Legal Blog

The Weekly Scenario from Steve Shane – 11.04.13

Question:  Are non-citizen residents of the U.S. subject to estate and gift taxes? Answer:  Yes, non-citizen residents here in the States are subject to the same estate and gift taxes (and often income taxes) as other U.S. citizens.  In fact, an individual can even be considered a U.S. resident for estate and gift tax purposes when he is not a resident for income tax purposes. For estate and gift tax purposes, a person becomes a U.S. domiciliary if he is living in the U.S. (regardless of how long) with no present intent to leave the U.S. at a later time.  In other words, with the intent to remain indefinitely.  The way this is determined is with a set of factors which go to the person’s intention to stay (i.e., does the person own a home, where does the person’s kids go to school, where is this person working, etc.).  If there is no definite intent to leave, the estate of the non-U.S. citizen residing in the U.S. will be taxed on all assets whether here in the U.S. or in another country (just as if he were a U.S. citizen).  As a result, he will also be able to utilize the same exemptions as a U.S. citizen would have. Comment:  I have clients who are residents and/or citizens of the U.S. who own property outside the U.S.  The tax implications are complicated by the fact that both the U.S. and the foreign country may tax the same transfer.  It is important for someone to review whether a tax treaty is applicable so to mitigate the possibility of double taxation.  It is also important to review any reporting and withholding requirements, particularly if it involves a foreign bank account or a distribution from a foreign trust. Steven E. Shane Principal Offit│Kurman Attorneys At Law 301.575.0313 Washington/Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly.