There are many noncitizens who live and work in the United States. Many of them are married to U.S. citizens. When it comes to estate planning for these couples, one needs to be very careful as the estate planning rules for married couples who are both U.S. citizens is quite different from those that apply to married couples where one spouse is a noncitizen.
The biggest difference is in the treatment of transfers to spouses. If both spouses are U.S. citizens they have an unlimited marital deduction. The unlimited marital deduction allows either spouse to gift during life or leave upon death as much as they want to the other spouse without triggering gift or estate taxes. With married couples where one spouse is a noncitizen only gifts or bequests to the U.S. citizen spouse are unlimited. If the citizen spouse wants to make a gift to the noncitizen spouse during lifetime, they are limited to a $136,000 annual exclusion (indexed for inflation). If the citizen spouse wants to bequest—leave something upon death—to the noncitizen spouse, they can only leave up to the estate tax exemption amount of $5.34 million (indexed for inflation). If the citizen spouse wishes to bequest more than the estate tax exemption amount to the noncitizen spouse the noncitizen spouse will have to pay estate taxes on the excess.
If a Qualified Domestic Trust (QDT) is utilized, the property that exceeds the estate tax exemption amount, that is transferred to the QDT, will qualify for the unlimited marital deduction and no estate tax will have to be paid at that point in time.
Contributed by MH Arrowhead, Phoenix and Scottsdale Estate Planning Attorney, David T. Eastman.
Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone. Financial predators are looking for ways to take funds from others and often use litigation as their means to do so. At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you. We do this through proper and current estate planning techniques. With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more. A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family. Without a living trust, this information will be made public. For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Cave Creek, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe. In New Mexico we serve the areas of Albuquerque, Santa Fe, Las Cruces, Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more. Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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