If you’re a green card holder living in California, it is essential to understand how your immigration status affects your estate planning. U.S. laws around taxes, trusts, and inheritance are likely different from the laws in your home country, and failing to plan properly can lead to costly legal and tax consequences.
In any country, forced inheritance laws control who gets what. In the US, while we do have statutes that designate beneficiaries if a person fails to act, you can generally leave your assets to whomever you like.
California has one of the most expensive probate processes in the US. Any asset that does not transfer by operation of law (like a survivorship clause on a deed) or by a transfer of death beneficiary designation (like bank accounts, RSUs, and life insurance policies) may be subject to tens of thousands of dollars in attorney costs during a public, time-consuming, and stressful probate process.
Below are four common estate planning mistakes green card holders make in California—and how to avoid them.
1. Relying on a Foreign Will Instead of a California Estate Plan
The Mistake: Assuming that your will from your home country is valid in California.
Why It’s a Problem: California courts require wills to follow state-specific legal standards. A foreign will may not be accepted or could lead to probate delays, disputes, or even invalidation.
The Solution: Create a California-compliant estate plan that works alongside your foreign documents. This may include a revocable living trust, a U.S.-based will, powers of attorney, and advance healthcare directives. These documents should specifically exclude your foreign assets!
2. Naming a Non-U.S. Citizen Spouse as Sole Trustee of an Irrevocable Trust
The Mistake: Appointing your green card holder spouse as the only trustee of an irrevocable trust.
Why It’s a Problem: The IRS may classify the trust as a foreign trust, which brings significant tax complications, reporting requirements, and potential penalties.
What Green Card Holders Search:
- Can a non-citizen spouse be a trustee?
- Trustee rules for green card holders
The Solution: Appoint a co-trustee who is a U.S. citizen or a corporate fiduciary to ensure the trust is classified as a U.S. trust and stays in compliance.
3. Not if Your Chosen Guardian Lives Abroad
The Mistake: Naming a guardian for your children who lives outside the U.S., without accounting for the legal and practical challenges.
Why It’s a Problem: Courts may delay or deny guardianship if there’s no plan in place for the child’s care during the transition. A foreign guardian could face immigration or logistical issues.
The Solution: Include provisions for:
- A temporary U.S.-based guardian
- A trust that specifically permits your successor trustee to pay for travel, housing, and legal assistance for the permanent guardian
- This is a long-form guardianship nomination form that provides the court with details regarding your choice. Remember, you do not choose the guardians; the court appoints them after an independent investigation to determine what is in the child’s best interests.
4. Putting Foreign Property into a U.S. Trust
The Mistake: Attempting to transfer real estate or other assets located in another country into a U.S. revocable living trust.
Why It’s a Problem: Many countries do not recognize U.S. trusts, which can result in legal complications, tax conflicts, or rejection of the trust during probate. Also, the taxation of assets in an irrevocable trust in California is among the highest in the US. Forcing non-US assets into a California trust will likely result in a highly negative tax outcome.
The Solution: Work with a local estate planning attorney in the country where the property is located. Use a coordinated estate plan—with one trust or will for U.S. assets, and another for foreign assets, making sure that each plan specifically excludes the assets held outside of that country.
Final Thoughts: Build an Estate Plan That Matches Your Life
If you’re a green cardholder in California, your estate plan needs to address your unique situation, including citizenship status, international property, foreign family ties, and U.S. tax obligations.
Your goals—protecting your loved ones, minimizing taxes, avoiding probate, and honoring your wishes—are completely achievable. You need the right tools and a legal team that understands both California law and the cross-border implications of your estate.
Patricia De Fonte | De Fonte Law PC
Estate Planning with Heart®
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