The short and definitive answer is – ABSOLUTELY!
The longer answer is as follows:
If you reside in the United States and you are not a citizen, most often the same US estate and gift hurdles apply to you under Internal Revenue Code and Regulations as to a US citizen. More reasons to do planning and to be aware how your estate is affected by the US lax laws because you do not want to surprise your heirs who may not even be residents in the US!
If you’re a nonresident and non-citizen (NRA, or nonresident alien), the tax treatment of your estate will be significantly different. Residency for estate tax purposes is not the same concept as residency for income tax purposes. Residency at death is determined by domicile at death. Domicile is established in the US if you resided in the US, even for a very short period of time, but intended to stay in the US permanently and wanted the United States to be your home.
If you’re considered a resident of the United States, your estate is subject to federal estate taxes on your worldwide assets, but you also enjoy the benefits of the lifetime gift and estate tax exemption in the amount of $11.18 million and the gift tax annual exclusion in the amount of $15,000. If your spouse is a citizen in the US, you also enjoy unlimited marital deduction on lifetime or testamentary gifts to your citizen spouse.
Everything changes if you are considered an NRA. You are no longer subject to taxes on your world-wide property but you are subject to U.S. gift and estate taxes only on property located on American soil. This is the end of the good news. The bad news is that your exemption is no longer in the millions of dollars and drops to $60,000, so substantial U.S. property can result in a big estate tax bill.
Taxable property for an estate of NRA includes real estate as well as tangible personal property (such as artwork and jewelry) located in the United States. Determining the location of interests in businesses, stocks and bonds is more complicated. For example, if NRA gifts shares of stock in a U.S. corporation, the gift is not taxed under U.S. gift tax but a gift through a Will at death of NRA of the same stock at death is subject to estate tax. Your status as either a U.S. resident or a nonresident alien (NRA) is crucial in determining your gift and estate taxation and in estate planning methods available to you. Call us and we can help you work through all of the implications of your residency and help you plan for it!