Estate planning can be a confusing process, and it\u2019s especially so for non-US citizens<\/a>. While citizens and non-citizens have access to the same estate planning tools (power of attorney, wills, trusts, etc.), the applicable tax laws can vary significantly.<\/p>\n Without proper planning, a non-citizen\u2019s estate may face substantial estate taxes<\/a>, and gifted assets may get tied up in probate court or ultimately fail to pass to the intended beneficiaries. As such, non-citizens should always consult an estate planning attorney<\/a> to make sure their estate plan minimizes estate tax exposure and correctly dispositions gifted assets.<\/p>\n Before you meet with your estate planning attorney, here ten tips to help the process make a little more sense:<\/p>\n A non-citizen is considered to be domiciled in the United States if they live in the US and have no present intent to leave. When determining domicile, the IRS may consider the following:<\/p>\n If you become incapacitated during your lifetime, you will need an authorized agent to manage your affairs on your behalf. This person will need the legal authority to access your financial accounts, pay your bills, buy and sell property, and ensure all your needs are provided for. To do this, draft a durable power of attorney<\/a> and appoint a family member or friend to serve as your attorney-in-fact. Note that your attorney-in-fact does not need to be a US citizen\u2014appointing a non-citizen is perfectly legal.<\/p>\n On a similar note, if you\u2019re incapacitated you\u2019ll need to provide someone with access to your medical files, and with the authority to speak with your doctors and make important medical decisions on your behalf. This individual is called your healthcare proxy. If your healthcare proxy is the same as your attorney-in-fact, then you can grant them healthcare access in the same durable power of attorney. If the healthcare proxy is a different person, you\u2019ll need to draft a separate healthcare power of attorney.<\/p>\n An advance directive<\/a> (sometimes called a living will) is a legally-binding document that expresses your healthcare preferences to your doctors. If you become incapacitated and cannot communicate important medical decisions, your doctors will consult this document to determine whether or not you\u2019d approve of their recommended procedures and treatments. This may seem redundant if you have a healthcare proxy, but it\u2019s extremely helpful to have both, as the advance directive gives your healthcare proxy clear instructions to follow in case there is uncertainty.<\/p>\n Your passing will be an emotionally difficult time for your loved ones. Make their mourning process a little easier by clearly expressing your funeral and burial plans. If your financial situation allows, it\u2019s best to purchase pre-needs services from a cemetery or crematorium, so everything is set and paid for when you pass away.<\/p>\n If that\u2019s not feasible, then you should at least make your intentions clear and indicate which of your assets should be used to cover the costs after you die. Write these instructions down in a letter of intent, leave the letter with a family member or friend, and ask them to bring the letter forward when you pass away.<\/p>\n When it comes to property (both real estate and personal property), the term \u201csitus\u201d refers to where the property is being treated for legal purposes. If a non-citizen is domiciled in the US, all of their assets across the world will be subject to estate taxes. If a non-citizen is not domiciled in the US, only their property with situs in the United States will be subject to estate taxes.<\/p>\n As of January 1, 2018, individual estates with less than $11.2 million are exempt from estate taxes, and joint estates with less than $22.4 million are also exempt. If a citizen or domiciled non-citizen has assets in excess of these values, only the value in excess of the exemption will be subject to an estate tax. The actual tax will vary depending on the final value of the estate.<\/p>\n Non-domiciled non-citizens are only exposed to US estate taxes to the extent their property has situs in the United States, so it\u2019s likely that only a portion of their assets will be taxed by the US. Unfortunately, the federal estate tax exemption for such situations is only $60,000. Any assets with situs in the US will be subject to estate taxes ranging from 18% – 40%.<\/p>\n While most estate planning attorneys will recommend that non-citizens transfer assets to their heirs through a trust rather than a will, it\u2019s still important to draft a will<\/a>. At the very least, your will should name a guardian for your minor children, appoint an executor (aka personal representative<\/a>) to handle your estate, and include a pour-over statement that directs any assets not transferred via a trust. For the will to be valid, the person writing the will (known as the testator) needs to sign and date the will in the presence of two witnesses<\/a>, and have the witnesses sign the will. If you choose to bequeath assets to beneficiaries with a will, note that you can gift assets to non-citizens.<\/p>\n Before we dive into trusts, it\u2019s important to note that some assets are designed to pass to a beneficiary without the need for a trust, a will, or probate court. These assets usually have a beneficiary listed on the account\u2019s contract, and the financial institution will automatically transfer the assets to the beneficiary when they\u2019re presented with a copy of your death certificate. Assets like this include:<\/p>\n For these assets, all you need to do is make sure the right beneficiaries are listed on the accounts. It\u2019s still a good idea to discuss your plan for these assets with your estate planning attorney, however, as it may be in your best interests to transfer some of these assets to a trust.<\/p>\n\n
1.\u00a0Define Your Domicile<\/h2>\n
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2.\u00a0Appoint a Legal Agent<\/h2>\n
3.\u00a0Appoint a Healthcare Proxy<\/h2>\n
4.\u00a0Draft an Advance Directive<\/h2>\n
5. Plan for Your Funeral and Burial<\/h2>\n
6.\u00a0Prepare for Estate Taxes<\/h2>\n
7.\u00a0Draft a Last Will and Testament<\/h2>\n
8.\u00a0Make a Plan to Distribute Non-Probate Assets<\/h2>\n
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9.\u00a0Consider Establishing a Trust<\/h2>\n