Becoming a citizen can have many useful benefits, including little-known advantages in estate planning for U.S. citizens. If you just became a United States citizen, now is a great time to update your estate plan. If you just became a citizen of another country, you may have estate planning needs in the U.S. as well.
Estate Planning for New United States Citizens
Congratulations on receiving your United States citizenship. You now have the estate planning advantages of the unlimited marital deduction and an increased estate and gift tax exemption. If you had a green card before receiving citizenship, then you already had these advantages. However, your estate plan may not have reflected it, so it’s a good time for an update.
Before you became a citizen, you could not make unlimited transfers of property to your spouse without paying taxes. Now, you can make as many transfers as you like – including in your will or the rest of your estate plan. Your estate tax exemption amount goes up to $11.18 million for both you and your spouse if he or she is a citizen. In addition, you and your spouse can use estate tax portability. It allows either you or your spouse to use the remaining amount of estate tax exemption left over after one of you passes away.
If your spouse is not a citizen or permanent resident, then you may need to update your estate plan too. Your current plan may not take into account the very low estate tax exemption that non-citizens receive – only $60,000 – or the lack of a marital deduction for gifts to spouses. If not, you or your spouse could end up owing significant taxes due to transfers of property to each other and relatives.
Estate Planning for New Citizens of Other Countries
People who just became citizens of other countries may need to estate plan in the United States too. If you own any property located in the United States, you may owe income taxes now and estate taxes in the future. An estate plan can help you set aside money, or even move your property to a holding company that could affect tax liability.
Further, you may need to make a will in your new country – and possibly one in the United States as well. Sometimes, more than one will is appropriate for dual citizens or people with ties in several countries. Other times, just one will or other estate planning structures are best. Talk to estate planning lawyers in both countries to find out more.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.