Estate Planning for the Modern Global Family (Part 1)

Estate planning can be overwhelming for many people, and it can be even more complex for today’s global families with international loved ones or with assets outside of the United States. For instance, someone whose spouse is not a U.S. citizen must keep unique legal considerations in mind while creating their estate plan. An increasing number of families also have international beneficiaries or own properties and assets in more than one country, and the laws and tax regulations of each jurisdiction need to be taken into account.

Planning for Non-U.S. Citizen Spouses

When it comes to estate planning for a spouse who is not a U.S. citizen, the following remain the same:

  • Basic steps of creating wills or living trusts
  • Naming beneficiaries for retirement accounts
  • Establishing powers of attorney for finances and healthcare decisions

However, there are differences to consider when it comes to federal estate and gift taxes. Currently, the federal exemption allows an estate up to $13.61 million to be transferred tax-free (or $27.22 million for married couples). The unlimited marital deduction allows assets to be passed on without federal tax to a surviving spouse, but this only applies if that spouse is a U.S. citizen. Also, only $185,000 can be gifted tax-free in 2024 to a spouse who is a non-U.S. citizen.

Advanced planning can help to solve some of this disparity. One option to consider is a Qualified Domestic Trust (QDOT) in which assets can be placed for a non-U.S. citizen spouse’s benefit. This spouse can then receive income from the trust without immediate estate tax implications. A QDOT needs to meet specific legal requirements pursuant to the Internal Revenue Code in order to be valid, and the trustee must be a U.S. citizen or corporation.

In the next post, I will write about planning for international assets and bequests.

For help with your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.