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RE: Asset Protection for inherited property outside the USA

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  • RE: Asset Protection for inherited property outside the USA

    Dear All

    Could you kindly advice me on asset protection for an overseas condo that I have inherited from my parents? The condo is located outside the USA in Asia and is presently empty for a year. The legal system takes about a year to transfer the condo deeds to my name after my parents left it for me on their joint last will while living overseas. My parents are not US citizens and never lived in the USA. I am an American.

    I am planning toon rent the condo for at least 2 years or longer. I am planning on opening a bank account overseas to collect the rental income and filing tax returns on my IRS in the USA.

    1. Should I create an irrevokable trust in the overseas country for asset protection?

    2. I already have an LLC the USA in which I hold rental property in IL. Could I move this overseas property condo into the same LLC or create a separate US-based LLC?

    Thank you for your time and advice.

  • #2
    You'll probably need a qualified attorney familiar with the laws where the asset is located.

    Comment


    • #3
      You have both a tax and asset protection question.
      The assumption is you personally inherit the ownership.
      Then transfer it to. ?????
      The local laws and US laws will both impact the legal/tax setup. Not sure why you decided to rent it out for a few years. You will need to find out the reporting requirements of both countries until you sell it.

      Are you trying to shield the overseas asset from US creditors or protect US assets from overseas claims?

      Definitely not a DIY. Tax and legal advice for both countries.

      https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances.

      https://estate.findlaw.com/planning-an-estate/how-us-tax-rules-apply-to-inheritances-and-gifts-from-abroad.html

      Comment


      • #4
        I

        Thank you for the links. My accountant informed me that I need not pay inheritance tax in the USA. I am planning to rent the condo for nostalgia as I do not want to sell it for now. I will be declaring the property in my tax returns in the USA and the rental income. No foul play here.

        The asset protection is mainly to shield the condo from US creditors given my medical profession in the event of a lawsuit. I am worried that a US creditor may trace an overseas property and not sure on the legal implications between a US-based LLC and overseas property.

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        • #5
          Not implying any less than honorable intent.
          The local rules can be highly disadvantageous for many reasons. For example, 12 months utility bill in the owner’s name cuts out a 25% tax on the value of the sale. Inheritance may be exempt.
          The default assumption is “locals” have highly more favorable administrative and tax treatment than foreigner ownership. Simply suggesting find out unless you are deeply familiar with your parents country.
          Sorry for your loss. Understand the sentiment, hope things work out.

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