How Being Married to a Noncitizen Could Affect Your Estate Planning

If you are married to someone who is not a United States citizen, that could have an effect on some of your estate planning strategies.

Noncitizens are allowed to legally inherit property from citizens of the United States, so you don’t have to worry about beneficiary designations. However, there could potentially be some issues with gift and estate taxes. Keep in mind that a very small portion of the population will ever actually have to pay these taxes, but if you are dealing with a high-value estate and have a noncitizen spouse, this is something you’ll need to consider.

Effects on estate and gift taxes

Any assets left to a surviving spouse are typically not subject to federal estate tax, no matter their value—so long as that spouse is an American citizen. If not, then the spouse does not benefit from an unlimited marital deduction, even if that spouse is a permanent lawful resident of the United States. It is in the federal government’s interest to keep those large sums of money in the United States to benefit from the estate taxes, rather than letting the surviving spouse receive the money tax-free and potentially return to their native country.  So, if your estate exceeds the estate tax exemption equivalent amount ($11.4 million for persons dying in 2019) you can only leave $154,000 in addition to the exemption equivalent to your spouse without having to plan around or have your estate pay federal estate taxes.

With the gift tax, there is also an unlimited gift tax deduction. All gifts made to a spouse during your life are free from taxation—so long as that spouse is a U.S. citizen. If the spouse is not a citizen, then there is a tax-free limitation of $154,000 as of 2019.

For more information about how being married to a noncitizen can affect estate planning, contact an experienced Tampa, FL attorney at BaumannKangas Estate Law.