Non-US citizens with USA Investments

If you are a non-US citizen (EB-5 Visa Holders and non-U.S. resident Aliens) you may be unaware that your investment accounts and assets in the U.S. are subject to US estate taxes. Those taxes can consume almost 40% of your asset values.

In simple terms an estate tax is a Death Tax.

US citizens are currently exempt from paying federal estate taxes on the first $5.45 million they transfer to their heirs (this amount is subject to change annually.)   This is known as the estate tax exemption and assets above this amount may be subject to federal estate taxes.  Depending upon the state they’re in, their estate may also be subject to state and local taxes, causing their estate taxes to be even higher – currently Florida does not assess an estate tax.

For those that are not US citizens and have their primary residence in another country the exemption is generally limited to the first $60,000.

The US can be a very attractive place to hold and preserve assets.  It offers a combination of benefits that include the knowledge that you are investing in a stable country, a strong currency and a highly regulated investment and banking system.

The issue however presents itself when you don’t plan well ahead for potential wealth transfer hurdles.

Let’s say that you opened an account with a brokerage firm worth $1M and some time after you were to pass away. At 2016 tax rates, your heirs could face a federal estate tax of up to 40% of the value of your assets at the time of your death.  That could amount to almost $400,000 paid in estate taxes.

A simple solution to this problem could be life insurance.

Purchasing a life insurance policy in the amount of your estimated estate tax liability can be a smart way to protect your legacy and help ensure that your heirs and beneficiaries have the funds they need to pay any assessed US estate taxes.

Developing a smart estate planning strategy can be very complicated, and it is important that non-US citizens that have their primary residence in another country understand the US tax treatment of US property owned.  For assistance designing an estate planning strategy that meets your specific needs, please contact Magnate Financial Advisors today.