The federal estate tax exemption just hit $15 million, and most Americans abroad now feel their estate planning is essentially solved. That confidence is exactly what leaves the real exposure unaddressed.
The treaty gap most Americans in Spain and Portugal don’t know they have
The US mitigates double estate taxation through bilateral treaties — but the list of countries covered is shorter than most expats assume. Expat Advisor Match’s 2026 reference confirms the US holds estate and gift tax treaties with just 16 countries, including France, Germany, Greece, Ireland, Italy, the Netherlands, and Switzerland. Spain and Portugal — two of the most popular American retirement and relocation destinations covered throughout this site — are notably absent from that list.
Without a treaty, an American’s estate can face genuine double taxation exposure: Spanish or Portuguese inheritance tax on local assets, with no treaty mechanism automatically preventing a second layer of US tax on the same property. The Village Law Firm notes a partial safety net exists regardless of treaty status — the foreign death tax credit, claimed on IRS Form 706, lets an estate offset US tax with foreign tax already paid — but it’s generally capped at the lower of the two countries’ rates, not full relief.
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LEARN MOREThe non-citizen spouse trap
This is the risk that catches even financially sophisticated Americans off guard, because it contradicts a core assumption baked into most US estate planning. The Village Law Firm is direct: non-citizen spouses do not qualify for the unlimited marital deduction that citizen spouses receive automatically. Expat Advisor Match puts the actual 2026 limit at $194,000 a year in tax-free gifts to a non-citizen spouse — anything beyond that, whether gifted during life or left at death, becomes subject to real estate and gift tax exposure that simply doesn’t exist between citizen spouses.
The fix is a specific legal structure most Americans have never heard of before it becomes relevant. The Village Law Firm describes the Qualified Domestic Trust, or QDOT, as the standard tool for protecting a non-citizen spouse — it allows estate tax deferral on assets passing to them while providing genuine ongoing financial security, rather than triggering full estate tax exposure on the first spouse’s death. Any American married to a non-US citizen and relying on Europe has a real, immediate reason to confirm this structure is actually in place, not assumed.
Why the American trust you already have may not work here
American estate planning leans heavily on revocable living trusts specifically to avoid probate — a structure that works cleanly inside the US legal system and often stops working the moment it crosses into civil law Europe. Link Independent’s 2026 guide is blunt about the mismatch: European countries may not recognize American trusts at all, or may impose inheritance tax despite the trust structure, undermining the exact probate-avoidance benefit the trust was created to deliver in the first place.
The consequence, when it goes wrong, is more serious than simple inconvenience. The Village Law Firm warns that if a country doesn’t recognize a trust, assets there may be treated as though the trust doesn’t exist at all — triggering local intestacy law, or the same forced heirship rules I’ve covered in more depth separately in the context of property ownership abroad — rather than the distribution the trust was actually built to carry out. The workaround firms use in practice involves domesticating the asset through a locally recognized structure, such as a corporate entity the foreign jurisdiction does respect, rather than relying on the US trust alone to govern property outside American borders.
The two-will problem, and the mistake that turns it into years of litigation
Coordinating a US will with a local one is standard, sound practice — coordinating them poorly is one of the more expensive mistakes in this entire category. Harrison Brook lays out exactly how this goes wrong in practice: a US attorney drafts a comprehensive will covering worldwide assets, a French notaire independently drafts a separate French testament, and the two documents use different legal concepts and potentially contradictory beneficiary language — producing years of costly probate litigation across two jurisdictions when the estate is finally settled.
Harrison Brook’s own fix is straightforward in principle, harder in practice: both advisers need to actually know about both documents, coordinating language and scope deliberately rather than each drafting in isolation. This is worth treating as a hard requirement rather than a nice-to-have — a “two-will strategy” only works when both wills are drafted with full awareness of each other, not as two separate projects that happen to share the same estate.
State estate tax: a risk that doesn’t disappear with the move itself
One final detail worth flagging, since it’s easy to assume moving abroad settles every US-side tax question. Trustee Handbook notes that US state estate taxes can still apply to property located in a given state regardless of where the owner actually lives — a real reason to evaluate whether retaining property in a high-estate-tax state still makes sense once the rest of a family’s life has relocated to Europe.
What this means for actually protecting a family’s estate
The practical framework starts by treating the $15 million federal exemption as genuinely good news on exactly one dimension — federal US estate tax — and nothing more. Confirm whether the country of residence has an actual US estate tax treaty, since Spain and Portugal’s absence from that list is a real, structural gap rather than an oversight worth ignoring. If married to a non-citizen spouse, confirm a QDOT or equivalent structure is actually in place, not assumed to exist by default. Have a cross-border advisor confirm whether an existing US trust will actually be honored in the country of residence, and build a locally recognized alternative if it won’t. And if a local will exists alongside a US one, confirm both advisors have reviewed both documents together — not as two separate, disconnected projects.
None of this is a reason to avoid living in Europe. It’s a reason to treat estate planning as a genuinely cross-border project from the start, coordinated by advisors on both sides who actually talk to each other — rather than two well-intentioned but disconnected plans that only reveal their conflict after it’s too late for anyone to fix.
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If you’re seeking professional translation and localization services to enhance your global ventures, visit The Spanish Group — your trusted partner in bridging cultures worldwide.
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If you’re seeking professional translation and localization services to enhance your global ventures, visit The Spanish Group — your trusted partner in bridging cultures worldwide.
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