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Question:

I’m a US citizen living abroad, my wife is a non-US citizen. I have two children living in United States and they are both US citizens. My property and all my assets are in U.S. I don’t own anything overseas. Can I draft a revocable trust in the state where my child who I would designate as trustee lives?

Response:

Yes, that should be no problem. The trust laws are not affected by where you live. The tax laws are not implicated in this case either. You should use your Social Security number for the trust.

Where things get a bit complicated is when and if you pass assets to your wife, who’s a non-U.S. citizen. Technically, if you give her more than $164,000 (in 2022) during a calendar year, you are supposed to file a gift tax return. However, there’s no tax until you’ve given away $12.06 million (in 2022) cumulatively in taxable gifts.

This is also true post-death. While there’s never any estate tax on what you leave a U.S.-citizen spouse, anything in excess of $12.06 million left to a non-citizen spouse will be subject to estate tax. At those levels, this doesn’t affect too many people, but it will be reduced in half beginning in 2026.

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