Estate Planning for US Expats: Cross-Border Wills, Trusts, and Tax (2026)

US citizens who live abroad don't escape US estate tax — it applies to your worldwide assets regardless of where you live or where assets are located. But you also have to navigate the estate and succession laws of every country where you own significant assets or have a family member who is not a US citizen. The two systems interact in ways that catch most families off guard: the country where your apartment is located may legally require a share to go to your children, your non-citizen spouse cannot inherit your estate tax-free without specific trust structures, and your US will may be unenforceable on assets in some jurisdictions. Here is how to think through each layer.

US Federal Estate Tax Applies to Your Worldwide Assets

US citizens are subject to US federal estate tax on their entire worldwide estate — US brokerage accounts, foreign bank accounts, the apartment in Paris, the pension, the life insurance proceeds. Residency abroad changes nothing about this rule. The taxable estate is everything you own at death, regardless of where it sits.²

The good news: the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made the $15 million per-person exemption permanent and eliminated the sunset provision that TCJA had set for the end of 2025.¹ For 2026, the first $15,000,000 of your estate passes free of federal estate tax. A married couple can combine exemptions ($30M combined), and the executor can make a portability election on Form 706 to transfer any unused exemption from the first spouse to die to the surviving spouse — but only if Form 706 is timely filed, even when no tax is owed at the first death.

The GST (generation-skipping transfer) exemption is also $15 million per person under OBBBA, but it is not portable between spouses. Each person must use their own GST exemption during life or at death.

State Estate Taxes: The $15M Exemption Doesn't Travel

The OBBBA exemption is federal. Twelve US states and Washington DC impose their own separate estate taxes with much lower exemptions. If you were domiciled in one of these states before moving abroad and haven't formally severed that domicile, the state will assert estate tax at your death on your worldwide estate (or, for some states, on in-state property only).

High-exposure states for expats who haven't cut ties:

• Oregon: $1,000,000 exemption, 10–16% rate — the lowest exemption in any US state
• Massachusetts: $2,000,000 exemption, 0.8–16% rate
• New York: $7,350,000 exemption (2026) — but with a "cliff" provision: if your estate exceeds 105% of the exemption, you lose the entire exemption and pay estate tax on the full amount
• Washington: ~$2.2M exemption, 10–20% rate
• Illinois: $4,000,000 exemption, 0.8–16% rate
• Minnesota: $3,000,000 exemption, 13–16% rate

The same state domicile severing steps you use to eliminate state income tax liability apply here: change your driver's license, voter registration, professional memberships, and formal declarations. Keeping a vacation home in a high-estate-tax state doesn't automatically preserve domicile, but it is evidence courts weigh if the state challenges your claim.

The Non-Citizen Spouse: No Unlimited Marital Deduction

Under US law, assets passing to a US citizen spouse at death qualify for an unlimited marital deduction — no estate tax, regardless of amount. This doesn't apply when the surviving spouse is not a US citizen.³ The policy rationale: a non-citizen spouse could receive assets US-estate-tax-free and then move those assets permanently offshore beyond the reach of the IRS. Congress responded with two mechanisms.

The $194,000 Annual Gift Exclusion for Non-Citizen Spouses

You can give a non-citizen spouse up to $194,000 per year (2026) without gift tax or using your lifetime exemption.¹ This is more than 10× the $19,000 annual exclusion for other recipients, but it is still a hard cap — anything above $194,000 counts against your $15M lifetime exemption or is currently taxable if the exemption is exhausted. Annual gift programs using this exclusion can systematically shift assets to the non-citizen spouse before death.

QDOT Trust (IRC §2056A)

If you want to leave more than your remaining exemption to a non-citizen spouse at death, the assets must pass through a Qualified Domestic Trust (QDOT) to qualify for the marital deduction and defer estate tax.³ Key mechanics:

• At least one trustee must be a US citizen or US corporation. If QDOT corpus exceeds $2,000,000, the trustee must be a US bank or a bond posted with the IRS.
• Income distributions to the surviving non-citizen spouse: not subject to estate tax (if spouse is a US resident) or subject to 30% withholding (if non-resident alien).
• Principal distributions (corpus) trigger the deferred estate tax at the first spouse's marginal rate — the QDOT defers the tax until corpus is distributed, but does not eliminate it.
• When the surviving non-citizen spouse dies, the remaining QDOT corpus is included in the estate and taxed.
• If the surviving spouse becomes a US citizen before the QDOT is established (and before the estate tax return is due), the QDOT requirement disappears and the unlimited marital deduction applies normally.

Forced Heirship: What Civil-Law Countries Can Override Your Will

Common-law countries (US, UK, Australia, Canada) give you near-complete freedom to leave your estate to whomever you choose. Civil-law countries — much of continental Europe, Latin America, and parts of Asia — do not. They reserve a mandatory share (réserve héréditaire in France, Pflichtteil in Germany, legítima in Spain) for certain family members that cannot be disinherited regardless of what your will says.

France

French law reserves a fixed share for children: one child receives at least 50% of the estate; two children share at least 66%; three or more children share at least 75%.⁴ Spouses do not have a forced share in France (though they have usufruct rights). A US will that leaves everything to the surviving spouse or a trust can be challenged by children under French law if French property is involved.

Germany

German law gives children, parents, and the surviving spouse a Pflichtteil — a monetary claim equal to half of what they would receive under intestate succession. It is not a right to specific assets but a debt claim against the estate. A disinherited German child cannot compel the transfer of your Munich apartment, but they can sue the estate for cash equal to half their intestate share.⁴

Spain, Italy, Netherlands

Spain reserves two-thirds of the estate for children (one strict third, one "betterment" third distributable among children freely). Italy reserves shares for spouse and children (50% for a spouse alone; up to 67% when children are also present). The Netherlands provides a legitimate portion of 50% of the intestate share, structured as a monetary claim rather than an in-kind share.

Brussels IV: The EU Election Most US Expats Don't Make

The EU Succession Regulation (Brussels IV), which took effect August 17, 2015, changed the default rule for succession of EU-situated assets. Previously, each EU member state applied its own conflict-of-laws rules; under Brussels IV, the default is the law of the country where the deceased was habitually resident at death — which for an expat living in France means French law, including forced heirship.⁵

Critically, Brussels IV allows any person — including a US citizen — to elect the law of their nationality to govern succession of their worldwide estate. A US citizen living in Germany can include a choice-of-law clause in their will selecting the law of their US state of domicile. If that state's law (e.g., Texas or Florida) has no forced heirship rules, the election can override German Pflichtteil claims on German-situated assets.

US Estate Tax Treaties: 16 Countries

The US has estate and gift tax treaties with 16 countries.⁶ These are separate from income tax treaties and serve different purposes:

• Pro-rata unified credit: non-resident alien decedents with US assets normally receive only a $60,000 US estate tax exemption. Estate tax treaties often grant them a proportionate share of the full $15M US exemption (their US assets / worldwide assets × $15M).
• Double-death-tax relief: if both the US and the foreign country would tax the same asset, the treaty typically allocates taxing rights or provides a credit.
• Situs rule modifications: the treaty may override domestic situs rules for certain assets.

Countries with US estate tax treaties: Australia, Austria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, Norway, South Africa, Sweden, Switzerland, United Kingdom. Notable absences include Canada, Mexico, China, India, Brazil, UAE, Singapore, Hong Kong, and Spain (US-Spain estate tax treaty was terminated in 2021).

For US citizens dying abroad, the treaty usually means the foreign country's estate or inheritance tax can be credited against the US estate tax on the same asset. The mechanics depend heavily on which treaty applies and how the foreign country characterizes its tax — inheritance taxes levied on beneficiaries (common in the UK, Germany, and Japan) are treated differently from estate taxes levied on the decedent's estate.

Situs Rules: Which Jurisdiction Governs What

Both succession law (who gets the assets) and estate tax (who pays what) depend on where assets are legally "situated." The default US situs rules:

Treaty situs rules can override these defaults. The US-UK estate tax treaty, for example, modifies situs for certain government securities, shares of companies, and bank accounts. Running through the situs analysis for each asset class before death determines which countries have jurisdiction to tax it and which succession laws apply to transfer it.

Dual Wills: One for the US, One for Each Foreign Country

A single US will is often inadequate to transfer foreign assets efficiently. Foreign courts may refuse to recognize it (especially if it hasn't been notarized and apostilled under the Hague Apostille Convention), probate may take years in the foreign jurisdiction, and the will may not comply with local formalities.

The standard expat estate-planning approach is a dual (or multiple) will strategy:

• A US will (or revocable trust) governs US assets
• A foreign will drafted under local law governs assets in each key foreign country
• Each will must explicitly limit its scope to its jurisdiction — a poorly drafted foreign will that doesn't carve out US assets can inadvertently revoke part of the US will if the jurisdictions treat them as conflicting

In EU countries, a Brussels IV choice-of-law clause should be included in the foreign will. Outside the EU, each jurisdiction's conflict-of-laws rules control, and local counsel must confirm whether a US-law choice will be respected.

Foreign Life Insurance: Estate-Planning Tool or PFIC Trap?

Life insurance is marketed heavily in the UK (whole-of-life policies, investment bonds), Germany (Kapitallebensversicherung), and Singapore (participating whole life) as estate-planning vehicles — the logic being that the death benefit passes outside the estate and can fund inheritance taxes. For a US citizen, this strategy has a fatal flaw.

Foreign life insurance policies with an investment component are almost universally PFICs — Passive Foreign Investment Companies under the §1291 default regime. The investment portion of the policy is treated as foreign mutual fund ownership. Every year that the policy accrues cash value triggers potential excess-distribution calculations. At surrender or maturity, ordinary income tax plus compound interest penalties going back to the year of purchase apply to the accumulated earnings.

Pre-Death Planning Checklist for US Expat Families

1. Determine domicile state. Confirm you've severed domicile with high-estate-tax states. If you haven't, run the math on state estate tax exposure vs. the cost and complexity of severing.
2. Identify assets by situs. List every material asset — real property, financial accounts, retirement accounts, business interests — and map each to its jurisdiction for both succession law and estate tax purposes.
3. Identify forced-heirship exposure. For each foreign asset jurisdiction, determine whether forced heirship applies and whether a Brussels IV election (for EU countries) is viable and sufficient.
4. QDOT if needed. If your spouse is not a US citizen and your combined estate may exceed your remaining exemption, plan the QDOT structure before it is needed in a crisis.
5. File Form 706 at first death. Even if no tax is owed, a timely Form 706 is required to elect portability of the DSUEA for the surviving spouse.
6. Draft country-specific wills. For each jurisdiction with material assets, have a local attorney draft a will with an explicit scope limitation and, where applicable, a Brussels IV choice-of-law clause.
7. Avoid foreign investment-linked life insurance. Use term insurance for pure death-benefit needs. If you already own a foreign whole-life or endowment policy, consult a specialist about PFIC remediation options (QEF election, mark-to-market, or surrender if the PFIC gain is manageable).
8. Review beneficiary designations. Retirement accounts pass outside the will by beneficiary designation. Confirm designations are current and, where the spouse is a non-citizen, consider whether a spousal QDOT needs to be named as beneficiary of IRA/401(k) assets above the exemption amount.
9. Annual gifting program. If you want to shift wealth to a non-citizen spouse, the $194,000/year gift exclusion allows systematic transfers. Document each gift and file Form 709 if required.