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Can I Leave Property to a Non-Citizen?

Bochnewich Law Offices Feb. 5, 2024

Estate planning can be challenging enough. When it involves leaving property to a non-citizen spouse or loved one, it can be even more confusing. Questions abound: Are there any legal restrictions? Will there be tax implications? Rest assured, you do have options for help. Dealing with such complex matters is precisely why we're here. 

At Bochnewich Law Offices, we pride ourselves on providing comprehensive estate planning services tailored to your unique needs and circumstances. Serving the Southern California region, including Riverside County, Los Angeles County, San Bernardino County, Orange County, and San Diego County, we're committed to delivering personalized, quality legal assistance that puts your mind at ease. 

Leaving Property to a Non-Citizen: What You Need to Know 

Leaving property to a non-citizen may seem like uncharted territory, but it's more straightforward than you might think. Yes, non-citizens can inherit property just as citizens can. So, when you're drafting your will or living trust, or naming beneficiaries for your retirement accounts or life insurance policies, there's no problem with naming your non-citizen spouse. 

Federal Estate & Gift Tax: The Rules for Spouses 

Now, let's talk about the federal estate and gift tax. For deaths in 2024, only those who leave more than $13.61 million are potentially subject to the tax. Married couples can leave a total of twice that amount tax-free. 

The tax is imposed on transfers of property both during life and at death. Because the exemption amount is so high, very few families pay the tax. It isn't collected until after someone's death, when the value of all property that person gave away or left is totaled up. 

Assets Left at Death 

Assets left to a surviving spouse are not subject to federal estate tax, no matter how much they are worth—IF the surviving spouse is a U.S. citizen. This rule is called the unlimited marital deduction. However, the marital deduction does not apply when the spouse who inherits isn't a U.S. citizen, even if the spouse is a permanent U.S. resident. 

But don't worry, you can still leave assets worth up to the exempt amount (again, $13.61 million in 2024) to anyone, including your noncitizen spouse, without owing any federal estate tax. And if the noncitizen spouse dies first, assets left to the spouse who is a U.S. citizen do qualify for the unlimited marital deduction. 

Gifts Given During Life 

If your spouse is a citizen, any gifts you give to them during your life are free of federal gift tax. However, if your spouse is not a U.S. citizen, the special tax-free treatment for spouses is limited to $185,000 a year (in 2024). This amount is indexed for inflation. 

Postponing or Avoiding Federal Estate Tax 

If you're concerned about estate tax, there are two main strategies to consider:

  1. First, if your spouse becomes a U.S. citizen by the time your estate's federal estate tax return is due, they will qualify for the unlimited marital deduction. 

  2. Second, you can use a special trust, called a "qualified domestic trust" or QDOT. Your noncitizen spouse can inherit from you free of estate tax if you use a QDOT. You leave property to the trust, instead of directly to your spouse. Your spouse is the beneficiary of the trust; there can't be any other beneficiaries while your spouse is alive. 

Remember, estate planning involving non-citizens has its unique considerations. But here at Bochnewich Law Offices, we're committed to helping you understand and tackle these challenges.  

Beneficiary Designations and Non-Citizen Spouses 

Beneficiary designations are another critical factor to consider when planning your estate. These designations dictate who inherits your accounts—like retirement plans, life insurance policies, and bank accounts—upon your death. It's important to understand that non-citizen spouses can indeed be named as beneficiaries. Our attorneys will work with you to ensure your designations are accurate and up-to-date, reflecting your current wishes and circumstances. 

Estate Taxes and Non-Citizen Spouses 

One major concern when leaving property to a non-citizen is the potential impact of estate taxes. While the federal estate tax exemption for 2024 is $13.61 million, special rules apply when the surviving spouse is not a U.S. citizen. We'll help you navigate these complexities, exploring strategies like obtaining citizenship or setting up a QDOT to mitigate potential tax burdens. 

Seeking Legal Guidance 

Estate planning is a complex process that requires careful thought and experienced guidance. That's where we come in. With decades of experience in estate planning, our attorneys are well-equipped to handle each aspect of the process, from drafting wills and setting up trusts to making strategic tax decisions. Whether you're dealing with a non-citizen spouse or other unique circumstances, we're here to provide personalized, high-quality legal assistance. 

Leaving property to a non-citizen may seem overwhelming, but with the right guidance, it doesn't have to be. At Bochnewich Law Offices, we're dedicated to helping you navigate the intricacies of estate planning, ensuring a smooth and efficient transfer of your assets.

Serving clients throughout Southern California, our team of experienced attorneys is ready to assist you in securing a future that honors your wishes and benefits your loved ones. Contact us today for a free consultation and take the first step towards peace of mind.