At the time you begin your lifetime and estate planning, you will likely be presented with a planning questionnaire. This questionnaire will ask for information regarding the real and personal property that you own or in which you have an interest. Don't take for granted the questions regarding property and assets that you own, and in particular, where those assets are located. You may reside in Pennsylvania and likely have purchased your home here. In addition you may have purchased a vacation condominium in Florida, or a cabin in Wyoming. Perhaps you are a partner in a partnership with other family members from Arizona that owns rental property in Phoenix. Maybe you have inherited the family vacation property in Ontario, Canada.  Perhaps your financial and estate plan involves off-shore trusts or investments.

             If you own or acquire out of state or foreign assets, it is not enough to plan your estate based solely on the value of those assets. The laws vary among the different states of the United States. For example, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states. Community property rights between spouses in these jurisdictions may or may not result in the disposition that you desire and that you would expect based upon the treatment of property in a common law state such as Pennsylvania. Different states have different inheritance tax provisions that should be considered so your estate and beneficiaries have proper liquidity to pay any taxes that may be applicable to the property located in another state. The formalities of a will vary from state-to-state. For example the number of witnesses may not be the same in another state as required in Pennsylvania. So if you own property in another state (or country) and ancillary administration is necessary to transfer property, you must be certain that your Last Will and Testament meets the requirements for probate in each applicable jurisdiction. 

             If you were divorced in another state, there may be property subject to a divorce decree or order.  Partnership or stock purchase agreements may govern property dispositions and be subject to the laws of another state.

             Property and assets in foreign countries create special problems. Not only must your plan anticipate any foreign taxes that may apply, but the estate administration should anticipate additional expense and delay associated with foreign ownership. Currency fluctuation and difficulty locating qualified appraisers may present challenges in valuing the foreign assets in U.S. dollars for purposes of determining the U.S. taxable estate. Continued ownership by a family member or other desired beneficiary may be restricted based on the laws and regulations of the country in which the property is located.

             You should not curtail your out of state or foreign investments simply because there may be some additional planning involved. If your dream retirement villa is in Mexico, then you need to make the extra planning effort so that your dream does not become your family's nightmare. How do you properly plan for these assets? First, you pay careful attention to your estate planning questionnaire and provide your advisor with as much detail as you have available. Second, determine the applicable tax, disposition and ownership laws and regulations applicable to the property in other jurisdictions. If there are questions regarding the ownership, valuation, probate or any other matters involving the property, seek local counsel so that you can resolve these matters as part of your lifetime planning. 

             When dealing with another state or another country, the question asked is: "Do you know a good lawyer there?" The best answer to this question is to contact an attorney who is familiar with your lifetime and estate planning needs and is able to discuss these needs with someone who understands the language and business culture and who can provide the legal expertise and services you require in another state or country. Through its membership in Lawyers Associated Worldwide (LAW), the Knox Law Firm is able to reach a network of independent law firms located in over 80 major commercial centers throughout the world. Its membership in LAW enables the Knox Firm to speak on your behalf with someone who is fluent in the language, customs and laws applicable to your foreign or out of state property. One telephone call or email allows access to built-in legal contacts with independent, indigenous law firms in any part of the globe. The presence of LAW's member firms in so many places around the world means fast, efficient and personalized legal services.

             So, if you are fortunate enough to own property or assets in another state or country, don't take the estate planning for these assets for granted. Please make sure that you plan accordingly so that your heirs and beneficiaries can enjoy these assets as fully as you intend.

For additional information, please contact:

David M. Mosier, Esq.
Knox, McLaughlin, Gornall & Sennett, P.C.
120 West Tenth Street
Erie, Pennsylvania 16501-1461
Telephone (814) 459-2800; Fax (814) 453-4530
E-mail: dmosier@kmgslaw.com