If you own real estate outside the United States, your New York estate plan may not cover as much as you think. For families navigating international estate planning in NYC, this is one of the most common and costly blind spots we see. Whether you have a vacation home in Italy, a family property in Colombia, or an apartment in Paris, the rules governing what happens to that property when you die are far more complicated than most people realize and a U.S. will alone is rarely enough.
This guide is for New Yorkers with assets abroad: expats, dual citizens, and anyone who has inherited or purchased foreign real estate. By the time you finish reading, you will understand how U.S. estate tax applies to foreign property, why your New York will may not hold up overseas, and what local “forced heirship” laws could do to your legacy.
The good news is that with the right planning in place, these challenges are manageable. The key is understanding them before it is too late to act.
Does Your Foreign Real Estate Get Taxed in the U.S.?
The answer depends on your citizenship and residency (domicile) status, and the difference is significant.
If you are a U.S. citizen or someone domiciled in the United States, the IRS taxes your worldwide estate. That means your apartment in Paris, your family home in Bogota, and your villa in Tuscany all get counted toward your taxable U.S. estate. The federal exemption sits at $15 million in 2026, so many clients will not owe federal estate tax on that property. Still, it must be reported, valued, and included on your estate tax return regardless of whether a tax bill is generated.
Unlike the federal government, New York State has a much lower exemption of $7.35 million for 2026. If your worldwide estate (including foreign land) exceeds this by more than 5%, you hit the “New York State tax cliff,” and New York taxes your entire estate from the very first dollar.
If you are a non-resident alien, foreign real estate is not considered a U.S.-situated asset, so it falls outside U.S. estate tax entirely. Your exposure is only to the laws of the country where the property is located.
For U.S. citizens, the more pressing concern is often not the U.S. estate tax but the foreign country’s own inheritance taxes, which apply at the same time and operate completely independently. When both countries assert taxing rights over the same asset, the U.S. does offer a foreign tax credit on Form 706 to help reduce the overlap. Where an estate tax treaty exists between the U.S. and the other country, it may provide additional relief. Where no treaty exists, that credit may not fully cover the combined burden.
Will Your U.S. Will Hold Up Overseas?
This is where many families are caught off guard. A U.S. will can reference foreign property and attempt to direct where it goes, but whether a foreign country will recognize and honor that will is an entirely separate question and the answer is frequently no, or not without significant additional steps.
Every country has its own rules about what makes a will valid. The formal requirements, execution procedures, and administrative processes vary widely. Even if a foreign country agrees to recognize a New York will as valid, local probate or succession must still be completed under that country’s own law before title to the property can transfer to your heirs.
How this plays out depends on the legal system involved:
- Common Law (UK, Canada, Australia): These countries generally recognize New York wills, but you must often go through a “resealing” process where the local court validates the New York probate.
- Civil Law (France, Italy, Spain, Latin America): These systems are far stricter. Even if they recognize the will, they may ignore your instructions if they conflict with local “forced heirship” laws.
- The EU Succession Regulation (Brussels IV): For property in participating EU states, there is a powerful tool. As a U.S. national, you can elect in your will for the law of your nationality (New York law) to govern the succession of your European assets. This can allow you to bypass some foreign restrictions, but it must be explicitly drafted into your documents.
The Pro Tip: For clients with significant foreign holdings, we often recommend “Situs Wills.” These are separate wills for each country, drafted by local counsel and coordinated with your New York plan to ensure they don’t accidentally revoke each other. When done correctly, this approach allows local probate to move forward without waiting on a foreign court to evaluate a New York document.
What Local Laws Could Affect Your Heirs?
This is where international estate planning becomes genuinely complex, and where the stakes of not planning ahead are highest.
Forced heirship laws are one of the biggest surprises for U.S. clients. Many countries legally require that a minimum share of an estate pass to certain heirs, regardless of what a will instructs. These are not suggestions. They are enforceable legal entitlements.
- In France, children have a reserved share called the réserve héréditaire. One child is entitled to half the estate, two children to two-thirds, and three or more children to three-quarters. Only the remaining portion can be freely directed by will.
- In Germany, close relatives have a right called the Pflichtteil, which entitles them to a cash payment equal to half of what they would have received under intestate succession, even if they are explicitly disinherited.
- Italy, Spain, and most Latin American countries have similar frameworks. A client who intends to leave their Italian vacation home entirely to one child while excluding another may find that Italian law overrides that intention completely.
Foreign inheritance and succession taxes are another layer entirely. Many countries impose their own taxes independent of U.S. estate tax, with widely varying rates and exemptions. Japan’s inheritance tax can reach 55% on large estates. France, Germany, and the United Kingdom all impose their own taxes based on the relationship between the deceased and the heir. In the absence of an estate tax treaty with the U.S., these taxes can stack in ways that are difficult to fully offset.
Ownership and title restrictions matter too. Mexico, for example, prohibits direct foreign ownership of real estate in certain restricted zones near coastlines and borders. Foreign buyers must hold property through a bank trust called a fideicomiso or through a Mexican corporation. The succession of a fideicomiso interest must be addressed explicitly in any estate plan, and it operates differently than direct property ownership.
Community property regimes apply in many civil law countries, where each spouse automatically owns half of the assets acquired during the marriage regardless of whose name is on the title. For a U.S. client owning property in one of these jurisdictions, only their half interest is part of their estate. Understanding this before structuring a plan is essential, particularly for married couples with assets in multiple countries.
Frequently Asked Questions
Does my New York will automatically cover my property in another country?
No. While it might be valid under New York law, foreign jurisdictions have their own requirements for title transfer. Without a local will or a Brussels IV election, your heirs may face years of foreign litigation.
What is forced heirship and does it apply to me?
Forced heirship laws require that a minimum share of your estate pass to certain heirs, typically children and sometimes a spouse, regardless of what your will says. If you own property in France, Germany, Italy, or most Latin American countries, forced heirship rules likely apply to that property and could override your intentions.
Do I need a separate will for each country where I own property?
In many cases, yes. Having a local will drafted in each country where you hold real estate, coordinated carefully with your U.S. will, is often the most practical way to ensure your wishes are carried out and local probate can proceed efficiently.
