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a citizen for longer than nine months, the money can be put in a qualified domestic trust – also known as a QDOT – and withdrawn after he or she becomes a citizen.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
New Jersey’s Next Manufacturing Tax Credit: Stability Secured, Timing Matters
A Settled Regulatory Environment Enables Confident Capital Planning New Jersey’s new manufacturing incentive program, Next New Jersey Manufacturing Program, enters 2026 with something uncommon in economic development these days: policy stability. The statute is enacted, New Jersey Economic Development Authority’s (“NJEDA”) rules are adopted, and the application portal is open. With the election outcome settled, […]
Author: Michael J. Sheppeard
A Simple Guide to Industry Roll-Up Acquisitions
When done successfully, industry roll-up acquisitions can dramatically grow and strengthen your business. In this post, we break down what an industry roll-up is, why companies pursue it, and what makes it an effective (and sometimes risky) business strategy. What Is an Industry Roll-Up Acquisition? In an industry roll-up acquisition of companies, a buyer acquires multiple companies […]
Author: Dan Brecher
Genesis Mission: How the U.S. Government’s New AI Platform Will Reshape Corporate Innovation, Risk, and Competition
The federal government has launched one of the most ambitious scientific initiatives in decades, and it will redefine how companies develop technology, manage risk, and compete. The Genesis Mission, created by Executive Order and driven by the Department of Energy (“DOE”), is intended to accelerate scientific discovery through a national AI platform that links supercomputers, […]
Author: Michael J. Sheppeard
Stablecoins and the GENIUS Act: How New Global Rules Are Reshaping Compliance
Stablecoins Leave the Grey Zone Stablecoins were supposed to be the “boring” part of crypto: digital dollars that just work. Yet for years they have lived in a regulatory no-man’s-land, classified one day as securities, the next as commodities, and sometimes as something regulators had not even named yet. That uncertainty is finally starting to […]
Author: Bryce S. Robins
Don’t Overlook the Importance of Business License Management
If you operate a business without the proper license, you risk fines, insurance issues, reputational harm, and even business closure. Even innocent mistakes, like forgetting to renew a license, can have significant consequences, such as losing your lawsuit for payment of services that are unlicensed, which makes it imperative to have business license management procedures […]
Author: Dan Brecher
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
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.