How Living in Mexico Can Effect Your US Estate
Purchasing Mexican Property can
Create Death Taxes in the United States
Hire Us for Your Tax Planning Needs
Before You Take Title of Any Property in Mexico
As a U.S. citizen, your Mexican assets will be calculated into your total estate for death tax purposes. If your Mexican real property is not included in your U.S. estate plan, you could inadvertently invalidate your entire tax savings scheme.
Your tax avoidance planning must be done before you take title to your Mexican property so that it is titled correctly from the beginning. Should you try to change the title later, in order to avoid an unnecessary tax, the Mexican government will deem that to be a sale and you will have to pay transfer taxes which may be to expensive to justify the death tax savings.
Be Sure that Your Property
is Properly Titled
For example, we represented a U.S. citizen who held several real properties in Mexico the value of which created a $500,000.00 estate tax.
That tax could have been avoided by titling the Mexican property differently. Changing the titles, however, would have cost $40,000 in transfer taxes. The cost was simply prohibitive.
As you can see, your U.S. estate plan must be coordinated with your Mexican real property purchase at the time you take title to your Mexican real estate if you are going avoid its inclusion in your total estate for death tax purposes.
Do You Need A Mexican Will?
Similarly, as a U.S. citizens purchasing property or relocating into Mexico you must also consider whether you need a Mexican will. Such a determination will depend to a great degree on whether you wish to relocate permanently in Mexico or just to come periodically.
Don't Accidentally Establish Domicile in Mexico and Compromise Your U.S. Estate
Domicile is a factor which both the U.S. and Mexico law will consider when determining which country has jurisdiction over your assets after your death.
You need to be aware of the long-term affects of establishing domicile in another country either intentionally or unintentionally.
Folsom & Associates successfully represented a U.S. citizen of wealthy means who had lived in the State of Guanajuato for many years.
His estate plan was carefully prepared by his U.S. attorney before he retired to Mexico. His entire estate was invested with a large investment house in the U.S. He never intended to established domicile in Mexico and had no Mexican property or other assets so he never prepared a Mexican will.
Upon his death, his U.S. brokerage house refused to release his funds to his family, as was directed in his U.S. will, because they said he was domiciled in Mexico and he didn't have a Mexican will.
With this argument, they had grounds to retain his funds and begin an intestate proceeding in Guanajuato. These cases often last up to four years.
Worse yet, because Mexico's intestate laws are different than in the U.S., his entire estate would have been distributed according to Mexico law rather than his own stated intent in his U.S. will. Had this happened, his property would have been distributed to people other than his intended heirs.
Call Us For a Consultation
Our mission is to build a legal foundation that assures this never happens to you or your family.