For many families, the person they trust most to care for their children or administer their estate after their death lives outside the United States. It may be a sibling in Canada, parents in Italy, a brother in Vietnam, or another trusted relative abroad. That can create problems under New York law because a foreigner may not be eligible to serve as guardian, trustee or executor unless an exception applies. If you have international family you want to entrust with your children or assets, what should you do?
New York Law Governing Fiduciaries
When you create an estate plan, you must name people who will be responsible for certain aspects of your estate, such as a guardian, trustee or executor. These individuals are “fiduciaries” and subject to New York’s Surrogate’s Court Procedure Act (SCPA), including § 707, which sets forth rules governing who is eligible to receive fiduciary letters that give them the authority to act.
Naming Fiduciaries When You Have Children
Most parents focus on choosing a guardian to raise their children. While that is certainly important, it is only one piece of the puzzle. In New York, caring for your children and managing their inheritance are separate responsibilities.
Under SCPA Article 17, a guardian may be appointed for the person, the property, or both. The individual responsible for the child’s care can be different from the individual responsible for managing the child’s assets.
In addition, many estate plans utilize trusts for minor beneficiaries. In those cases, inherited assets may be managed by a trustee rather than through a guardianship of the property.
That distinction is important because the relative best suited to raise a child may not be the same person best positioned to administer investments, trusts and financial assets over a period of years. However, when you have multiple fiduciaries, there are more opportunities to run afoul of the rules governing who can be a fiduciary.
Problems with Foreign Fiduciaries
One of the most important provisions in New York law for international families is SCPA § 707(1)(c). Under that statute, a non-domiciliary non-citizen is generally ineligible to receive fiduciary letters unless a statutory exception applies.
Because executors, guardians, and testamentary trustees are all fiduciaries under SCPA § 103, this issue can affect multiple fiduciary appointments throughout an estate plan, especially when there are minor children. In practical terms, a family may nominate a trusted relative who lives abroad only to discover later that additional planning is necessary to ensure the appointment functions as intended.
One way to get around this problem is to name co-fiduciaries. A statutory exception to the rule permits an ineligible person to serve with one or more co-fiduciaries, provided at least one of those co-fiduciaries is a resident of New York.
Note that this is not just a citizenship issue. SCPA § 707 applies to a “non-domiciliary non-citizen.” The person could live in New York but not be a citizen or be a citizen and not live in New York. Both would be a problem. Domicile and citizenship are separate concepts under New York law, and each must be analyzed independently when evaluating whether a proposed fiduciary is eligible to serve. Simply naming a person in the will does not automatically give them the authority to act. The appropriate probate and appointment procedures must still occur, and that is where a foreign guardian may be rejected as not eligible to serve.
The goal of your estate plan is not just to name a person. The real objective is to ensure that the people you trust can actually serve when necessary, that appropriate backup fiduciaries are in place and that the overall structure will function smoothly if assets, beneficiaries and family members are located in different countries.
Next Steps
If your preferred fiduciary lives overseas, is not a U.S. citizen, or simply has a more complicated residency situation, we encourage you to discuss those appointments with experienced estate-planning counsel before finalizing your documents. Our firm regularly works with families whose loved ones, fiduciaries and beneficiaries are located both inside and outside the United States. We can help evaluate proposed guardian, trustee, and executor appointments, identify potential eligibility concerns under New York law and create a coordinated plan designed to carry out your wishes when your family needs it most.
Thoughtful planning today can prevent costly complications tomorrow and help ensure that the people you trust are able to serve when your family needs them most. Contact us for a consultation.