For non-U.S. residents with assets in Texas, understanding the intricacies of the U.S. estate tax system is crucial as a The Woodlands, TX revocable living trust lawyer can explain. The 2024 estate tax exemption presents unique challenges and opportunities for effective estate planning. Attorney Stuart Green, who serves clients throughout Texas, offers insights into managing these assets and minimizing tax liabilities.
Differences In Estate Tax Exemptions
While the 2024 federal estate tax exemption stands at $13.61 million for U.S. citizens and residents, non-U.S. residents face a significantly lower exemption amount for their U.S. assets, specifically those in Texas. The exemption for non-U.S. residents is only $60,000, making strategic estate planning vital.
Types Of U.S. Assets Subject To Estate Tax
Non-U.S. residents are taxed on U.S. situs assets, which include:
• Real estate in Texas
• Tangible personal property located in Texas, such as art and vehicles
• Shares of U.S. corporations
• Certain debt obligations of U.S. entities
Assets typically not considered U.S. situs include:
• Certain U.S. bank deposits
• Life insurance proceeds
• Stock in non-U.S. corporations
• Specific U.S. Treasury bonds
Effective Strategies For Reducing Estate Tax Liability
Attorney Stuart Green advises on several strategies to help non-U.S. residents manage and reduce their estate tax liabilities on Texas assets and has done since founding his own practice in 2021:
• Utilizing foreign corporations or trusts can shield direct ownership of U.S. situs assets.
• Life insurance policies can offer liquidity to pay estate taxes without selling Texas assets.
• Making lifetime gifts of U.S. situs assets can lower the estate size, though gift tax implications should be considered.
• Establishing a Qualified Domestic Trust (QDOT) for a surviving non-U.S. citizen spouse can defer estate taxes on U.S. assets until distributions are made.
• Leveraging tax treaties between the U.S. and other countries can provide higher exemptions or tax credits.
Understanding U.S. Situs Assets
For non-U.S. residents, identifying U.S. situs assets is essential. This category includes:
• Texas real estate holdings
• Tangible personal property like jewelry and vehicles within Texas
• Stock in U.S. corporations
• Certain debt obligations of U.S. persons or entities
Non-U.S. situs assets, which typically escape U.S. estate taxation, include:
• Bank deposits in certain circumstances
• Life insurance proceeds
• Stock in foreign corporations
• Certain U.S. Treasury bonds
Tax Rates And Implications
For non-U.S. residents with Texas assets, the estate tax rates range from 18% to 40% on the value exceeding the $60,000 exemption. This substantial tax burden underscores the importance of proper estate planning.
Professional Guidance Is Essential
Given the complexities and potential tax liabilities, seeking professional advice is crucial. Attorney Stuart Green, experienced in international estate planning, provides tailored advice to help clients protect their Texas assets and navigate U.S. estate tax laws.
Non-U.S. residents with assets in Texas must understand the 2024 estate tax exemption and related rules. With a federal estate tax exemption of $13.61 million for U.S. citizens and residents, and only $60,000 for non-U.S. residents, strategic planning is essential to minimize tax liabilities. By employing effective strategies and consulting with professionals, non-U.S. residents can protect their assets and ensure a smooth transfer to heirs. Contact Stuart Green Law, PLLC to get started today; he is licensed in Texas, Kentucky, Pennsylvania, and South Dakota.