As the United States focuses on Election Day, November 4, 2025, governance takes center stage. Voters artfully navigate a flurry of flyers and rows of partisan messages disguised as information on the walk to their polling stations. They line up hoping to influence who leads, who’s accountable, and whether structure still matters. The season reminds us that everyone likes to advertise, but few like responsibility. In wealth and policy alike, performance often eclipses substance.
The same performance plays out quietly in private governance. Families and institutions also vote, though through a different system of decision-making. Their concerns are structural. Every moment is a decision-point on how authority is delegated, how systems communicate, and how responsibility is defined when borders blur.
For global families, the challenge with decision-making is more administrative than ideological. Even though tax treaties may intend to align cross-border inconsistencies in economic impact, administration and compliance requirements are often amiss. Consider, for example, Internal Revenue Code §2203, which defines who must act, and § 6324, which ensures someone pays when no one or everyone does.
Governance Gap: Anyone Who Could Have Possession Is Responsible For Compliance
Under §2203, the IRS does not need a foreign appointed executor to allocate compliance responsibility. Section 2203 defines the term executor as “the executor or administrator of the decedent, or, if there is no executor or administrator appointed, qualified, and acting within the United States, then any person in actual or constructive possession of any property of the decedent”.
That clause allocates administration responsibility, at least to the extent of the estate’s tax compliance obligations, on anyone who could (constructive) be in possession of the estate assets. A U.S. trustee, investment manager, or even a beneficiary who could touch the U.S. assets can be deemed the statutory executor, required to file Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, correspond with the IRS, and obtain the transfer certificate necessary to release frozen property.
This safeguard to ensure compliance and access exposes the structural flaw in cross-border estate administration. In countries such as Japan, India, and Singapore, an executor’s role is largely administrative and confined to assets within the local jurisdiction. Tax reporting and payment obligations rest with the heirs, not the executor, and there is no estate-level filing comparable to the U.S. estate tax returns. By contrast, under U.S. law, liability follows control. Once a fiduciary assumes possession or authority over property, both filing duties and potential personal responsibility attach. One system recognizes appointment; the other, possession.
Tax Treaties Leave Governance A Mystery
The 1954 U.S. – Japan Estate, Inheritance, and Gift Tax Treaty is among the earliest agreements designed to prevent double taxation for domiciliaries. Under the treaty, a Japanese domiciliary is entitled to a proportional credit for U.S. estate tax paid on U.S. situated assets, better than the minimal $60,000 exemption otherwise available to nonresidents. Like most treaties of its era, however, it governs taxing rights and credits, and not procedural or administrative obligations.
A Japanese executor can fully discharge all duties under domestic law while holding no continuing authority or obligation in U.S. tax compliance. The IRS has no jurisdiction to compel foreign fiduciaries or seize non-U.S. assets; its enforcement power extends only to U.S.-situs property through the federal estate tax lien mechanism, pending action by a domestic representative. When heirs and assets are divided across jurisdictions, this procedural gap can result in asymmetrical outcomes. Some heirs receive their inheritances free of U.S. encumbrances, while others are left to navigate complex compliance obligations without access to necessary estate records or resources.
Similar administrative conflicts arise in other jurisdictions. For example:
- India requires local probate for recognition of wills and estate administration, but such authority has no standing under U.S. law.
- Singapore, having abolished estate duty, provides no framework or resources for fiduciaries to manage foreign estate tax filings.
- The United Kingdom maintains closer procedural alignment with U.S. practice, yet a U.S. statutory executor is still required to access or transfer domestic assets.
Across systems, treaties deliver fiscal symmetry but not administrative harmony.
Case Study: Three Filers, One Administration, and No Governance
In one multinational estate involving three continents, three fiduciaries, each acting in good faith, filed three different U.S. estate-tax returns.
- The executor in Asia submitted a Form 706-NA through local counsel to preserve treaty benefits and avoid double taxation.
- A U.S. trustee filed another return to obtain the transfer certificates to release domestic accounts.
- An European representative filed a third return for heirs to ensure no transferee liability would ensure (effectively, a “protective” return).
Each return identified a different executor, valuation date, and asset list. The IRS estate tax compliance group faced an audit conundrum, pursued proof of authority, and reconciling the discrepancies took months while access to assets were locked by liens.
No one had acted improperly or breached their fiduciary duties. The confusion reflected a problem in policy because there was no unified governance design, no lead administrator, and no procedural bridge between jurisdictions to prevent conflict and delays.
No One May File, But Someone Will Pay
Under §6324, estate tax owed can create a ten-year lien on U.S. assets. Anyone receiving or controlling that property, whether the executor, trustee, or heir, can be personally liable for unpaid tax. A foreign fiduciary may refuse to act and file the tax return and the IRS can simply transfer the burden to whoever holds the asset.
The consequence reveals the structural issue that is beyond a financial problem. Families and advisors often optimize tax efficiency in planning but disregard administrative continuity and executive possibility. Policy assumes coordination that operate theoretically but fail in the real systems.
Cross-Border Estate Administration: Policy In Action Is Dysfunctional
The dysfunction revealed by §§2203 and 6324 are predominantly structural. Tax systems were not designed for collaborative management and control. The double-taxation avoidance agreements (DTAAs) that fill speeches and communiqués look cooperative on paper but lack critical details in procedural implementation. They delineate who retains authority to tax, but rarely complete the framework on how and who must act to align the administration of the tax.
In practice, policymakers are disinterested in resolving administrative friction that is not tied to producing new revenue. Harmonizing governance is not politically alluring. Families are, therefore, left to navigate systems that coordinate at the treaty level but crumble in execution in frameworks that appear promising publicly but fail privately.
The same paradox exists domestically. Each administration promises modernization, yet administrative backlogs, delayed refunds, and compliance penalties continue even during government shutdowns. When agencies furlough staff, deadlines and interest charges continue without breaks. The law continues to insist on compliance even when its operators cannot process returns or resolve discrepancies.
When governance is performative, whether in public institutions or private wealth, structural framework becomes more critical than ever to ensure order.
Strong Governance Frameworks Can Withstand Administrative Failures
Cross-border families can avoid administrative and compliance failures by planning for administration through proper governance design, beyond paperwork. Some key aspects include:
- Appoint dual-jurisdiction agents empowered to act in both countries.
- Embed successor-executor clauses authorizing substitute signatories under §2203.
- Pre-allocate Form 706-NA responsibility in wills, trust deeds, and advisory mandates.
- Educate fiduciaries about transferee liability before distributions and even the administrations occur.
- Build structural continuity digital vaults, compliance calendars, and escalation paths that survive turnover and time zones.
Coordinated Administration Requires A Governance Framework Beyond Rules
Sections 2203 and 6324 protect the tax system, but they also expose its limits. The failure lies in governance, specifically in infrastructure. Policies may set our the rules but are predominantly for show. Systems rarely display a performance but silently operate effectively.
A properly working legacy plan requires establishing a framework that withstand politics, borders, and bureaucracy. Governance, whether public or private, can only succeed when accountability and execution share the same foundation.