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LegalGems
LegalGems, Attorney
Category: Estate Law
Satisfied Customers: 3636
Experience:  Private Practice; Elder Law Attorney; Estate Planning; Attorney Mentor
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The decedent (passed away on 10/19/2012) was 89 years old and

Resolved Question:

The decedent (passed away on 10/19/2012) was 89 years old and had dual citizenship (US and Japan). He was born in US and left to Japan to get education when he was 12. He stayed and worked in Japan until his death. His combined total assets is $5.15M ($2.14M in mutual funds and $55,000 cash in the U.S, plus $2.96M in real estate, retirement benefit, stocks and cash in Japan). His debt is $1.17M and deductible expenses such as funeral, legal , hospital fees were $70,000. His debts and deductible expenses were all incurred in Japan.

For US estate tax purpose, is there any special rules to allocate his assets, debts, and deductible expenses between US and Japan?

Would it be possible to request an advise from John Elder, Esq. ?

Thank you
Submitted: 1 year ago.
Category: Estate Law
Expert:  LegalGems replied 1 year ago.

LegalGems :

Hi; My goal is to provide you with great service - if you have any questions during our chat, please ask! I'll do my best to ensure your satisfaction! Remember,I can only provide general legal information, as no attorney client relationship is created. It is always best to consult with a personal attorney so they can apply the law to your specific situation.

LegalGems :

Please permit me to assist you since you have posed the question some time ago, and your requested expert has not posted today. Basically, Japan and the USA have a treaty that governs unusual situations such as these, which is fortunate. One moment please as I am waiting for the information to download.

LegalGems :

Please see specifically Article 3.

LegalGems :

For example: Real property and tangible property is governed by the law of the land in which it is located; debts are governed by where the decedent resided.

Customer:

I have read Article 3, but it still does not help to find out if the decedent's estate will be subject to US estate tax or not.

LegalGems :

Article 3 determines which property will be counted as an asset for US purposes, and which assets will be counted for Japan's purposes. I thought you were trying to allocate his effects between the 2 countries? This treaty addresses that.

LegalGems :

This may assist you further. Hawaii has adopted the same policy as the IRS with regards XXXXX XXXXX taxes aka inheritance tax. There is no tax for estates under $5.120 - please see: http://www.state.hi.us/tax/2012/m6ins.pdf

Customer:

The decedent owned US based mutual funds and cash in the bank totaling $2.19M. Estate's combined total asset is $5.15M. So U.S. asset is approximately 43% of the total asset. Can the estate claim 43% of 5.12M exemption?

LegalGems :

The exemption refers to the value of assets that don't need to have an estate tax paid - it is not an exemption in the sense that you can write it off.

LegalGems :

To clarify, estate taxes don't need paid on amounts below the amount designated by Congress each year.

Customer:

What you are saying is that the estate's combined total asses is $5.15M which is less than $5.12M, the estate is not subject US estate tax.

Customer:

However, in this case, the decedent was domiciled in Japan since he was 12 years old and he had dual citizenship.

LegalGems :

No. We are not allowed to give specific legal advice, so I am providing you with the tools to determine which of the assets are considered US assets, and which are considered Japan assets (pursuant to the treaty). Then, based on this valuation, you would need to determine if US estate taxes are owed. Based on the pamphlet from the IRS, that amount would be the $5.120. If there are more than that in assets, estate taxes would be owed.

LegalGems :

Does that make sense?

Customer:

Yes, it does make sense, but does it apply for dual citizenship as well?

LegalGems :

It is my understanding that the purpose of these treaties between governments is to assist in these types of situation - domicile, citizenship, etc. Art 2 (3) of the treaty defers that to the respective countries; and generally if a country considers an individual a citizen, there is an accountability issue. Even citizens of the US who have not lived here for years (but have property) generally have estate issues to wrap up.This is supposed to provide general information, so that the customer can seek advice from an personal attorney that can review all their particular circumstances, financial considerations etc, and locate any loopholes or in depth research that may result in a more favorable outcome. Generally, being a dual citizen results in higher taxes because both countries are making some kind of claim. (and the costs associated with hiring professionals in each country).

Customer:

Ok. Thank you.

LegalGems :

I can't give any information on Japanese policy, but I was reading some material simply out of curiosity, and it is best to hire a US attorney that works closely with Japanese inheritance issues so that everything is properly taken care of. If you have a US attorney hire everything, they will likely not be familiar with the Japanese side of things (and legally they can't give opinions on non-US law).

LegalGems :

I would imagine in Hawaii you would be able to find someone with these connections. Here is a link to the state bar's referral system: http://www.hsba.org/findlawyer.aspx

Customer:

Thank you.

LegalGems :

You are welcome. Sorry for any earlier confusion. I know the topic can be overwhelming, especially given your recent loss. Take care (and if you are in a similar situation regarding citizenship, it would be wise to hire an estate planning attorney to review your goals as that can save a small (or large) fortune for your heirs in the long run).

Customer:

We tried to find an attorney in Hawaii, but there is none. That is why we decided to try your website because we had a very good experience before.

LegalGems :

No attorney in estate planning?

LegalGems :

Let me check something.

Customer:

There are some attorney who do estate planning but not to that extent.

LegalGems :

Oh; Did you check with all of them - the list is rather extensive.- maybe one that is familiar with immigration law and probate? Also, a good source to read reviews and garner the level of their experience is www.lawyers.com and www.avvo.com. You may need to contact the US embassy in Japan and see if they have any suggestions. I would think you could find something since we have good relations with Japan.

LegalGems :

You may also want to contact an Estate Planning attorney, or Elder Law attorney, versus Probate, because probate refers to the distribution of assets. Whereas an experienced EP or EL attorney would presumably have interactions between US and Japan at some point.

Customer:

What we plant to do is to contact White & Case in Japan.

LegalGems :

Clever - as they will probably have attorneys licensed in multiple jurisdictions given their international firm.

Customer:

Yes. Thank you.

LegalGems, Attorney
Category: Estate Law
Satisfied Customers: 3636
Experience: Private Practice; Elder Law Attorney; Estate Planning; Attorney Mentor
LegalGems and 2 other Estate Law Specialists are ready to help you

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LegalGems
LegalGems
Estate Lawyer
3636 Satisfied Customers
Private Practice; Elder Law Attorney; Estate Planning; Attorney Mentor