Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Estate planning with a non-citizen spouse
Author: Scarinci Hollenbeck, LLC
Date: March 26, 2014
Key Contacts
Back
Estate planning, when not done in careful accordance with tax law, can lead to extremely high costs for high-net-worth individuals. Many of these costs can be easily mitigated or avoided entirely by taking advantage of the unlimited marital deduction, but this does not apply for individuals who are married to non-citizens, according to Market Watch.
The current estate tax is 40 percent of all holdings in excess of $5.34 million, according to Lexology. An individual with a net worth of $10.34 million who is married to a U.S. citizen, for example, might choose to avoid this effective tax of $2 million by bequeathing $5.34 million to his or her children and transferring the remaining $5 million to his or her spouse. There is no limit on tax-free gifts to spouses who are U.S. citizens, regardless of whether you are a citizen yourself.
However, if your spouse is a non-citizen, your options are more limited, according to MarketWatch. Your spouse can become a citizen by merit of his or her marriage with you, allowing him or her to take advantage of the unlimited marital deduction. He or she can attain complete citizenship even after your death, but no later than the due date for filing the federal estate tax return, which is typically nine months after your death.
For various reasons, your spouse may not want to become a citizen right now – some countries require renouncing citizenship with them before becoming a citizen of the U.S., for example, which can complicate holdings in those countries. If your spouse wishes to defer becoming a citizen for longer than nine months, the money can be put in a qualified domestic trust – also known as a QDOT – and withdrawn after he or she becomes a citizen.
The final option is to gradually transfer your estate to your non-citizen spouse while you are still alive, advises MarketWatch. In accordance with the tax law, you can gift him or her up to $145,000 per year without incurring tax penalties – substantially more than the standard tax-free gift size of $14,000 to other people.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Estate planning with a non-citizen spouse
Author: Scarinci Hollenbeck, LLC
Estate planning, when not done in careful accordance with tax law, can lead to extremely high costs for high-net-worth individuals. Many of these costs can be easily mitigated or avoided entirely by taking advantage of the unlimited marital deduction, but this does not apply for individuals who are married to non-citizens, according to Market Watch.
The current estate tax is 40 percent of all holdings in excess of $5.34 million, according to Lexology. An individual with a net worth of $10.34 million who is married to a U.S. citizen, for example, might choose to avoid this effective tax of $2 million by bequeathing $5.34 million to his or her children and transferring the remaining $5 million to his or her spouse. There is no limit on tax-free gifts to spouses who are U.S. citizens, regardless of whether you are a citizen yourself.
However, if your spouse is a non-citizen, your options are more limited, according to MarketWatch. Your spouse can become a citizen by merit of his or her marriage with you, allowing him or her to take advantage of the unlimited marital deduction. He or she can attain complete citizenship even after your death, but no later than the due date for filing the federal estate tax return, which is typically nine months after your death.
For various reasons, your spouse may not want to become a citizen right now – some countries require renouncing citizenship with them before becoming a citizen of the U.S., for example, which can complicate holdings in those countries. If your spouse wishes to defer becoming a citizen for longer than nine months, the money can be put in a qualified domestic trust – also known as a QDOT – and withdrawn after he or she becomes a citizen.
The final option is to gradually transfer your estate to your non-citizen spouse while you are still alive, advises MarketWatch. In accordance with the tax law, you can gift him or her up to $145,000 per year without incurring tax penalties – substantially more than the standard tax-free gift size of $14,000 to other people.