By Fredrick P. Niemann, a NJ Estate Planning Attorney
Estate planning can be especially important for those with international ties. Typically, international estate planning issues come up in two contexts. First, there are situations where a U.S. citizen or resident has international ties, such as owning foreign assets, living abroad, or desired beneficiaries who do not live in the U.S. Second, there are nonresident aliens who have ties to the United States, such as those who own property in the U.S. or have desired beneficiaries who live in the U.S. Tax implications are different everybody, but regardless of your international ties, one thing is certain: you can benefit from estate planning.
U.S. citizens and residents are subject to the estate and gift tax not only on their property in the U.S., but on all of their worldwide assets. This may subject the individual to a double-tax based on the foreign jurisdiction your assets are in and other factors, such as whether you are considered a resident there or not. The U.S. government grants individuals a foreign estate tax credit which encompasses assets abroad, but this credit has limitations and requires specific circumstances be met. Treaty relief may also be present if the U.S. has entered into a specific treaty with the nation that your assets are in. The Federal Government allows for the U.S. marital deduction to encompass foreign property if your spouse is a U.S. citizen. If you transfer property to a spouse who is not a citizen however, certain additional requirements must be met for your spouse to receive the marital deduction.
Nonresident aliens in the U.S. are subject to U.S. estate and gift taxes only on their assets which are situated in the county. The Federal Government has specific criteria for identifying what is considered to be situated in the United States, as well as a list of assets which fall under this category. Similar to U.S. citizens, treaty relief may be available for nonresident aliens if the U.S. has entered into a specific treaty with your home country addressing tax obligations. Nonresident aliens are limited in the different types and amounts of deductions they are eligible for relating to tax purposes. For example, nonresident aliens are limited to a $60,000 estate tax exemption for their assets situated within the U.S. There are numerous other limitations and exceptions to the limitations, such as a qualified domestic trust (QDOT), which are beneficial for tax purposes. It is important to consult an experienced estate planning attorney if you have assets overseas.
International estate planning is a complicated field with numerous specific rules and regulations. Every person’s situations is most likely different, depending on your status as a U.S. citizenship status, where your assets are kept, and what your goal is in transferring them just to name a few. Fredrick P. Niemann is a New Jersey Estate Planning Attorney who welcomes you with your international estate planning matter. Please call him today toll-free at 888-800-7442 or email him at firstname.lastname@example.org/ to discuss questions you may have. He looks forward to hearing from you.