US Estate Tax Implications for non-US residents

When acquiring investment assets in the United States, it is important to plan in advance how to manage these assets from a US estate tax perspective. US estate tax liability may apply due to the location of the assets, such as real estate, regardless of the owner’s citizenship or residency. 

Non-US persons are subject to US estate tax on the value of their tangible and intangible assets located in the United States. In this context, tangible assets refer to real estate located in the United States. Intangible assets in this context most often refer to stocks in a United States corporation. It can also include certain assets of businesses incorporated or registered in the United States while other assets are excluded, such as personal bank accounts or life insurance proceeds. 

Ownership of these kinds of US assets triggers US estate taxes on the value of these assets, regardless of whether their owner resides in the USA or abroad. US estate tax rates range from 18% to 40% on US situs assets. While there is an estate tax exemption based on the value of the assets, it is limited to USD 60,000. Given this low exemption amount, the US estate tax liability is easily triggered, as real estate located in the United States often exceeds this exemption amount. This means that that the mere ownership of an apartment in California for example, could trigger US estate tax liability for a non-resident, non-US person. 

It is recommended to carefully plan the estate of a non-resident, non-US person who owns assets located in the United States.