A test worth millions
Currently, U.S. citizens enjoy a $5 million exemption from both estate and gift taxes (at least in 2011 and 2012). But many non-citizens are limited to an estate and gift tax exemption of only $60,000. The key question is where the non-citizen considers home or “domicile” to be.
Determining your home country
If a non-citizen does not consider the U.S. to be his home country, he can only claim a $60,000 lifetime estate and gift tax exemption. To determine where a non-citizen’s home is located for estate and gift tax purposes, the IRS uses a “facts and circumstances” test. The test includes many factors, including review of:
- Your Visa status
- Locations and values of other residences (real property)
- Where your family members and close friends live
- Where your personal property is located - especially valuable items like fine art, currency, cash, stocks, and bank accounts
- The location of your business interests
- Where you are registered to vote
- Where you are licensed to drive
- Where your primary residence is
- Where you intend to be buried
Non-resident alien status
If a person is neither a citizen of the U.S. nor considered to be domiciled in the U.S. (a non-resident alien or “NRA”) for gift and estate tax purposes, then the only assets which would be subject to U.S. gift and estate taxes are those situated in the United States.
As an attorney experienced in international estate planning law, I can help you determine whether you are subject to U.S. estate and gift tax laws.
Call me at (650) 325-8276 or download my new guide, U.S. Gift Tax and Estate Tax Planning for Non-Residents and Non-Citizens.