At Feinstein & Partners, we assist our foreign clients with minimizing their U.S. estate tax exposure. The estate tax is a tax on the right to transfer property at the time of death. Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their assets situated in the U.S. U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies.
Unlike U.S. citizens and residents who have substantial estate tax exemptions, for a nonresident non-citizen, the applicable exemption continues to be limited to $60,000. Thus, estate taxes are due when a nonresident alien’s estate transfers U.S.-situated assets above $60,000. Currently, the top estate tax rate is 40%.
For example, Mr. X is a citizen and resident of Italy who owns a condominium in New York valued at $3,060,000. Upon death, Mr. X’s estate would be subject to the U.S. estate tax on $3,000,000. The estate tax is $1,200,000. However, with proper planning, the estate taxes for nonresidents can be substantially minimized.
Our estate tax planning services for nonresidents include:
- Tax planning for acquisition of U.S. based assets by nonresidents
- Reorganizing U.S. investments of foreign nationals using tax planning opportunities under applicable estate tax treaties and U.S. estate and gift tax laws
- Setting up efficient holding structures for U.S. based assets owned by nonresidents
- Coordinating between U.S. and foreign estate tax law with estate tax treaties to minimize taxes