest alternative to hotels for occasional business trips. She dies and after allowable deductions her U.S.-situated estate is $60,000. Since the potential tax on her estate is $13,000, and deducting the unified credit amount of $13,000 equals $0, no estate tax is due.

Whether an individual is a resident or not makes a very big difference between (1) the assets taxed – worldwide or U.S.-situated and (2) the estate tax exemption amount – $15 million or $60,000, so we need to understand how residency is determined.

Estate Tax Definition of Resident

A person is considered a U.S. resident for estate tax purposes if they have their domicile in the U.S. (limited to the 50 states and the District of Columbia). A person acquires domicile by living there with no definite present intent of leaving. 26 C.F.R. § 20.0–1(b)(1).

Lawful permanent residents (“green card holders”) are generally presumed domiciled in the U.S., since holding a green card demonstrates intent to reside indefinitely. (If a green card holder can prove they do not intend to stay indefinitely, they could challenge having U.S. domicile.)

Living in 50 states & D.C. + no definite present intent to leave

———->

Domicile in the U.S.

———->

U.S. Resident for estate tax

Determining whether someone has “no definite present intent to leave” relies on the facts and circumstances of the individual. Those interested in cases where it is not clear whether someone has domicile in the U.S. will find resources elsewhere.

Returning to Clarissa: she now has a green card, lives in Memphis, and has no definite present intention to leave the U.S. Clarissa also owns a stunning private retreat in Mexico. She is with Jane Smith and also tragically dies on January 16, 2026. Since Clarissa is now a resident, her worldwide assets are subject to estate tax and, with the property in Mexico, her taxable estate is $20 million dollars. Since the potential tax is $7,945,800 ($345,800 on the first million, plus 40% x $19 million), deducting the unified credit of $5,945,800, leaves an estate tax of $2 million.

Being a resident gives Clarissa a much larger unified credit, but also subjects her worldwide assets to taxation. When Clarissa was not a resident, her Mexico real property wasn’t in her U.S. estate because it is clearly located outside of the U.S. When clients are not residents, we need to understand which types of property are considered located in the U.S.

Determining Property Location (for NRNC)

Unless a Death Tax Treaty applies, the general rules for locating property for NRNC decedents are:

Located in the U.S.	Located outside the U.S.
Real estate and tangible personal property physically located in the U.S. (with an exception for art on loan for public exhibition).	Deposits not connected to a trade or business with a U.S. bank or branch (including a foreign branch), savings and loan association, or insurance company
Stocks of corporations organized under U.S. law.	Life insurance proceeds on the decedent’s life
Debts obligations of a U.S. person or resident, domestic business or political entity.	Non-U.S.-related debt obligations subject to exceptions around contingent interest

Real and tangible property (if in the U.S.) are located in the U.S. Intangible assets linked to U.S. persons or entities (debts and stocks) are located in the U.S. by statute. Due to statutory carve outs designed to avoid overreach or double taxation, however, some intangible assets, (personal deposits and life insurance proceeds), are deemed to be located outside the U.S.  26 C.F.R. § 20.2104-1 and § 20.2105-1.

Tax Treaties

When there is a Death Tax Treaty with another country, the rules are governed by the treaty. The countries with a treaty are Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, South Africa, Switzerland, and United Kingdom. These treaties are important because they can prevent double taxation, adjust the rules for determining where property is situated, and provide clarity that overrides the general statutory framework.

“You can only have one Will” … per jurisdiction

Most wills say, “I revoke all prior wills” to clarify that a new will supersedes any older wills. This language enforces having only one Will at a time, which is generally a great idea.

However, if a person has interests in more than one country, it may make sense to have a Will for each addressing the property located there, particularly real estate. A will prepared by an attorney (or appropriate professional) of and in the language of the country in which the real estate is located will be easier to probate when the time comes. Getting translations of a will from another country with the level of formality required can prove challenging.

Returning to Clarissa: NRNC – Mexico (no death tax treaty). She now owns the cabin outside of Memphis, a home in Mexico, stock in Costco, a checking account at Graceland Regional Bank, life insurance, and various accounts at Banorte Bank. Clarissa’s U.S. assets are the cabin in Memphis and stock in Costco. She wants them to go to her daughter who lives in the U.S. Clarissa’s Mexican assets are her home, her life insurance, and her accounts at Graceland Regional (a U.S. bank) and Banorte (a Mexican bank). She wants those to go to her son, who lives in Mexico.

Instead of a blanket revocation of “all prior wills,” the revocation can be qualified to acknowledge the existence, or likely future existence, of a will in another country.

“I, Clarissa Cordero, a citizen of and resident of the United Mexican States, revoke all prior Wills and Codicils, except my Will executed under the laws of the United Mexican States to dispose of my real and personal property located therein, and declare this to be my Will to dispose of my real and personal property located in the United States of America.” Or “I, Clarissa Cordero, a citizen of and resident of the United Mexican States, revoke all prior Wills and Codicils, except any Will I may execute under the laws of the United Mexican State to dispose of my real and personal property located therein, and declare this to be my Will to dispose of my real and personal property located in the United States of America.”

It is important that Clarissa’s Mexican counsel drafts that will so as not to revoke the U.S. will.

“Ancillaries” – Health Care & Financial Powers of Attorney

If a person is a citizen or resident, most practitioners will advise executing health and financial powers of attorney. For an NRNC who spends significant time in the U.S. or visits regularly, having a U.S. health care power of attorney naming who they would want to make healthcare decisions for them is prudent.

After all, if something happens while a client is in the U.S., their foreign directives may not be valid or could cause a delay. In addition, they may also wish to name different health care agents in the U.S. and abroad, depending on language fluency. The agent named can be someone living outside the U.S. – in our connected world, choosing a trusted agent is more important than geography.  

Nevertheless, services like DocuBank are particularly valuable for clients who travel a lot or live part-time overseas. Instead of relying on paperwork that may not be readily accessible—or even in the same country, the client gets a wallet card that instantly delivers their healthcare directives and information to hospitals around the world at any time.

“A couple was visiting Thailand when one of them had a catastrophic heart attack and was without oxygen to his brain for 15 minutes. Their spouse knew that their living will contained specific language about that situation, and so they called DocuBank. Our on-call staff was able to help and ensured the documents were delivered immediately.” Michael Wall, Director of Business Development, Docubank

For anyone with property in the U.S., executing a U.S. financial power of attorney can prevent costly or inconvenient delays if they become incapacitated or are unavailable. Here, too, it is not required that the named agent be a U.S. person or living in the U.S. For some practical matters, however, such as needing to go to a bank branch, naming an agent in the U.S. is often more efficient.

If a U.S. citizen is spending significant time outside of the U.S. in a particular country, it is worth connecting with local counsel with cross border experience to see if they recommend local equivalents of a health care or financial power of attorney.  Healthcare systems vary widely around the world, and a document drafted in the U.S. may not be recognized abroad. Financial institutions are likewise reluctant to accept documents with which they are unfamiliar.

These considerations highlight that international estate planning extends beyond tax exposure to the practical realities of implementing a client’s plan across jurisdictions.

Conclusion:

This article only scratches the surface of international estate planning, offering a framework for spotting issues and identifying when further research is warranted. As advisors, we should help clients anticipate the complexities that arise when assets, residence, or family connections span borders. In addition to understanding the U.S. estate tax framework, counsel should be mindful of how wills, powers of attorney, and other planning documents may need to align across jurisdictions. When clients own property abroad or spend significant time in another country, coordinating with local counsel familiar with cross-border matters is essential. Future discussions may explore related gift tax, income tax, and reporting considerations that often accompany international planning.

Resources/Links:

Docubank – InterActive Legal Link: https://pages.docubank.com/interactive-legal

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