As clients return from their summer holidays—some from overseas visits with family—it’s a great time to consider the unique challenges those with dual citizenship face. Estate planning becomes increasingly complex when international elements are involved, making it essential to address key issues early.
Here are some considerations for clients with dual citizenship:
1️⃣ Inheritance Tax Risks: If their country of citizenship has inheritance tax laws, these may apply to worldwide assets, including those held in Australia.
2️⃣ Residency and Taxation :Dual citizenship may impact Australian residency status and residency tests for taxation purposes. Adverse tax effects can arise if they or any nominated beneficiaries are non-residents for tax purposes.
3️⃣ Executor Residency: If any chosen executors are non-residents, the estate might be deemed a "non-resident trust" for taxation purposes.
4️⃣ Assets in Foreign Jurisdictions :Assets in countries with civil law systems or those adhering to "forced inheritance" rules require careful planning. Consideration should also be given to whether those countries are signatories to the Convention on International Wills.
Action Points for Advisers:
✔️ Identify if clients hold overseas assets and assess their location, type, and ownership structure.
✔️ Confirm whether these assets are in a common or civil law jurisdiction.
✔️ Evaluate their residency and domicile status in Australia.
✔️ Determine if they are beneficiaries of a foreign trust.
Engaging in these discussions can help your clients mitigate risks and navigate the complexities of cross-border estate planning.
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