Issues with International Assets and Beneficiaries
Many Muslims have concerns about international assets. We prepared this brief FAQ on these specific assets. I realize this won’t be relevant to most people. However, these questions come up often enough that it is worth addressing.
Can I use a US Attorney to deal with International Assets?
In general, the answer is no. You will likely need a lawyer in each country where you have wealth, though they may coordinate their efforts.
I have an asset in a Muslim-majority country where they have Sharia. Am I covered?
We don’t necessarily know that. You should likely consult with a lawyer there.
Can I put my foreign assets in a trust created in the United States?
Many countries do not recognize trusts. To accomplish your goals, you may need an alternative arrangement. This may include an Islamic will, though it may be necessary to get an alternative to that as well.
Can I place assets in the United States in a foreign trust?
In general, yes you can. However, it is essential to understand the type of asset you have matters here. Simply transferring an asset, like real estate, to a foreign trust may not accomplish your goals.
Can I plan on Islamic Inheritance in any country?
No. There are several countries where it is not possible to plan your estate based on the Islamic Rules of Inheritance using only the laws of those countries. Not all countries have a system of free alienation of property like states in the United States do.
Do I need to pay taxes on my property in another country?
If you are a US Citizen or Permanent Resident, all of your worldwide income is subject to the Federal Estate Tax. You should check with the IRS for more information.
Do I need to count my assets in other countries for purposes of the Federal Estate Tax in the United States?
For US Persons, assets worldwide count towards the Estate Tax.
What is an Offshore Asset Protection Trust?
Certain countries have strong asset protection laws that allow for placing wealth in trusts in their jurisdictions, with Trustees based in those countries, to protect those assets from future creditors. These trusts are frequently used by physicians and business people who have concerns about future liability.
Are offshore trusts legal?
Yes. It is necessary to report them to the IRS. However, there is nothing inherently wrong with creating such trusts, which may be done consistently with both US Law and the Islamic Rules of Inheritance.
If I have my assets in irrevocable Offshore Asset Protection Trusts, do I still need to plan for them based on Islamic Inheritance?
Yes. Islamic Inheritance applies even if you have irrevocable asset protection trusts. While this may not be the rule for all irrevocable trusts, it would be the rule here.
I have family members overseas. Do I need to send them inheritance?
If they have the right to inheritance in Islam if they were nearby, they would have the right to inheritance overseas. Distance does not change that.
Can it be difficult to send an inheritance overseas?
It might be. The United States does impose some restrictions on the flow of capital. Different countries may be subject to various sanctions or other rules from time to time.
Is it challenging to get an inheritance from overseas?
Sometimes it is, either for the same reasons it may be challenging to get an inheritance, such as political risk, or because the individual country has policies against transferring large amounts of money to other countries.