What Steps do U.S.-Resident Non-Citizens Need to Take to Avoid Estate Taxes?
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Question:
My husband and I are both US non-citizens but both US residents. We both have our names on the deed of our house (valued at about $200,000 or less) and titles to our cars. If one of us passes away, will the surviving spouse keep the house and the cars without estate taxes, state taxes and inheritance taxes? Will a trust help us in this situation? If it does, what trust would that be? Can a US resident couple set up a trust?
Response:
Not to worry as long as you stay living in the United States. The federal estate tax exclusion of $12.06 million (in 2022) per decedent applies to non-citizens as well as to citizens as long as they are living in the United States at the time of death. All their assets are included in this figure, including those they may own outside of the United States. But beware moving back to your country of origin and keeping your property in the United States. Then, the estate tax threshold drops to a mere $60,000.
Whether you might have any state estate taxes depends on your state, but the lowest threshold around the country (in Massachusetts and Oregon) is $1 million, so you’re probably okay without setting up trusts for this purpose. You might want to create a trust for other purposes—probate avoidance and asset management in the event of incapacity.
Related Articles:
Estate Tax Planning for Non-Citizen Spouses
Can Non-US Citizens be Beneficiaries of a Trust?
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