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a citizen for longer than nine months, the money can be put in a qualified domestic trust – also known as a QDOT – and withdrawn after he or she becomes a citizen.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.
- Practices: Tax and Trusts & Estates, Sophisticated Estate Planning & Wealth Preservation, Estate & Trust Litigation, Real Property Tax Strategies
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
Author: Jay McDaniel
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
Author: Donald M. Pepe
When to Settle and When to Fight: A Litigator's Framework
Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]
Author: Sean M. Pena
A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now
Few situations create more uncertainty than learning that an employee has filed a whistleblower complaint. Questions arise immediately: Is the allegation legitimate? Should the employee be placed on leave? Do we need to notify our insurance carrier? Are we now prevented from disciplining the employee if there are unrelated ongoing work related issues? There is […]
Author: Sean M. Pena
Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses
When a business reaches the point where it can no longer service its debts or otherwise resolve its liabilities, management is often faced with a difficult question: is a bankruptcy filing necessary or is there another way to perform an orderly liquidation or sale of the business assets? While Chapters 7 and 11 of the […]
Author: John D. Giampolo
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.