Estate planning when your spouse is a noncitizen can be tricky but in general,
you can proceed as if they were full citizens.
Regardless of your spouse’s status, both partners ought to make wills
or living trusts to leave assets you have in the U.S. to anyone you wish,
name beneficiaries of any retirement accounts, and make durable powers
of attorney for finances and health care.
You may be surprised to learn that you can even leave property to a noncitizen,
so you can take this into account when naming beneficiaries for retirement
accounts or life insurance policies.
What about the estate tax?
The federal estate tax, on the other hand, does not affect assets which
are left to a surviving spouse but only if the spouse is a citizen. This
is known as the unlimited marital deduction which works as an additional
exemption. Even if the inheriting spouse is a permanent legal resident,
the deduction does not apply to them. Although, you can leave any amount
up to the 2015 limit to any spouse even if a noncitizen which is $5.43 million.
Gifts you give to your noncitizen spouse can also be subject to the federal
gift tax. This tax will apply to gifts of more than $147,000 in a year
as of 2015.
If you intend to gift or leave more money that this to your noncitizen
spouse, you can avoid the estate tax if your spouse becomes a full citizen
by the time your estate’s federal estate tax return is due. This
return is normally due to the IRS within nine months after the death of
the citizen spouse but an extension of six months can be granted.
Otherwise, you may be able to pass on your assets without paying the estate
tax if you use a special “qualified domestic trust” or QDOT
to leave your property to the trust rather than your spouse. Your spouse
is then the beneficiary of the trust and receives the income the trust
property generates which are not subject to estate tax.
No matter how you wish to provide for your noncitizen spouse, speak with
a Sacramento estate planning attorney from
The Woodbury Law Office and we can go over all your legal options together!