Can I Have a U.S Trust Even Though I Live Out of the Country?
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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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Hi Harry. This is great info. I am a U.S. citizen who received Italian citizenship about five years ago. My husband is Italian. I want to consider setting up a simple trust to make his life easier should I pass away before him. I am an Italian resident (also with my tax filings). I no longer own property in the United States but all of my assets sit in the U.S. My husband doesn’t have a ss number because he has never lived there. Does a trust make sense for me? I don’t want to spend a lot of money creating one and don’t need it managed (simple assets). Thanks.
Alesia,
Yes, I think a trust makes a lot of sense. But a lot depends on the investment company where your assets are housed. I know that Fidelity Investments, for instance, is very difficult to deal with when the trustee is not a U.S. resident even if they are a U.S. citizen. So it may be necessary to have a U.S.-resident trustee even during your life and especially upon your death in case you were to die before your husband.
Harry
My wife and I live in Thailand. I am a U.S. Citizen and my wife is a Thai citizen and a non-resident alien. Can I set up a Trust to transfer her Arizona State Retirement System survivor monthly pension into and then have it transferred by the trust to her bank account in Thailand? Do I have to be present in the U.S.A. to set up the trust?
Steve,
That sounds possible, but you’ll need to check directly with the Arizona State Retirement System. Also, you’ll need a U.S.-based trustee to manage the trust.
Harry