How U.S. Gift, Estate, & GST Taxes Impact Worldwide Estates
U.S. citizens and residents are subject to the U.S. gift, estate, and generation-skipping transfer (GST) taxes on their worldwide estate. However, for U.S. gift and estate tax purposes, residency is defined quite differently than it is for U.S. income tax purposes.
Unlike the objective standards for U.S. income tax purposes (substantial presence, green card, or citizenship), the term “U.S. tax resident” for gift and estate tax purposes is actually domicile. This difference gives rise to valuable estate planning opportunities that clients must absolutely understand in order to minimize their exposure to U.S. gift and estate taxes.
For example, with proper domicile planning, a non-U.S. citizen can become a U.S. lawful permanent resident (green card holder) without being deemed a U.S. domiciliary for U.S. estate tax purposes thereby avoiding exposure to the worldwide estate. In other words, a non-U.S. citizen individual can be a resident for income tax purposes but a nonresident for estate tax purposes, and this has been fully recognized as lawful by the IRS and the courts.
By engaging our firm for domicile planning, only U.S.-situs assets would be exposed to the U.S. estate tax. Furthermore, if all U.S.-situs assets are owned by a special purpose foreign “blocker” corporation, then the individual will be deemed to have no taxable U.S. estate. This would mean there would be absolutely no exposure to U.S. gift or estate taxes with proper planning.
The concept is simple but the details are complex. We cut through the complexity by planning and implementing a comprehensive plan with an appropriate degree of economic substance to ensure your goals are met.
What’s best is that our estate planning strategies and techniques have all been upheld by the courts and come with indemnity protections. We stand by our work.
Castro & Co. has the knowledge and experience that complex global estates require. Call (833) 227-8761 to learn more and receive the international estate planning assistance you need from one of our experienced international estate planning lawyers.