Planning for non-US citizens

Provides education on potential transfer tax considerations when one or both spouses are non-US citizens.

by Carrie Larson, Senior Wealth Strategist, Advanced Planning Group 15 Aug 2022

It is not uncommon for a client or a client’s spouse to be a permanent resident of the US but not a US citizen (i.e., a green card holder). A green card holder domiciled in the US is subject to US estate and gift taxes to the same extent as a US citizen.1 That is, in most instances a green card holder is subject to US estate and gift tax on the gift or bequest of property located anywhere in the world. Unfortunately, most transfers to a non-US citizen spouse fail to qualify for what is known as the “marital deduction” for estate or gift tax purposes (see Sections 2056(d)(1) and 2523(i) of the Internal Revenue Code). This is not always understood by couples to whom it may apply and can result in tax consequences that are both surprising and unfortunate.

Transfers at death and the qualified domestic trust

The federal estate tax marital deduction allows an individual at the time of their passing to leave, outright or in certain types of trusts, an unlimited amount of wealth to a spouse who is a US citizen without immediate estate tax.2 Most estate plans for married couples are designed to defer estate tax at the death of the first spouse, thereby preserving the maximum amount of property for the benefit of the surviving spouse during their lifetime.

Please note: The complete publication, including important information and disclosures, can be downloaded via the link below.

Browse additional articles available from UBS Advanced Planning on topics of interest to ultra high net worth clients and their families.

Purpose of this material.
The information on this page and in the attached document is provided for informational and educational purposes only. It should be used solely for the purposes of discussion with your UBS Financial Advisor and your independent consideration. UBS does not intend this to be fiduciary or best interest investment advice or a recommendation that you take a particular course of action.

No tax or legal advice.
UBS Financial Services Inc., its affiliates and its employees do not provide tax or legal advice. You should consult with your personal tax and/or legal advisors regarding your particular situation.

Get in touch

Together, we can help you pursue what’s important