Reconciling U.S. and Mexico Law for Tax and Estate Planning: Trusts, Real Property, Situs Wills, Wealth Transfers

The ties between the U.S. and Mexico result in significant economic migration. Many U.S. citizens and permanent residents have property interests in Mexico and vice-versa. Estate planning counsel and advisers must identify the tax and wealth transfer planning rules and opportunities specific to U.S. and Mexican citizens with assets and presence in both countries.

Mexican law has neither an estate tax per se nor a deemed disposition regime for property passed through inheritance, nor does it provide automatic right-of-survivorship in joint tenancy or spousal property ownership. At the time of marriage, spouses must indicate whether the marriage entails joint or separate property treatment and this election can take precedence over an asset's title.

In many cases, the transfer of Mexico-situs property to non-Mexican taxpayers is a taxable transaction requiring Mexican tax withholding. Tax advisers to U.S. citizens with a presence in Mexico must ensure that U.S. and Mexican wills, trusts, and transfer provisions are appropriately coordinated to avoid costly tax consequences.

Mexican law also imposes restrictions on direct ownership of real property by non-Mexicans in specified locations. U.S. taxpayers contemplating property purchases or transfers of covered Mexican property must know the best entity requirements to hold Mexican assets.

Listen as our experienced panel guides advisers in planning estates of clients with U.S. and Mexican tax presence, including interests in business entities, real estate, and financial accounts. The panel will cover the legal and tax considerations when planning for each type of asset's disposition.