heredity conceptBy Mark A. Vergenes

“Foreign national” is a broad term that includes (from the perspective of the U.S.) both resident aliens (non-U.S. citizens who have established a legal domicile in the U.S. and have no intent to leave) and non-resident aliens (non-U.S. citizens who have not established domicile in the U.S.).

As the global economy expands, so does the need for international estate planning, which can be quite complex for non-citizens. This is especially true when it comes to transfer taxes, which could be looked at as a type of income tax. The U.S. taxes the passing of title to property such as real estate, investments, shares, or bonds, from one person (or entity) to another.

Here are a few facts foreign nationals should keep in mind:

  • If a non-citizen is considered a resident alien, U.S. transfer tax rules apply to his or her assets worldwide.
  • A non-resident alien is subject to U.S. transfer tax rules only if the title or property is legally located in the U.S.
  • Non-resident aliens are allowed a U.S. estate tax credit of $13,000, which essentially shields the first $60,000 of the estate from taxation.

There are different considerations affecting those in marriages between U.S. citizens and non-citizens. We’ll talk about those in another post.

Mark A. Vergenes is president of MIRUS Financial Partners and Chairman of the Board for the Lancaster Parking Authority.

Investment Advisor Representative offering securities and advisory services offered through Cetera Advisor Networks LLC., member FINRA/SIPC. Cetera is under separate ownership from any other named entity. MIRUS Financial Partners nor Cetera Advisor Networks LLC. give tax or legal advice.