Estate planning can be complicated for anyone. However, it presents unique challenges for non-citizens with assets in the United States. Non-citizens’ estate planning isn’t something that all estate lawyers are ready to handle. However, avoiding an excess tax burden is important. However, the right help can drastically reduce your tax burden and increase what you leave behind to loved ones.
One of the most important factors to consider regarding estate planning for non-citizens is residency status. The U.S. estate tax laws apply differently to residents and non-residents. Guardian Life shares that U.S. citizens and residents are entitled to a significant estate tax exemption—currently set at $13,610,000 for 2024.
However, non-residents with U.S. assets face a much smaller exemption of just $60,000. This stark difference means that non-citizens may be subject to high estate taxes, potentially up to 40% on assets exceeding the $60,000 threshold.
Residency status is a critical element in determining estate tax obligations. The Internal Revenue Service (IRS) uses the concept of "domicile" to decide who qualifies for the higher exemption. A person is considered domiciled in the U.S. if they live there and intend to remain permanently. Non-citizens who do not meet these criteria are considered non-residents and are subject to the lower exemption.
For example, someone living in the U.S. on a non-resident visa might still be considered domiciled for estate tax purposes. This contrasts with income tax rules, which would still treat them as a non-resident.
There are several strategies that non-citizens can employ to minimize their U.S. estate tax obligations:
Given the complexities of U.S. estate taxes for non-citizens, seeking advice from experienced estate planning professionals who understand U.S. tax law and international estate planning is crucial. This includes not only tax attorneys but also financial advisors who are familiar with cross-border tax issues. A well-crafted estate plan can ensure that your assets are protected, and your family's financial future is secure.
Don't leave your legacy to chance. If you're a non-citizen with U.S. assets, the tax implications can be significant. However, with the right planning, they don't have to be. Contact our estate planning law firm today to schedule a consultation and preserve your assets.
Navigating estate planning as a non-citizen can be complex, but with the right strategies and professional guidance, you can protect your wealth and ensure a smooth transfer to your loved ones. Whether it's minimizing tax liabilities through gifting, leveraging life insurance, or understanding the nuances of U.S. tax treaties, a comprehensive estate plan will safeguard your legacy. At Vick Law, P.C., we create customized estate plans for non-citizens, ensuring your assets are preserved and your family is protected. Don’t leave your estate to chance—contact us today to secure your future and that of your loved ones.
Reference: Guardian Life (Aug. 28, 2024) “US estate tax strategies for noncitizens and nonresidents with US assets”