Blog · 2026-05-27

Inheritance and a second passport: what to sort out in advance

A second passport almost never settles the inheritance tax question on its own - residency, domicile and where your assets physically sit do. Here is where heirs face 40-60%, where the rate is zero, and what to fix while you still can.

A passport does not switch off estate tax

The most common misconception sounds reasonable enough: "I hold a passport from a country with no inheritance tax, so my heirs pay nothing." It rarely works that way. In almost every developed jurisdiction, the right to tax an estate comes not from citizenship but from three other facts: where the deceased was tax resident or domiciled, where the asset itself sits, and sometimes where the heir lives.

Citizenship drives estate tax directly in essentially one place - the United States, where the tax net follows the citizen worldwide. Everywhere else, a passport is leverage rather than an answer: it lets you change residency, elect the succession law of your nationality in a will, and pass status to your children. But as long as you actually live in London or Berlin, a second passport changes nothing in the estate tax calculation.

Three ways a country claims its share

• Residency or domicile of the deceased. The dominant principle in Europe. If you counted as resident or domiciled, the country claims your worldwide estate.
• Location of the asset (situs). Real estate, accounts and shares in local companies are taxed where they sit, regardless of where you lived or which passport you carried.
• Residency of the heir. Germany, Spain, Japan and others tax on the recipient side too. Families are caught out by this regularly: the parents left, but an adult child stayed in the EU to study and work.

The practical conclusion is that you plan a configuration, not a passport - residency, ownership structure and asset location together. Our country-by-country tax section is a reasonable starting point for the underlying differences.

The numbers as they stand in 2026

The figures below are indicative for 2026. Thresholds and reliefs get revised, and regional rules - Spain and Argentina in particular - vary sharply from one province to the next, so confirm current terms before acting on any of it.

Trap one: US assets in non-US hands

This is the most underestimated exposure in international portfolios. If you are neither a US citizen nor US-domiciled, your exemption against US-situs assets is not $15m - it is $60,000. Everything above that is taxable at rates reaching 40%. The net catches US-listed shares held in a brokerage account (even a Swiss one), US real estate and stakes in US companies. A $1m position in Apple and Microsoft held by someone with a Paraguayan or Caribbean passport is a potential six-figure bill for the heirs.

Estate tax treaties can soften this, but the US has fewer than two dozen of them, and most of Latin America, the Caribbean and the post-Soviet space are simply not covered. The other route is structuring - non-US holding companies, insurance wrappers, trusts. The warning here is real: a badly built structure creates more problems than it solves, which is why this belongs with specialist cross-border succession lawyers rather than with your broker's relationship manager.

Trap two: domicile and the tail after you leave

Domicile is not residency. It is a concept of long-term attachment to a country, and historically it was very hard to shake off. From 6 April 2025 the UK replaced it with something more legible: worldwide inheritance tax now attaches to "long-term residents" - people resident for 10 of the previous 20 tax years. Leaving does not end it immediately. A tail applies: three years for those who were resident 10 to 13 years, rising with longer residence up to a maximum of ten.

The lesson is that exiting a country's tax orbit is a multi-year process, not a stamp in a passport. Which is why choosing a new residency is best done early rather than when the question turns urgent. Paraguay is convenient on this axis: no inheritance tax, a territorial system and light presence requirements - the details sit in our guide to Paraguayan citizenship.

Double taxation of estates, and why ordinary treaties don't help

There are hundreds of income tax treaties in the world. Estate and gift tax treaties number in the dozens at best. The classic bind: the deceased was resident in Germany, the property was in France, the heir lives in Spain. Three claims, and credit relief between them is partial or absent.

Inside the EU, Regulation 650/2012 - "Brussels IV" - helps, but it is important to be clear about what it does. It decides whose succession law applies, not who collects the tax. Taxation stays entirely national. What the regulation does give you is the right to elect, in your will, the law of your nationality. This is the first point where a second passport earns its keep in practice: it can, for example, lift an estate out of French forced heirship and let you dispose of assets freely.

You need a will in every country where you hold assets

A single "global will" performs poorly in the real world. A bank in Singapore, a land registry in Spain and a court in St Kitts each apply their own rules on form, witnesses, notarisation, translation and apostille. While recognition grinds on, assets are frozen and the family has no access to cash.

• A separate will in local form in each jurisdiction of ownership, each expressly stating that it does not revoke the others.
• An explicit choice of applicable law where permitted (the EU; the UAE via DIFC or ADGM wills).
• An asset register - countries, banks, account numbers, access, adviser contacts - written so heirs can actually use it.
• A review of ownership form: joint accounts, insurance and pension beneficiaries often bypass the will entirely.

If assets are held through companies, remember the company is itself an inheritable asset with its own situs. Worth checking against the rules of the jurisdiction where you incorporate.

Does a second citizenship pass to your children?

Usually yes - and that is one of the strongest long-term arguments for acquiring one. The conditions differ, though:

• Children born after the parent naturalises acquire citizenship by descent automatically or through a simple registration in most countries. That includes the Caribbean programmes - Grenada and St Kitts and Nevis both allow status to carry down the family line.
• Children born before naturalisation typically do not acquire it automatically; they must be included in the application as dependants or apply separately.
• Generational limits exist in a number of countries: descent transmits only to the first generation born abroad, after which registration or residence is required. This is more common with European passports than Caribbean ones.
• Argentina and Brazil grant citizenship by birth on the territory, which makes the Argentine route a family strategy in its own right.

One point specific to investment programmes: the citizenship is inherited like any other, but the qualifying investment is not. Property bought to qualify usually carries a mandatory holding period, and a sale by heirs before that period ends can create complications, including questions about status. Rules differ from programme to programme, so check holding terms before the purchase rather than after - the conditions are compared in our citizenship programme catalogue.

What to do now

The practical minimum removes most of the risk: map your assets by country, assess your domicile and residency honestly rather than aspirationally, check the US exposure in your portfolio, put local wills in place, and solve for liquidity - so heirs can pay the tax without a forced sale of the business or the family home. All of it is cheaper and simpler while you are alive than it is afterwards.

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