Especially if you have significant wealth, planning carefully for your future and the future of your loved ones is vital. Although many people are familiar with the basics of estate planning, from drawing up a will to naming beneficiaries, those married to non-citizens of the United States may be less familiar with the estate tax laws that may affect their wishes and plans.
Estate Taxes & Non-citizen Spouses
The good news is that you can indeed leave your property and assets to non-American citizens, whether or not you are married to them. It does not matter if they have a visa, a green card, or even if they are a currently not a resident of the United States. The bad news is that you may need to pay a heavy estate tax on some of the money that you leave behind if your non-citizen spouse is inheriting the money.
Generally, an individual can leave up to $5.34 million behind in gifts and inheritance during their lifetime without being taxed. After that amount is reached, all further gifts are taxed at a rate of 40 percent. This money can be given to spouses, relatives, and friends, regardless of their citizenship.
It’s important to note that U.S. persons (U.S. citizens, those with dual citizenship, and U.S. residents) may owe estate taxes on all of his or her worldwide assets, even those located outside of the United States.
Unlimited Marital Deductions
If your spouse is a citizen, a special rule called “unlimited marital deductions,” states that you can give them any amount of money, both in the form of gifts and in the form of inheritance, throughout your life. While your spouse may need to pay estate taxes upon their own death, your money and other assets will be protected in full until the time of his or her passing.
Sadly, though, the unlimited marital deductions rule cannot be applied to a marriage in which one spouse is not a United States citizen. Instead, the basic rules for gift-giving and estate taxes still apply: you may give your spouse $5.34 million total over your lifetime without paying taxes, including $145,000 annually in gifts.
Palo Alto Estate Planning Attorney
What can you do to protect your assets and ensure that your nonresident spouse has the security that they need after you are gone? There are several strategies that you can enact to make certain that your family members are cared for and that your assets are only taxed when necessary. At the Law Office of Janet L. Brewer, we have a long history of helping California families plan their estate and with helping families with non-resident members. To learn more about our services, or to speak with Janet Brewer, call us today: (650) 325-8276.