Ashford International Law P.C.

Summary

1. A person who is neither a United States citizen nor domiciled in the United States is taxed at death on United States situs property alone, but against an exemption of only $60,000 and a top rate of 40 percent. The exemption for a citizen or a domiciliary in 2026 is $15,000,000.
2. Situs is decided asset by asset, and the result is often counterintuitive: shares in a United States company are inside the tax wherever they are held, while a bank deposit, portfolio debt and the proceeds of insurance on the owner’s own life are outside it.
3. The gift tax reaches far less than the estate tax. A nonresident who is not a citizen pays no United States gift tax on intangible property, so a securities portfolio can be given away during life free of the tax that would fall on it at death.
4. Fifteen jurisdictions have an estate tax convention with the United States. For the modern conventions the securities exposure disappears altogether, and for nine of the fifteen the convention replaces the $60,000 exemption with a credit prorated by the ratio of United States situs assets to the worldwide estate.
5. Income tax runs on a separate track: 30 percent on dividends unless a treaty reduces it, nothing on portfolio interest and nothing on most capital gains, and withholding on the gross price when United States real estate is sold.
6. Where no convention solves the problem, a holding structure must, at a price. Every structure that solves the estate tax creates an income tax cost, and the structure has to be chosen before the asset is bought.

Part I. Two systems, and two definitions of who is foreign

The United States taxes income and it taxes transfers of wealth, and the two regimes do not use the same test to decide who is inside them. Income tax residence turns on the green card test or on the substantial presence test, a mechanical count of days over three years (section 7701(b)). Transfer tax status turns on domicile, which is residence in the United States combined with the absence of a definite present intention to depart (Treasury Regulation section 20.0-1(b)). Domicile is a question of intention proved by facts: where the family home is, where the children go to school, where the client is registered to vote, holds a licence, receives medical care and states an intention to remain, and what immigration status is held. The two tests diverge constantly. An executive on an L-1 visa may be a resident for income tax from the first year and never a domiciliary. A retired green card holder who has lived in Florida for twenty years is a domiciliary even though the card is only an immigration document.

The consequence of the divergence is the whole subject. A citizen or a domiciliary is taxed at death on the worldwide estate, against a basic exclusion amount of $15,000,000 in 2026 (section 2010(c)(3), as amended by Public Law 119-21 of July 4, 2025; Revenue Procedure 2025-32). A decedent who is neither is taxed only on property situated in the United States, but is allowed a unified credit of $13,000, an exemption equivalent of $60,000 (section 2102(b)(1)). That figure is not indexed and has not moved since 1988. The top rate is the same 40 percent in both cases (section 2001(c)). The gap between the two exemptions is now 250 to one, and it widened again in 2026 when the citizen’s figure rose and the nonresident’s did not.

A return is required whenever the United States situs gross estate exceeds $60,000 (section 6018(a)(2)), measured gross, before debts and expenses, and reduced further by post-1976 adjusted taxable gifts and by any specific exemption claimed after September 8, 1976 (section 6018(a)(3)). The return is Form 706-NA. It is due nine months after death. An extension of six months is available for filing and not for payment.

Part II. What counts as a United States asset

Situs is a statutory question answered asset by asset, and the statute is short. Section 2104 lists what is inside. Shares of stock are United States property only if issued by a domestic corporation (section 2104(a)), and then irrespective of where the certificates are kept or which bank holds the account (Treasury Regulation section 20.2104-1(a)(5)). Debt obligations of a United States person, of the United States itself or of a State are inside, as are deposits with a United States branch of a foreign bank (section 2104(c)). Real property and tangible personal property located in the United States are inside under the regulation rather than the statute (Treasury Regulation section 20.2104-1(a)(1) and (2)).

Section 2105 lists what is outside, and it is the more useful list. The proceeds of insurance on the life of the nonresident are not United States property (section 2105(a)). Bank deposits are outside so long as the interest on them would not be effectively connected with a United States trade or business (section 2105(b)(1), by reference to section 871(i)). Deposits with a foreign branch of a United States bank are outside (section 2105(b)(2)). Debt obligations whose interest would qualify for the portfolio interest exemption are outside (section 2105(b)(3)), which removes most United States Treasury and corporate bonds from the taxable estate. Works of art on loan to a public gallery for exhibition are outside (section 2105(c)).

Two traps deserve to be stated plainly. The look-through that once treated shares in a United States regulated investment company as foreign property to the extent of the fund’s foreign holdings expired for decedents dying after December 31, 2011 (section 2105(d)). Shares in a United States mutual fund are therefore stock of a domestic corporation and fully inside the taxable estate, even where the fund invests exclusively outside the United States. And section 2104(b) provides that property transferred in a manner described in sections 2035 to 2038, which is to say with a retained interest, a retained power or within three years of death, is United States property if it was United States property either at the time of the transfer or at death. A deathbed contribution of a United States share portfolio to a foreign holding company does not work, and neither does a revocable arrangement.

Two entries in that table are marked unsettled, and the firm states them that way in writing rather than adopting a convenient answer. Neither sections 2104 and 2105, nor their regulations, nor the Internal Revenue Manual chapter on international estate and gift tax examinations, nor the instructions to Form 706-NA addresses the situs of a partnership interest. The authorities usually cited decide something narrower: Revenue Ruling 55-701 construed the residual rule of the old United States and United Kingdom convention rather than section 2104, and Sanchez v. Bowers (2d Cir. 1934) taxed a Cuban marital community proportionally to its American assets on its own facts. The competing theories, entity situs where the partnership does business, a look-through to the underlying assets, and the domicile of the partner, are each argued from authority that does not squarely govern. That the conventions address partnership interests expressly, as the German convention does in Article 9, shows that the drafters saw the same gap. The position of a United States retirement account is similar: the conservative answer, that the account is intangible property enforceable against a United States institution and therefore situs property, is an inference from a general regulation and not a ruling.

One further provision governs what may be deducted. Debts, expenses and losses are allowed to a nonresident’s estate only in the proportion that the United States gross estate bears to the worldwide gross estate (section 2106(a)(1)). A mortgage on which the decedent was personally liable is therefore deductible only in part, while a non-recourse debt secured on the property reduces the value of the property itself. The form of the borrowing changes the result. Claiming the deduction at all requires disclosing the worldwide estate on the return.

Part III. The gift tax reaches less than the estate tax

The gift tax applies to a nonresident who is not a citizen only where the property transferred is situated in the United States, and it does not apply at all to a transfer of intangible property (sections 2501(a)(2) and 2511(a)). United States real estate and tangible property in the United States are taxable when given away. Shares in a United States corporation, bonds, partnership interests and bank balances are not. This is the widest planning opportunity in the subject, and it is the reverse of the estate tax result for the same assets.

The opportunity is bounded in three ways. A nonresident donor has no unified credit against the gift tax, so only the annual exclusion of $19,000 per donee in 2026 and the special exclusion of $194,000 for gifts to a non-citizen spouse (section 2523(i)(2)) are available, and gift splitting between spouses is not. A transfer made with a retained interest or within three years of death is pulled back into the estate as United States property under section 2104(b). And the home country has its own gift tax, which the United States rule does nothing to displace: a gift of United States shares by a German or French donor is exempt in the United States and fully taxable at home. Nonresident gift tax returns are made on Form 709-NA.

A separate regime applies where the donor is a covered expatriate. Section 2501(a)(3) still refers to the pre-2008 expatriation rules, but the operative provision for expatriations on or after June 17, 2008 is section 2801, which taxes the United States recipient rather than the donor, at the highest estate tax rate. The final regulations under section 2801 (T.D. 10027) apply to covered gifts and bequests received on or after January 1, 2025, and the tax is reported on Form 708.

Part IV. The conventions, which are the point of the exercise

For most of the firm’s clients the convention, and not domestic law, is the instrument that decides the outcome. Fifteen jurisdictions are listed in the instructions to Form 706-NA: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. They fall into two generations, and the difference between them is decisive.

The older conventions, negotiated between 1947 and 1955 with South Africa, Ireland, Greece, Switzerland, Finland, Australia, Japan and Italy, allocate taxing rights by agreed situs rules. They tell each country which assets it may tax, and they leave the definition of who is taxed to domestic law. The modern conventions, with the Netherlands in 1969, France and the United Kingdom in 1978, Germany in 1980, Austria in 1982 and Denmark in 1983, are built differently. They fix a single fiscal domicile through a tie-breaker in Article 4, running through permanent home, centre of vital interests, habitual abode and nationality; they confine the country that is not the domicile country to real property and to the business property of a permanent establishment; and they reserve everything else, a securities portfolio above all, to the domicile country. For a decedent domiciled in Germany, France, the United Kingdom, Austria, Denmark or the Netherlands, the United States exposure on a portfolio of American shares is removed by the convention, not reduced. Canada sits apart: there is no Canadian estate tax convention, and the relief is in Article XXIX B of the income tax convention, added by the third protocol signed on March 17, 1995.

The second thing a convention can do is enlarge the exemption. Section 2102(b)(3)(A) allows a credit larger than $13,000 only to the extent required under a treaty obligation, and where the convention so requires the credit becomes the full applicable credit amount multiplied by a fraction: the United States situs gross estate over the worldwide gross estate. The instructions to Form 706-NA identify the conventions containing such a provision as those with Australia, Canada, Finland, France, Germany, Greece, Italy, Japan and Switzerland. The arithmetic is worth seeing. A decedent domiciled in Germany with a worldwide estate of $20,000,000, of which a Florida apartment worth $2,000,000 is the only United States asset, is entitled under Article 10(5) of the German convention to one tenth of the $5,945,800 credit that applies to the $15,000,000 basic exclusion, a credit of $594,580 rather than $13,000. Before deductions, the tax on the apartment falls from $732,800 to $151,220. The same decedent domiciled in Spain, with no convention, pays the full $732,800.

Two conditions attach. The proration is a fraction of the worldwide estate, so the benefit cannot be claimed without disclosing the worldwide estate to the Internal Revenue Service on a timely return. And the convention with the United Kingdom, which is otherwise among the most protective, contains no proration: a decedent domiciled in the United Kingdom is confined by the convention to United States real property and permanent establishment property, but retains only the $60,000 exemption against whatever remains taxable. The assumption that a favourable convention necessarily enlarges the exemption is wrong as often as it is right.

The last column gives the general portfolio withholding rate on dividends and on interest, in percent, from Table 1 of the Internal Revenue Service tax treaty tables; the rates are subject to the footnotes to that table and to the limitation on benefits article of each convention, and real estate investment trust dividends and contingent interest are treated differently. The Swedish convention was terminated by United States note of June 7, 2007 and ceased to have effect on January 1, 2008. Article numbers are given only where the firm has verified them against the convention text.

Seven of the fifteen conventions also cover gifts: Australia, Austria, Denmark, France, Germany, Japan and the United Kingdom. The remainder leave gift tax to domestic law on both sides, which is usually the better outcome for the client, since domestic law already exempts gifts of intangibles.

The network is static. No new or amended United States estate or gift tax convention has been signed since the French protocol of 2004, and the last movement in either direction was the termination of the Swedish convention. For a Belgian, Spanish, Portuguese or Luxembourg family the $60,000 exemption is the whole of the relief available, and planning has to be done by structure rather than by treaty. Relief in the other direction, a credit at home for the United States tax, remains available under the home country’s own law: Germany gives a unilateral credit under section 21 of the Erbschaftsteuergesetz, France under article 784 A of the Code general des impots, and most other European systems have an equivalent, subject in each case to a lesser-of limitation and to a claim period.

Part V. Income tax while the assets are held

The estate tax is the larger number, but it arises once. The income tax runs every year, and it is collected by withholding at source, which means the custodian decides the rate from the paperwork in the file.

Dividends and other fixed or determinable annual or periodical income from United States sources are taxed at 30 percent of the gross amount (section 871(a)(1)), reduced to the treaty rate, typically 15 percent, on a Form W-8BEN carrying a foreign taxpayer identifying number and a claim under the relevant article. The form is valid through the third calendar year following signature. When it lapses the custodian must revert to 30 percent, or to 24 percent backup withholding (section 3406) where the account is presumed domestic, and the payments are reported on Form 1042-S. Recovering over-withheld tax means filing Form 1040-NR and waiting.

Interest is usually free of the tax altogether. Interest on bank deposits is exempt (section 871(i)), and portfolio interest is exempt (section 871(h)(1)) where the obligation is in registered form and the recipient is not a 10 percent shareholder of the obligor (section 871(h)(3)) and the interest is not contingent on the obligor’s receipts, profits or property values (section 871(h)(4)). Most Treasury and corporate bonds qualify. The exemption for interest received by a bank on a loan made in the ordinary course of its business sits in a different provision and applies to foreign corporations (section 881(c)(3)(A)), not to individuals.

Capital gains on securities are not taxed at all in the ordinary case. There are two exceptions. An individual physically present in the United States for 183 days or more in the taxable year, without becoming a resident under section 7701(b), is taxed at 30 percent on net United States source capital gains (section 871(a)(2)), and treaty relief is generally unavailable because the charge depends on presence. And gain on United States real property is taxed under FIRPTA, described below.

Rental income from United States real estate is taxed at 30 percent of the gross rent, with no deduction for mortgage interest, property tax, insurance, management or depreciation, unless the owner elects to treat the income as effectively connected with a United States trade or business (section 871(d) for an individual, section 882(d) for a foreign corporation). After the election the income is taxed at graduated rates on the net figure, which in most years produces little or no tax. The election is easily made and frequently overlooked, and the difference between the two treatments on a leveraged property is the difference between a substantial annual tax and none.

Two further points bear on portfolios held through intermediaries. Payments that are economically equivalent to dividends, on total return swaps and equity-linked instruments, are treated as dividends for withholding (section 871(m)), as are substitute payments on securities loans and repurchase agreements. And the withholding agent’s liability for getting any of this wrong is strict and personal: an agent that fails to withhold owes the tax itself, with interest and penalties (sections 1461 and 1463).

Part VI. United States real estate

Real property in the United States is situs property for the estate tax and for the gift tax in every case, whatever the owner’s nationality or residence, and interposing a single member limited liability company does not change that: the entity is disregarded and the owner is treated as holding the property. This is the asset that no convention removes from United States taxation, and it is therefore the asset around which structures are built.

On a sale, the Foreign Investment in Real Property Tax Act treats the gain of a nonresident or a foreign corporation as effectively connected income, taxable at graduated rates on the net gain (section 897(a)). Collection is by withholding from the buyer, who is personally liable for the amount (section 1445).

The residence conditions run to the buyer’s intended use and not to the seller’s, which is a common source of failed exemption claims. Because the withholding is computed on the price rather than on the profit, a seller with a modest gain or a loss can have far more tax withheld than is owed. The remedy is to apply for a withholding certificate on Form 8288-B before closing, which limits the withholding to the tax actually expected. It is the single most valuable step available to a foreign seller, and it has to be taken before the money moves. Where no certificate is obtained, the buyer remits the tax on Forms 8288 and 8288-A within twenty days of closing and the seller recovers the excess by filing a return for the year.

FIRPTA also reaches shares. Stock of a domestic corporation is itself a United States real property interest if the corporation is a United States real property holding corporation, meaning that its United States real property interests are worth at least 50 percent of the sum of those interests, its foreign real property and its other trade or business assets (section 897(c)(2)). The test looks back over the shorter of the holding period or the five years ending on the disposition (section 897(c)(1)(A)(ii)). A regularly traded class of stock is caught only for a holder who has owned more than 5 percent of the class (section 897(c)(3)). A shareholding in an American property company is therefore inside the estate tax as domestic corporate stock and inside FIRPTA on sale.

Where real estate is held through a foreign corporation operating in the United States, a second charge applies. The branch profits tax takes 30 percent of the dividend equivalent amount, in addition to the corporate income tax (section 884(a)). An income tax convention reduces or eliminates it only where the corporation is a qualified resident of the treaty country (section 884(e)), which is why foreign holding companies for American real estate are ordinarily placed in a treaty jurisdiction, or beneath a second entity.

State and local taxation is separate and is not covered by the federal conventions. Real property is exposed to state estate or inheritance tax by its location, to transfer taxes on the conveyance and to reassessment on a change of ownership. Several states begin to tax at roughly $1,000,000, and Maryland imposes both an estate tax and an inheritance tax.

Part VII. Structures, and what each of them costs

The exposure that remains after the convention has been applied is concentrated in two places: United States real estate, which no convention removes, and United States securities held by a family in a country with no convention or with an older situs convention. The answer to both is a holding structure, and the governing principle is that every structure which solves the estate tax creates an income tax cost. The structure is chosen before the asset is bought, because unwinding one afterwards is almost always a taxable event.

A foreign corporation holding the securities portfolio is the residual answer for a family without treaty protection. Shares of a foreign corporation are not United States property (section 2104(a)), so the estate tax exposure disappears entirely. The costs are on the income side: the corporation is the beneficial owner for withholding, and the treaty rate on its dividends is available only if it satisfies the limitation on benefits article of the convention where it is resident, which a holding company owned by a resident of a third country usually does not. The home country may also attribute the company’s income to the shareholder under its controlled foreign company rules, or treat the company as resident where it is in fact managed.

A foreign corporation holding the real estate blocks the estate tax in the same way. It pays United States corporate tax on net rental income and on the gain, plus the branch profits tax, and the shares receive no basis adjustment at death, so the built-in gain survives the owner. The preferential long-term capital gain rate available to an individual is lost. The two-tier structure, a domestic corporation beneath a foreign parent, avoids the branch profits tax at the cost of dividend withholding on distributions to the parent, and is the standard form where the property is held for income rather than for use.

A domestic limited liability company blocks nothing. It is disregarded for federal tax and the member is treated as owning the property directly. It is useful for liability and for title, and it is not an estate tax structure.

An irrevocable foreign trust is frequently the most efficient answer for a securities portfolio, because the funding is a gift of intangible property and therefore free of United States gift tax (section 2501(a)(2)), and the assets are outside the settlor’s estate provided no interest and no power is retained (sections 2036 to 2038, and section 2104(b)). The obstacle is rarely tax and usually control. Where any beneficiary is or may become a United States person the analysis changes completely: the trust becomes a foreign non-grantor trust subject to the accumulation distribution rules, and Forms 3520 and 3520-A enter the picture.

Leverage reduces the taxable estate where the borrowing is structured correctly. A non-recourse loan secured on the property reduces the value included; a recourse loan is deductible only in the worldwide proportion under section 2106(a)(1). Shareholder debt that qualifies for the portfolio interest exemption allows earnings to be taken out of a United States structure without dividend withholding, subject to the related-party and earnings stripping limits, and it must be documented at the date of the loan rather than reconstructed later.

Life insurance is the quietest structure in the subject. The proceeds of a policy on the life of a nonresident who is not a citizen are not United States property at all (section 2105(a)). A private placement policy that wraps an investment portfolio therefore converts situs securities into a non-situs asset, subject to the diversification and investor control requirements that United States law imposes on the policy.

Every one of these structures is also visible from the other side. German clients must consider the controlled foreign company rules of sections 7 to 14 of the Aussensteuergesetz and the attribution of foreign family foundations under section 15; French clients the taxation of participations in low-taxed foreign entities under article 123 bis of the Code general des impots; and clients everywhere the risk that the holding company is treated as resident where its directors in fact meet, and the home country’s own inheritance tax on the shares of the company, which the structure does nothing to reduce. A structure that is efficient in the United States and reportable, attributed or taxed at home has not solved anything.

The last question is the one families ask least often. A foreign holding company inherited by a child who has become a United States person is a controlled foreign corporation in that child’s hands, taxed currently on its income, and a foreign trust with a United States beneficiary carries the throwback rules and annual reporting. The structure that is right for the parents is frequently the wrong one for the children, and restructuring before it passes is owed to them.

Structures also carry reporting duties that have nothing to do with tax. A foreign holding company registered to do business in a U.S. state reports its non-U.S. owners to FinCEN, and banks identify the owners of every company that opens an account. The position after the August 2026 final rule is explained in the article The Corporate Transparency Act after the August 2026 Final Rule.

Part VIII. Spouses, joint titles and the next generation

The unlimited marital deduction is not available where the surviving spouse is not a United States citizen (section 2056(d)), whatever the length of the marriage and wherever the couple lives. Property passing to such a spouse qualifies only if it passes to a qualified domestic trust (section 2056A), or if the spouse becomes a citizen before the estate tax return is filed. The qualified domestic trust requires at least one United States trustee, and where the assets exceed $2,000,000 either a bank trustee or a security arrangement. It defers the tax rather than removing it: income distributions are taxed as ordinary income, principal distributions other than for hardship trigger the deferred estate tax, and the balance is taxed in the first decedent’s estate at the survivor’s death. Because the trust may be created by the executor, or by the surviving spouse, before the return is filed, it also functions as a rescue mechanism for families who discover the citizenship requirement after the death.

The conventions offer a better route where one applies. An estate may claim either the statutory deduction through a qualified domestic trust or the marital relief the convention allows, and not both (Treasury Regulation section 20.2056A-1(c)). The German convention allows a marital deduction under Article 10(6), the French convention under Article 11(3), the United Kingdom convention under Article 8(2) and the Danish convention under Article 9; the Canadian convention gives a marital credit under Article XXIX B(3) and (4), which in practice doubles the credit available, on an executor’s election and without any trust. The Austrian convention contains no marital provision at all, a deliberate omission when it was negotiated because Austrian rates on spousal transfers were then low. During life, gifts to a non-citizen spouse are limited to $194,000 a year (section 2523(i)(2)).

Joint ownership is the most common unforced error. The entire value of jointly held property is included in the first decedent’s estate except to the extent the survivor’s own contribution is proven (section 2040(a)). For a couple who are both nonresidents, a jointly titled American house or brokerage account is therefore fully inside the United States taxable estate of whichever spouse dies first, unless the consideration furnished by the survivor can be documented, and after decades of joint finances it rarely can be. Creating a joint tenancy in United States real property is itself a gift of half its value where the co-owner is not the owner’s spouse; between spouses, where one of them is not a United States citizen, the charge is deferred until the tenancy is severed or terminated (section 2523(i)(3), which revives the principles of the repealed section 2515). The contribution records are worth assembling while both spouses are alive, because they cannot be assembled afterwards.

The couple’s matrimonial property regime sits underneath all of this. A community or participation regime under the law of the home country may mean that only half of an asset ever belonged to the decedent, which changes the gross estate before any deduction is considered. American banks, registries and transfer agents do not account for a foreign regime unless it is documented for them, and the documentation has to be prepared in a form a United States institution will act on.

Finally, the recipients. A United States person who receives more than $100,000 from a nonresident individual or a foreign estate reports it on Form 3520, and $20,573 in 2026 where the transfer comes from a foreign corporation or partnership (section 6039F). No tax is due on the receipt. The penalty for not reporting is measured against the value of the gift, which makes it one of the more expensive omissions in the field.

Part IX. What happens at the death, and why it takes so long

Form 706-NA is due nine months after the death, with a six month extension available for filing and not for payment. Treaty benefits and the section 2106 deductions must be claimed on a timely return and require disclosure of the worldwide estate. Returns claiming treaty relief are examined more often than others and frequently take more than a year to process.

Nothing moves in the meantime. United States banks, brokers and transfer agents will not release the assets of a deceased nonresident until they receive a transfer certificate, Form 5173, from the Internal Revenue Service, because they can be held responsible for the unpaid estate tax if they do. The certificate issues only after the return has been processed, and the Internal Revenue Service states a processing time of twelve to eighteen months from receipt of complete documentation. An estate below the sixty thousand dollar threshold does not escape the procedure; it takes a different route, submitting an affidavit and supporting documents instead of a return, and receives either a certificate or written confirmation that none is required. The only published exception is property being administered by an executor or administrator appointed, qualified and acting within the United States (Treasury Regulation section 20.6325-1). There is no exception for property passing to a surviving joint tenant. The practical consequence is a liquidity problem with a fixed shape: the tax is payable at nine months and the assets that would pay it are frozen for a good deal longer. Families with a large United States position and no other liquidity should plan for this specifically, whether through insurance, a reserve outside the United States or borrowing arranged in advance.

Administration is also local. A German Erbschein, a French acte de notoriete or a European Certificate of Succession has no authority with a United States transfer agent or county recorder. What works is a grant from the situs state, obtained through an ancillary probate, or an instrument that avoids probate altogether, such as a recorded transfer on death deed or a properly completed beneficiary designation. Where United States real estate is involved, the ancillary proceeding runs in the state where the property lies and on that state’s timetable.

Part X. Practical steps

1. Settle the domicile question first. Every other answer depends on it, and it is a question of fact that should be documented while the client is alive rather than argued after the death.
2. Inventory by situs, not by custodian. The bank statement does not answer the question. Foreign shares in an American account are outside the tax and an American mutual fund held in Zurich is inside it.
3. Run the convention before anything else. Identify the convention, fix the treaty domicile, establish whether it removes the securities exposure and whether it prorates the credit, and only then ask whether a structure is needed.
4. Decide what can be given away. Intangible property can leave the estate during life at no United States gift tax cost. This is the least expensive planning available and it is unavailable to citizens.
5. Choose the structure before the purchase. Restructuring an existing holding is usually a taxable event, and a foreign corporation formed in the last three years of life does not work.
6. Fix the spousal position while both spouses are alive. Compare the convention’s marital relief with a qualified domestic trust, and consider naturalization where it is realistic.
7. Document joint ownership and the matrimonial regime now. Contribution records and a regime certificate are obtainable today and not after the first death.
8. Keep the W-8 file current. Forms expire at the end of the third year, and the cost of a lapse is 30 percent of every dividend until it is replaced.
9. Make the net rental election on any United States property held for income. The alternative is 30 percent of gross rent.
10. Plan the liquidity for the nine-month deadline, on the assumption that the American accounts will be frozen when it falls due.
11. Ask what the structure does to heirs who are, or may become, United States persons. The answer usually calls for a restructuring before the assets pass.

Conclusion

A nonresident with American assets is not a domestic client with a foreign address. The exposure is narrow but it is deep: a $60,000 exemption against a 40 percent rate, applied to a list of assets that the owner’s own bank statements do not identify, collected through a transfer certificate procedure that freezes the estate for longer than the payment deadline allows. Against that, the relief available is substantial and it is mostly treaty relief, which is why the first question in every one of these files is which convention applies and what it actually says. Where a convention answers the question, the structure is unnecessary and usually harmful. Where none does, the structure has to be built before the asset is acquired, priced against its annual income tax cost, and tested against the law of the country the family lives in.

How the firm helps

Ashford International Law PC advises nonresident individuals, families and their advisers on American assets: identifying domicile and situs, applying the estate and gift tax conventions and computing the prorated credit, structuring holdings of United States real estate and securities before they are acquired, planning transfers to a non-citizen spouse, preparing Form 706-NA and obtaining transfer certificates, conducting ancillary probate in the states where the firm’s attorneys are admitted, and correcting withholding and reporting positions on existing accounts. Related pages on this site cover US decedents with non-US assets, non-US decedents, estate planning for non-US citizens, non-US beneficiaries, gift planning, asset planning using joint titles, marital property regimes, planning with retirement assets and, for the reverse direction, estate planning for U.S. persons with assets abroad. Defined terms used above are collected in the Topics A-Z, and the firm’s detailed guides on blocker structures, transfers to a non-citizen spouse, double taxation relief and investing in U.S. securities as a non-U.S. person are available on the Articles and Guides page. The federal gift, estate and generation-skipping transfer taxes and the state death taxes are summarized on the page on gift and death-related taxes, and the estate tax on citizens and domiciliaries is described on the page on estate tax in the United States.

This page is intended for general educational purposes and does not constitute legal or tax advice, nor does it create an attorney-client relationship. The matters described depend on the specific facts, the countries and states concerned, and the law in effect at the relevant time. Statuses and figures are stated as of September 2026 and must be confirmed before any decision.