Navigating Your Legacy Planning, Probate, Taxes, and Asset Protection Objectives

Legacy Planning, Probate, Taxes, and Asset Protection
Legacy Planning, Probate, Taxes, and Asset ProtectionNavigating Your Legacy Planning, Probate, Taxes, and Asset Protection Objectives

August 3, 2015
Paris, France

Dear Offshore Living Letter Reader,

I’ve been telling you about my current property purchase in Portugal. I’ve been working with my attorney in Lisbon to determine the best way to take title to the apartment I’m buying in Lagos. In response to my most recent dispatch on this, a reader wrote in to suggest that I title the property in the names of my kids. That, he suggests, would avoid probate, which I’ve indicated is a priority for me.

The reader is correct. Titling the property in my children’s names would eliminate probate in Portugal when my wife and I die. However, it wouldn’t satisfy my long-term legacy-planning objectives. The grandkids would have to go through probate when my kids die.

I’m concerned about probate, but I’m more concerned about legacy planning.

Wealth built up by one generation typically disappears within the next two. Estate taxes, probate costs, trust-fund spendthrifts with no respect for the money they didn’t earn, and bad investments all combine, usually, to disappear assets. I’m doing my best to raise my children so they understand the value of what we have and so that they feel like stockholders in the family’s assets. I want them to take ownership and therefore to be inclined to take care of what we’re building. However, I probably won’t be around long enough to have the same influence on my grandkids or, certainly, my great-grandkids… so I’m trying hard to put strategies and structures in place to help my family retain whatever wealth I manage to leave behind.

In addition, putting this (or any such investment) property in the kids’ names would mean that whatever rental income the apartment generates would technically be my kids’ rental income, creating a current tax and reporting obligation for them.

Furthermore, titling the apartment directly into my children’s names would mean the property would be …Continue Reading

Holding and Owning Real Estate Overseas

buying real estate overseas
buying real estate overseasThe Best Way To Hold Real Estate Assets Overseas

July 30, 2015
Paris, France

Dear Offshore Living Letter Reader,

Trying to figure out the best way to take title to a piece of real estate you’re buying overseas can get complicated.

First, you have to remember probate. Every country has it. Take title to a piece of property in your own name, and your heirs will become well versed in the particulars and complications of probate in whichever country that piece of property lies.

So, while titling a piece of property in your personal name can be the simplest thing in most cases, it’s generally not the best solution long-term. Even if you don’t care about probate (after all, you’ll be dead… your heirs can figure it out), there are other reasons to use an entity to hold foreign real estate assets.

In some cases, it can be the only option.

Croatia was a good example of this a decade ago, before this country joined the EU. Back then (which is when I invested here), Croatia imposed a restriction on the foreign purchase of real estate… a form of reciprocity. For you to be able to buy property in Croatia, Croatians had to be specifically allowed to buy property in your home country.

This created a real challenge for Americans, because, in the case of an American buyer, Croatia wanted to see a letter indicating that Croatians could buy property not only in the United States but …Continue Reading