Do you or your family members own U.S. real estate or stocks or bonds in a U.S. company, and are citizens or residents of another country? You may benefit from the latest guide published by San Francisco area tax attorney Janet Brewer on U.S. Gift Tax and Estate Tax Planning for Non-Residents and Non-Citizens.
Federal estate and gift tax laws impose tough restrictions on non-citizens, even if the non-citizen has a "green card." In addition, many clients have assets both in the United States outside of the U.S. and not all countries recognize trusts and other tools that work within the United States.
The rules for a non-citizen and non-resident are extra complex if a person dies owning 'U.S. situs' assets -- such as real estate located in the U.S. or stocks, bonds, or stock options in a U.S. company.
And, as with all estate plans, there is no opportunity for a 'do-over.' Heirs and loved ones will have to live with the results of what taken care of -- or not taken care of -- now.
For example, many people think land in Silicon Valley is very cheap right now. They may be quite right… some of the real estate in the Bay Area is at its lowest price in years. But if the real estate investor is not a U.S. resident and something were to happen to them, they are only entitled to a $60,000 exemption from U.S. gift and estate taxes – non-resident aliens (NRAs) pay a much higher rate of gift and estate taxes than U.S. citizens.
Even under ordinary circumstances, estate planning requires special legal expertise. When the estate involves family members who are not U.S. citizens or are non-residents, or covers assets that are in more than one country, it’s crucial to do sound estate tax planning and/or gift tax planning now.
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