Planning area

Cross-border planning for non-U.S. persons with U.S.-situs assets, U.S.-resident heirs, or U.S. business interests.

Overview

Non-U.S. citizens holding U.S.-situs assets face a $60,000 estate-tax exemption — not the $15M+ available to U.S. residents — with the result that real estate, U.S. equities, and certain partnership interests can produce a 40% estate-tax bill on the entire holding above that floor.

The right structures — a non-grantor foreign trust, a properly designed life insurance policy, or a planning entity — can shift situs, defer recognition, keep liquid assets ready when needed, or remove the asset from the U.S. transfer-tax net entirely. The wrong structures, or no structure at all, can be very expensive.

The United States remains a political and economic safe haven for individuals who do not reside here — and there is real comfort in owning a U.S. policy, for the greater financial security it brings their families. Insurance rates are also substantially lower in the United States.

U.S. life insurance policies are issued by the largest top-rated carriers in the world, and U.S. mortality tables are lower thanks to advances in medical technology and access to top-tier care. Privacy and confidentiality remain vital to wealthy individuals living outside the U.S.

Estate Transfer

The rules vary significantly depending on where the person lives, their citizenship, and where the assets are located. For foreign nationals who are not U.S. citizens and not domiciled in the United States, the U.S. generally imposes estate tax only on certain U.S.-situated assets. The estate of a nonresident non-citizen may be required to file Form 706-NA if U.S.-situated assets exceed $60,000.

• Certain bank deposits
• Life insurance proceeds on the life of a nonresident non-citizen

Many countries have estate and gift tax treaties with the U.S. that can reduce or eliminate double taxation and provide more favorable treatment.

Whether you are working with a business owner, high-net-worth family, estate planning client, or existing policyholder, TES can help determine whether a tax-efficient strategy may add value.