The idea of retiring on a beach in Central America or in a quaint village in Europe might seem idyllic. But before you think seriously about retiring in another country, be sure you know all the tax and estate planning rules.

A lot of people have been tripped up by these rules in the past. For instance:

* If you keep more than $10,000 in a foreign bank account, you’ll have to file annual reports with the U.S. government. And be sure you can even open a local account – a law passed by Congress in 2010 requires foreign banks to file detailed disclosures on accounts held by Americans, and many smaller foreign banks won’t even accept Americans as account holders anymore because they don’t want to deal with the paperwork.

Owning real estate through a foreign trust or corporation can result in onerous tax and reporting requirements here in the U.S.

* Some foreign countries don’t allow non-citizens to directly own real estate. As a result, you’ll have to own the real estate through a trust or a corporation, or have a local agent hold title while you contract with the agent to control the property. Owning real estate through a foreign trust or corporation can result in onerous tax and reporting requirements here in the U.S.

* Some people have the opposite problem: They want to own real estate through a trust or corporation for asset-protection purposes, but this isn’t allowed by the foreign country.

* You might be subject to gift and estate taxes in both the U.S. and the foreign country. While you can sometimes get a credit on your U.S. federal taxes for any taxes you pay to a foreign country, this isn’t always the case. And it can be even harder to get a credit if state estate taxes are owed.

* Inheritance rules are very different in some countries, and sometimes foreign law will dictate what happens to your property in spite of what you put in your will. For instance, even if your will says that your real estate will go to your spouse, it could end up going to your children instead – or even to a distant relative.

Inheritance rules are very different in some countries, and sometimes foreign law will dictate what happens to your property in spite of what you put in your will.

* If you make gifts to foreign charities, you generally can’t deduct them on your U.S. taxes.

* Finally, Medicare typically won’t cover your health expenses in a foreign country, so you’ll have to make other arrangements. And if you eventually return to the U.S. and you didn’t pay Medicare Part B premiums while you were away, you might be subject to a penalty if you sign up for Part B coverage.

Retiring in a foreign country can have advantages.  The cost of living is certainly one of the biggest considerations for many people.  But like any major decisions, sit down with people who have walked that path before you - and include your tax and legal professional in properly planning a decision like this.