Out-of-State and Overseas Assets: How Should a Trust Handle Them?

A vacation home in Florida, a rental in New Jersey, an apartment and savings in China: this is common for New York families. When assets cross state or national borders, the law changes with them, so planning requires extra care.

Part One: Out-of-State Assets

What Happens to an Out-of-State Home Not in a Trust?

Real estate is governed by the law of the state where it is located. As a New York resident, after your New York probate is complete, an out-of-state home usually requires a second court proceeding in that state, called ancillary probate. That means lawyers and courts in two states.

Does Putting It in a Trust Avoid Ancillary Probate?

Usually, yes. If a new deed under that state’s law transfers the out-of-state property into your New York trust, no probate in that state is generally needed at your death.

What Should I Watch for When Transferring an Out-of-State Home?

• The deed format and recording process follow local law, usually requiring a local attorney or title company;
• Some states have special rules for transfers to trusts, such as property tax reassessment, homestead protections or transfer taxes;
• Notify the insurer and lender, as with a New York home (see Part 8).

I Plan to Retire to Another State. Is My New York Trust Still Valid?

Generally, yes. But after moving, review:
- Whether the new state’s rules on trusts, spousal rights and taxes differ;
- Whether trustee or execution arrangements need adjustment;
- If you keep New York real estate after moving, it may still be subject to New York estate tax, even though you are no longer a resident.

Part Two: Overseas Assets (Using China as an Example)

Can a U.S. Trust Directly Hold My Home in China?

Usually not easily. Real estate in China must be registered with the local real estate registration authority and generally cannot simply be transferred to a U.S. trust. After your death, your family usually must obtain an inheritance notarization locally or have a court confirm the inheritance.

So How Should Overseas Assets Be Planned?

A common approach is a separate local will covering only local assets, reviewed by local counsel. Your U.S. trust and will cover your U.S. assets.

Can Two Wills Conflict?

Yes, and it can be dangerous. Wills usually say “I revoke all prior wills.” Under China’s Civil Code, when there are multiple conflicting wills, the last one controls. If a later New York will is not drafted carefully, it could accidentally revoke your Chinese will, or vice versa.

Each will should state clearly which property it covers, and the two should be coordinated.

Do Overseas Bank Accounts Need to Be Reported in the U.S.?

U.S. tax residents with foreign financial accounts may need to file:
- FBAR: required if all foreign accounts combined exceed $10,000 at any time during the year;
- FATCA (Form 8938): filed with your tax return when foreign financial assets exceed certain thresholds.
A trust that holds foreign accounts has reporting duties too.

What Should I Know About Bringing Money From Abroad Into a U.S. Trust?

• Local currency controls: China, for example, limits how much foreign currency an individual can buy each year;
• If you receive gifts or inheritances from a foreign person (such as parents in China) totaling more than $100,000 in a year, you generally must file IRS Form 3520. It is a reporting requirement, not necessarily a tax, but penalties for failing to file are steep.

What If My Spouse Is Not a U.S. Citizen?

• Property left to a non-citizen spouse does not automatically qualify for the unlimited marital deduction. A QDOT trust can defer federal estate tax (see Part 5);
• Lifetime gifts to a non-citizen spouse have an annual tax-free limit ($194,000 in 2026).

My Parents Live in China but Own a Home in New York. What Should They Know?

For nonresident aliens, the U.S. federal estate tax exemption on U.S. property is only $60,000, far below the $15,000,000 available to U.S. citizens and residents. A New York home may also be subject to New York estate tax. This situation calls for specialized cross-border planning, and the earlier the better.

My Parents Want to Set Up a Trust Abroad for Their Children in the U.S. Is That a Problem?

A foreign trust created by a foreign person for U.S. beneficiaries is subject to complex U.S. reporting and tax rules, especially after the grantor dies. It should be designed before it is set up, by attorneys and accountants experienced in cross-border tax.

How Are Documents Authenticated for Use Abroad?

Documents signed in New York for use in China (or vice versa) used to require consular legalization. China joined the Hague Apostille Convention effective November 7, 2023, so an apostille is now generally available, which simplifies the process considerably.

The Bottom Line

When assets cross state and national lines, a trust is not a master key. Out-of-state real estate can usually go into a trust. Overseas assets often require a local will, a U.S. trust and reporting compliance working together.

Attorney’s perspective

For cross-border families, I start by listing all U.S. and overseas assets, then decide what belongs in the New York trust and what needs a coordinated local will, and flag the reporting duties. Where Chinese law is involved, I work with counsel in China. If your parents are not U.S. persons but own U.S. assets, please also read Non-U.S. Owners of U.S. Companies: The Estate Tax Trap.

For advice about your own family’s situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.

Related: Part 8: Putting Real Estate Into a Trust: Houses, Condos and Multi-Family Homes | Part 5: What Types of Trusts Are There? A Simple Map

Series overview

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.

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