Estate planning is a crucial aspect of financial planning, regardless of your citizenship status. However, for green card holders and non-citizens living in the United States, understanding the complexities of federal estate taxation is especially important. In this blog post, we’ll explore how US federal estate taxation applies to green card holders and non-citizens, and the role of wills, trusts, and estate planning attorneys in this process.
Understanding US Federal Estate Taxation
The United States imposes federal estate tax on the transfer of property at death. Under current law, the federal estate tax applies to estates with a total value exceeding $11.7 million for individuals and $23.4 million for married couples (as of 2021). However, for green card holders and non-citizens, there are additional considerations to keep in mind.
Estate Taxation for Green Card Holders
Green card holders are considered “domiciled” in the United States for estate tax purposes, which means that their worldwide assets are subject to US federal estate tax. This includes real estate, bank accounts, investments, and other assets located both inside and outside the United States. As such, green card holders must carefully plan their estates to minimize their exposure to federal estate tax.
Estate Taxation for Non-Citizens
Non-citizens who are not green card holders are subject to US federal estate tax only on assets located within the United States. However, determining the value of these assets and calculating the estate tax can be complex, especially for non-residents who may have limited knowledge of US tax laws.
The Role of Wills, Trusts, and Estate Planning
Wills, trusts, and estate planning are essential tools for green card holders and non-citizens to minimize their exposure to federal estate tax. Here’s how they can help:
- Wills: A will is a legal document that specifies how your assets will be distributed after your death. By carefully drafting a will, you can ensure that your assets are distributed according to your wishes and minimize your exposure to federal estate tax.
- Trusts: Trusts are another essential tool for estate planning. By transferring assets to a trust, you can remove them from your estate for tax purposes, reducing your potential estate tax liability. Trusts can also provide additional benefits, such as asset protection and privacy.
- Estate Planning Attorney: An estate planning attorney can help green card holders and non-citizens navigate the complexities of US federal estate taxation. They can assist with drafting wills and trusts, minimizing estate tax liability, and ensuring that your estate plan complies with US tax laws.
Estate planning is a crucial aspect of financial planning for green card holders and non-citizens living in the United States. By understanding how US federal estate taxation applies to them and utilizing tools such as wills, trusts, and estate planning attorneys, green card holders and non-citizens can minimize their exposure to federal estate tax and ensure that their assets are distributed according to their wishes. If you are a green card holder or non-citizen in need of estate planning assistance, don’t hesitate to reach out to our team for help.
