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US Estate Tax (Inheritance Tax)

Estate Tax

Under existing law, the U.S. estate tax is imposed at the death of foreign individuals owning the U.S. real property based on the entire value of the property that exceeds $60,000. Tax treaties between the U.S. and the home country on the taxation of the owner must be taken into account. These treaties generally provide significantly more favorable treatment to owners who reside in a country with which the U.S. has income and estate tax treaties. The U.S. has income and estate tax treaties with most of the major countries of the world that may totally or partially alleviate the tax burdens mentioned here. Life insurance is another method of mitigating tax liability.

Best advice is for non-residents to discuss these matters with a local U.S. tax attorney and their home country lawyer to ensure correct structuring.

Wills & Trusts

Technically, whilst you are not obliged to have a U.S. will, significant delays and expense may be incurred where there is no U.S. will in place in the event of death, particularly in the case of a single owner.

Even when holding a will in your home country, probate in the U.S. can be very expensive. Owners may prefer to hold a separate U.S. will to cover U.S. assets such as real property, bank deposits, share of stock in a U.S. corporation, partnership interest, currency held in a safe deposit box etc. If you follow this path then make sure that your U.S. will does not replace your home country will and that its existence is referred to in order to obtain probate in the U.S.

We recommend that individual owners of U.S. real estate take advice with their home country attorney as well as an attorney in the jurisdiction where the individual owns or intends to purchase property to address estate planning issues


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