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Non-US Citizen Estate & Marital Deduction Planning - YouTube
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hi my name is jeremy green director of
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advanced planning for cbs brokerage to
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be discussing the topic of estate and
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marital deduction planning for non-us
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citizens
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we'll be discussing how you define
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residency briefly gift
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tax planning estate tax planning and
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finally qualifying for the metal
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deduction using qualified domestic
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trusts
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so first i'm going to start with how we
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define um
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you know status of somebody who's a
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resident alien versus a
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non-resident alien basically you're a
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resident alien you you
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have a green card or you pass something
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called the substantial presence test i'm
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not going to go into a lot of detail on
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that right now
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but if you're a non-resident alien you
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do not pass one of those two tests
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so i'm going to cover non-resident alien
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status first
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they are get such a gift taxes in the
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united states on their u.s citizens
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property
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for tangible assets so intangible assets
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are not included in any gift tax
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ramifications although for example u.s
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stocks which is intangible if they're
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sites in the united states
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are actually part of the estate tax uh
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including the gross estate tax but not
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for gift tax purposes
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cash is considered a tangible gift and
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they cannot gift split with u.s citizens
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and finally there is no unlimited
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marital deduction we'll be discussing
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how you qualify for
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something equivalent to that uh in just
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a second
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um here's a chart i have of and for a
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piece that we have got to
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you can get by pdf as to how to look at
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what happens when you
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get from either u.s citizen uh or not a
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green card holder or non-green card
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holder
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uh to one of those other three up top um
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so any gifts between spouses of course
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in the us would qualify the unlimited
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marital deduction
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the important thing to know for non-us
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citizens
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are that there is a 157 thousand dollar
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annual exclusion
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uh for for non-us spouses and that they
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use up their lifetime exemption when
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they go above that
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resident aliens are taxed on their
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worldwide assets just like u.s citizens
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are
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non-resident aliens as i said before are
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not taxed on world wide assets just the
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assets in the united states
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the definition of what site is the
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united states and so forth is dependent
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on
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certain countries having tax treaties
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with us their list here we have this
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piece like i said get to you by bpef
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um there is also a flat capital gains
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tax rate of 30
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and we'll get into the estate tax
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aspects of
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the difference between these two shortly
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uh the jointly owned property
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uh is included in the u.s resident
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u.s citizens estate grossest states if
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they are the one that gave the
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consideration for the asset and
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only one half of that would be and be
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included in their gross state at the
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first foster's death
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so for marital deduction planning if the
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surrounding spouse is not a u.s citizen
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against no
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marital deduction you can get the
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unlimited marital deduction
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uh if we put it in a qualified domestic
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trust and or if they become
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u.s citizen by the time they file the
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estate tax return for the deceased u.s
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spouse
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so what you need to understand about the
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state tax
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exemption for a what's important about
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this chart is that non-resident aliens
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have a sixty thousand dollar
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uh lifetime exemption that's obviously
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significantly less than the eleven
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million five hundred eight thousand for
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u.s residents or u.s
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uh citizens um so how do we qualify for
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the middle deduction
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when the and that is the real
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opportunity here
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how to qualify for the middle deduction
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the unlimited moral deduction
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and defer all these state taxes at the
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first foster's death to the second
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smallest
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death the way we do for u.s citizens and
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how we would do that is use something
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called
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called a qualified domestic trust the
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purpose of a qualified domestic trust is
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to ensure that these state taxes
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that that were deferred at the first
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first spouse's death are actually paid
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and so what you need to understand that
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is the intent of this trust it has
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provisions that aren't found in any
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other trust
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but foundationally first and foremost a
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qualified domestic trust is
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a marital deduction trust um and it fits
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one of the three definitions we normally
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see from medical deduction trust is
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either a qualified terminal interest
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property trust to qtip
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a general power appointment trust or a
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trust that dumps into the estate of the
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second sponsors at the
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second spouse's estate when they when
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they pass away
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so what we see here is that the
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qualified domestic relations trust
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is defined by the fact that it must have
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a u.s trustee
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the u.s trustee is is actually liable
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for these state taxes
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inside that trust that are due the
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if it's more than two million dollars of
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assets held in the q dot
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it must have a institution as the
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trustee or a letter
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credit must be applied for by the
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non-institutional trustee
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uh distributions from the from the q dot
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of income are or pay our income taxable
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to the surviving spouse
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but they are not but principal paid out
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from it is estate taxable actually
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so they can qualify for an exemption
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from that
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if there's a hardship and they'd have to
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file a form 706
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q dot and they have to be paid that this
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has to be filed anytime a principal is
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paid from this trust
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and the exemption for hardship would be
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if there was not enough assets in the
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surviving spouses of state
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to pay for things like health
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maintenance education support
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and they must not have enough on their
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own personal assets to pay those things
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but at the surviving spouse's death
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those assets are
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estate taxable and they're included in
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the gross state of the
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deceased second spouse non-us citizens
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estate
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if you have a situation you'd like to
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discuss with us uh please
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look us up on the internet that's
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cbsbrokerage.net or
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go ahead and call me at this number
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below or email me here i hope this has
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been helpful to you
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