Disclaimer: this article is based on personal experience and outlines an estate planning strategy that was built personally for us and may not be reflective of everyone’s experiences or legal or financial situations, and so please use this only as an experiential insight and not as a legal or financial guide to estate planning.
A Complex International Situation
We’ve been living outside the US for the past 10 years. We moved from New York City to Lausanne for a six-year stint in Switzerland and then in 2017 to Ghent, Belgium, which is where we hope to stay put for the foreseeable future. We’re a family of three (okay, four including the dog!): my wife is of Brazilian origin, and I’m of Indian origin. We are both US citizens. Our daughter was born in 2010, in New York City, so is also a US citizen.
It took us a long time to think about our estate plan and several conversations with lawyers, notaries and administrators to decide what the best approach was. We probably don’t have the ultimate one, but it’s a working model that we feel sufficiently confident in.
Thanks to filing tax returns everywhere, we had a pretty good handle on our accounts and assets. In addition, since we have always been fully compliant with rules everywhere (FATCA, AML, etc.), we feel confident that we have taken the first step in creating a fully legal and comprehensive estate plan with no surprises for any jurisdiction. Between retirement investment accounts (IRAs) in the US, taxable investment accounts, regular bank accounts in the US, Switzerland and Belgium, and an apartment in Switzerland with rental income, we made a comprehensive asset list. We then started putting together detailed instructions and actions on a line-by-line basis of what we want to do about each item, what would flow straight to a beneficiary account, a guardianship account, a trust or dispensed to others.
Lesson 1: Keep countries separate
Quite quickly, after asking around and discussing with our accountants and legal representation in the US and Belgium, we found that the local laws in both countries regard any foreign entanglement as ‘suspicious’ (even though everything has been declared and fully legitimate) and there is a high likelihood that the execution of the estate plan will get stuck because some legal authority wants to dig or investigate further. So we decided to have a US side of the estate plan and a Belgian side of the estate plan.
Lesson 2: Avoid the US probate process
In the US, we decided to create a revocable US trust and put our liquid assets including after-tax investments there. For the IRA retirement accounts, we had already assigned beneficiaries and that is quite straightforward. We found out that a minor can inherit the IRA in a custodial account and then has 10 years to drain the fund upon turning 18 (i.e. until the age of 28 the account must be drained through the mandatory distributions annually).
In Belgium, we also decided to create a testamentary trust-type of vehicle. It’s important that it is a testamentary vehicle that is created by the notaris upon the death of both spouses together. To get around the forced heirship rules when one spouse dies, we decided to create a local Belgian marriage agreement which explicitly leaves all assets to the surviving spouse, and this document supersedes any post-death agreements and also avoids probate.
So, none of our local estate planning processes point to each other, but make sure that you have declared all your assets legally and legitimately in both countries to avoid any nasty incidents in terms of legal or fiscal ramifications in both countries.
Lesson 3: International guardianship
In Belgium, a local judge has the final say on naming the guardian, but, if your intent and documentation is in order and the plans seem well thought out and reasonable, then the judge is likely to follow your wishes. We decided to split guardianship into two directives: (1) short-term guardianship and (2) long-term guardianship.
The ‘short-term’ guardian is the nomination of the persons who will care for your child in the immediate event of the death of both spouses together. We also setup an escrow account in a local bank with the local guardian as a signatory for immediate expenses.
The ‘long-term’ guardian is the person who will eventually legally adopt and be guardian of our daughter. This person lives in a different foreign country and so we are in the process of obtaining documentation from the foreign authorities of the possibility to execute such a plan and the agreement letter from the selected person fully notarized and filed in Belgium.
Lesson 4: Common trustee pool
We are also creating a common pool of trustees for the two estate plans (Belgium & US). This consists of three trustee roles:
- Belgium Executor & Trustee: Our Belgian notaris firm
- US Executor & Trustee: Our US law firm
- Family Representation Trustee: A family member
For each of these trustee roles, we have two contingent alternatives besides the primary ones mentioned above. We have had conversations with all of them and have written agreement from all of them along with their identification documentation. Further, we have developed an Estate Plan Outline, which sets forward our wishes for how funds should be disbursed to our daughter and how to make appropriate decisions on her behalf.
Lesson 5: Documentation and communication channels
Upon doing a lot of research on this, it appears that we have three choices:
- Writing everything down on paper and filing it with our trustees
- Using a purpose-built web-based application (e.g. Evernote) for storing digital records of everything
- Using a secure file exchange application (e.g. Dropbox / Tresorit) and putting everything in a catalogued manner, to which access can be granted to and by the trustees.
It’s taken us about a month to finally put all this together, and we are quite satisfied that most of our plans will work as designed. Of course, we fully expect not everything will go smoothly but having able trustees gives us reassurance that they will rise to the challenge and help resolve matters for our daughter in the years to come.
About the author
Dr. Parekh is a serial entrepreneur and currently serves as the Managing Partner of Epistemy BV, a Belgian firm dedicated to developing sustainable strategies.
Deep has served in executive leadership roles at Please Platform BVBA and Triamant NV in Belgium at the intersection of digital transformation and life, health and social technologies, and helping to shape Belgian legislation on the on-demand work economy. Prior to this, he co-founded an investment and advisory firm Asteroidea AG in Switzerland. Deep also co-founded and served as Managing Partner of management consulting and advisory services firm Equus Group in the US and Latin America. Prior to his journey on the course of serial entrepreneurship, Deep held executive advisory positions at various companies, including Unilever, Ernst & Young, Booz Allen Hamilton and IBM.