What Is Situs?
Situs means that an item of property is either physically located in the United States or has a connection to the United States such that the U.S. considers it to be located here. For example:
- All real property (real estate) located in the U.S. – including condos, land, buildings, and houses – has a situs in the U.S.
- All tangible personal property, such as cash, jewelry, art, and furniture, located in the U.S. has a situs in the U.S.
- Both shares of stock in U.S. companies and shares in a U.S. registered investment fund (“RIC”), including mutual funds, have a situs in the U.S. It does not matter whether stocks are publicly traded or privately held or where the stock certificates are located.
- Cash accounts with U.S. brokerage firms have a situs in the U.S.
In contrast, property located outside the United States probably does not have a U.S. situs. If you have money in an account with a foreign bank, own property in another country, or invest in foreign companies directly (not through U.S. mutual funds), then you may own property with a situs in another country.
Why Does Situs Matter for Estate Planning?
The Internal Revenue Service assesses estate taxes on people’s estates that contain U.S. situs assets over a certain value. For example, someone who lives in another country and is not a U.S. citizen or permanent resident may owe estate taxes if his assets with a situs in the United States exceed a $60,000 value on his death. With an up to 40 percent tax on these assets assessed on the estate, heirs could receive much less than expected.
For U.S. citizens and permanent residents, the exemption amount is much more than $60,000. Your assets could be more valuable than you realize, though, so your estate plan may need to take the estate tax into account. Various estate planning tools can help you accomplish your goals without unexpected taxes due later.
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.