If you just received your green card, you are now considered to be a permanent resident of the United States. With this change comes a great opportunity for estate planning that can give you peace of mind in the future. While estate planning may not be your first thought, you can take advantage of the tax benefits afforded to permanent residents to hopefully better your family’s future.
Increased Estate Tax Exemption
One major benefit of permanent resident status is the increased estate and gift tax exemption. As a non-citizen and non-resident, you previously had an exemption of only $60,000, which could have resulted in expensive taxes imposed on your estate in the future. Now, you have an exemption of $11.18 million. If you are married to a citizen or permanent resident, he or she has an $11.18 million exemption too. This means that your estate is much less likely to owe taxes later on.
Marital Deduction Still Not Available
Unfortunately, permanent resident status does not grant you the ability to use the marital deduction. This deduction allows for unlimited transfers between citizen spouses. You still have limitations on the amount you can transfer to your spouse without paying taxes. However, if your spouse is a citizen, you might consider setting up a qualified domestic trust (QDOT). The trust could defer your estate tax liability should your spouse leave you substantial assets. You would not be taxed until you received distributions from the trust.
Ties to Other Countries
Many people who attain green card status still have ties to other countries, whether through business dealings or with family. Sometimes these ties can lead to double taxation or complicated estate distribution issues. Tax treaties between the United States and other countries may help, but it is a good idea to speak with an experienced U.S. estate planning lawyer about your situation. You may need more help with your estate plan than you think.
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.