Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
US Estate Planning for Americans in Switzerland – the Fundamentals
Presentation for American Citizens Abroad September 21, 2015 by Anthony D. Martin, Esq.
DM3/535982v5
www.duanemorris.com
Disclaimer
• In compliance with U.S. Treasury Regulations, please be advised that any tax advice given herein was not intended to be used, and cannot be used, for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed herein.
2
www.duanemorris.com
WHO ARE YOU?
• Are You a U.S. Citizen?
• Are you planning to expatriate?
• x
• Are you single? Married?
• If married, is your spouse a U.S. citizen?
• If not, does your spouse have a Green Card?
• If not, of which country is your spouse a citizen:
• Switzerland?
3
www.duanemorris.com
Who Are Your Children?
• Minors? • Adults?
4
www.duanemorris.com
How Do They Get Along?
• Happily? • Unhappily?
5
www.duanemorris.com
What is your Domicile?
• Are you planning to live out your days in the U.S.?
• If so, in which State?
• Are you planning to live out your days outside of the U.S.? If so, where?
6
www.duanemorris.com
What are your Assets?
• Real Estate? • Movables?
7
www.duanemorris.com
Who Owns Them?
• You alone? • You Jointly with Spouse?
8
www.duanemorris.com
Where Are Your Assets?
• U.S. Situs Assets
• Real estate in U.S.• Shares of U.S.
companies• Cash in U.S.
brokers accounts, U.S. money market accounts, and U.S. life insurance [but not in U.S. banks]
• U.S. debt [but not portfolio debt]
• Non-U.S. Situs Assets
• Cash in U.S. bank accounts
• Portfolio debt (e.g. treasury bonds)
• Life insurance proceeds on non-U.S. persons
9
www.duanemorris.com
What’s Your Net Worth?
• Not Exposed to U.S. Estate Tax?
Under $5.43 Million Over $5.43 Million
What about state estate tax?
• Exposed to U.S. Estate Tax
10
www.duanemorris.com
What Lifetime Gifts Have You Made?
• Only:• Gifts within the
Annual Exclusion Amounts (e.g. $14,000 in 2015)
• and• Direct Medical and
Educational Expenses
• Problem Gifts
• Non-U.S. citizen spousal gifts over annual limit, including by establishing joint accounts ($147,000 in 2015)
• Incomplete gifts, such as contributions to trusts, including insurance premiums to ILITs
11
www.duanemorris.com
What Estate Plans Do You Need?
• If you are single:
• Who will take care of you?
•
• Are you OK with Intestacy?
12
www.duanemorris.com
Are You Married to a ?
• Do You Have a U.S. Will?
• In what U.S. state are you Domiciled?
• Where will your Will be Probated?
• How do you Avoid Probate?
• Do You Have a Swiss Will?
• Did you Elect to have U.S. law govern your Will?
13
www.duanemorris.com
Will Your Spouse Inherit More ThanYour Lifetime Exemption from Estate Tax?
• Did You Provide for a Qualified Domestic Trust (QDOT)?
• Did You Provide for Life Insurance in an Irrevocable Life Insurance Trust (ILIT)?
14
www.duanemorris.com
Do You an Own any Assets?
• Do You have a Marital Agreement with your
• Spouse?
• Have You Consulted a Swiss Notary or Swiss Attorney? [Your Swiss attorney can help with international tax/treaty matters and advise how to make US estate plans valid in Switzerland]
• What is Your Exposure to Cantonal Inheritance Tax? [Exposure to Swiss federal IHT?]
15
www.duanemorris.com
Are Your Minor Children Dual Citizens?
• Who Will Be Their Guardians?
• Will You Have Trusts For Them?
16
www.duanemorris.com
What U.S. Estate Plans Should You Have?
• What’s in Your Will?
17
• Who are Your Executors?
• Who are the Guardians of Your Minor Children?
• Who gets Your Tangible Property?
www.duanemorris.com
Do You Need a Trust?
• Should Your Trust be Testamentary?
• Or should you Establish it Now (a Revocable Trust)?
• • What is Probate and Why Avoid it?
• $$$, Deeelays,
18
www.duanemorris.com
What’s In Your Revocable Trust?
• Who are Your Trustees?
• Who are Your Beneficiaries?• Your Surviving Spouse and Children• Do You have any Special Bequests?• What if Your Spouse and Children
Don’t Survive?• What about Parents? • What about Charities?19
www.duanemorris.com
When Does Your Spouse Inherit?
• Does Your Spouse Inherit Outright or In a Marital Trust?
• What if your Spouse Remarries?
• Do you Worry about Creditors of your Spouse?
• What if your Spouse is Incapacitated?20
www.duanemorris.com
The Amazing Credit Shelter Trust (within your Revocable Trust)• It saves Estate Taxes for your Children
• Your Spouse can be Co-Trustee and Distribute
• Principal for her Health, Education, Maintenance and Support (HEMS)
• The Independent Trustee can Distribute Discretionary $$$ above HEMS
21
www.duanemorris.com
When Do Your Children Inherit?
• When are they “Mature” enough?
• Do you worry about them getting Divorced or into trouble with Creditors?
• What about Unforeseen Contingencies – such as Special Needs?
22
www.duanemorris.com
What Assets Do You Put In Your Revocable Trust?• Your Investments:
• Your Intellectual Property:
• What about your Real Estate?
23
www.duanemorris.com
What Happens To Your Revocable Trust When Spouse Dies And Spouse Survives?
24
Revocable Trust$7M
Credit Shelter Trust$5.43M(2015)
QDOT$1.57m
www.duanemorris.com
What Don’t You Put In Your Revocable Trust?
• Life Insurance
• They have Beneficiary Designations (BDs)
• Have you Integrated your BDs with your Trust planning?
• IRAs & Retirement Plans
25
www.duanemorris.com
Should You Have Instructions If You Are Incapacitated?
• Talk to your attorney about your:
• Power of Attorney and your
• Advanced Medical Directive
26
www.duanemorris.com
What’s In Your Power of Attorney (POA)?
• Who are your Attorneys-in-Fact?
• Should your POA be effective NOW or only when you are Incapacitated?
• Whom do you Nominate to be Appointed your Guardian or Conservator?
• What about Your Digital Assets? 27
www.duanemorris.com
What’s In Your Advanced Medical Directive?
• Who are Your Medical Care Decision-Makers?
• What are Your End of Life Wishes?
• Have You Issued a HIPAA Authorization for U.S. providers?
28
www.duanemorris.com
What If Things Change After You’ve Set Up Your Plans – and you are Alive?
• You can change them while you are competent
• What if you are incompetent?
29
www.duanemorris.com
What If Things Change After You’ve Set Up Your Plans – and you are Dead?
• Post-Mortem Planning
• Out-of-Court Settlement
• Trust Amendment and Decanting
• Your Last Resort:
30
www.duanemorris.com
CONCLUSIONS
• Consult and Professional Advisors – A Will is Not Enough
• If you are a you need to provide for the disposition of your assets
• If you are dual and • citizen, law will govern the
Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
Tony Martin can be reached in the Boston office of Duane Morris:[email protected]
