Estate Planning for Non-Citizens: What You Should Know

Tom
2 days ago
6 min read

Estate planning is a crucial step for everyone, regardless of nationality or residency status. However, non-citizens, particularly those residing in the United States, face unique challenges and considerations when it comes to planning for the distribution of their assets after their death. Whether you're a permanent resident, a temporary visa holder, or an undocumented immigrant, understanding the specific estate planning strategies available to you can help ensure that your assets are distributed according to your wishes, and that your loved ones are cared for. At The Real Estate Law Firm, we help guide non-citizens through the intricacies of estate planning to ensure peace of mind for the future.

In this article, we will delve into important topics such as the role of residency, the impact of immigration status on inheritance, the importance of wills, trusts, and healthcare directives, and other considerations when estate planning as a non-citizen.

1. Understanding Residency vs. Citizenship in Estate Planning

The first thing non-citizens need to understand is the difference between residency and citizenship when it comes to estate planning. U.S. estate laws apply differently to citizens and non-citizens, particularly in areas like taxes and inheritance.

Resident Non-Citizens (Green Card Holders): If you are a lawful permanent resident (green card holder), you are treated similarly to U.S. citizens for most estate planning purposes. You can make a will, set up trusts, and engage in other estate planning activities. However, estate taxes can be more complex for non-citizens, particularly when it comes to inheriting U.S. property.
Non-Resident Aliens: If you are not a resident of the U.S., but you own property or assets there, different rules apply. In general, non-resident aliens are subject to different estate tax thresholds, and their U.S.-based assets may be taxed at a higher rate than those of U.S. citizens or residents.

For non-citizens, it is important to work with an estate planning attorney who understands these distinctions, such as the experts at The Real Estate Law Firm. This ensures that your estate planning documents are drafted in compliance with both U.S. law and your home country’s regulations.

2. Importance of Wills for Non-Citizens

A will is the foundational document in estate planning, especially for non-citizens who want to ensure their assets are passed down according to their wishes. It’s crucial to have a will in place, as the U.S. has specific laws that govern how the estate of someone who passes away without one (intestate) is distributed.

Effect of Will on U.S. and Foreign Assets: A will can help ensure that your U.S.-based assets are distributed per your desires. Non-citizens need to ensure their will includes provisions for both U.S. and international property, as some foreign countries may not recognize a U.S. will or may require additional documentation for foreign assets.
Choosing an Executor: The role of an executor is essential in ensuring that your estate is handled properly. Non-citizens should carefully select an executor, keeping in mind that international executors may face additional hurdles, such as travel restrictions or legal paperwork, which can delay the administration of your estate.
Probate Process: The probate process is different for non-citizens, especially if you own property in multiple countries. At The Real Estate Law Firm, we can assist you in creating a comprehensive will that considers these complexities.

3. Trusts: A Key Estate Planning Tool for Non-Citizens

For non-citizens, creating a trust is often a wise strategy for managing and distributing assets, as it can offer several advantages over a simple will. Trusts can help bypass the probate process, reduce estate taxes, and ensure that your assets are passed along according to your wishes.

Revocable Trusts: A revocable living trust allows you to retain control of your assets during your lifetime while establishing clear instructions for how your assets should be distributed after death. It also allows you to name beneficiaries who will inherit your property without going through probate.
Irrevocable Trusts: If you are looking to reduce estate taxes or protect assets from creditors, an irrevocable trust may be the best option. While this type of trust relinquishes your control over the assets, it can provide tax benefits and protect the trust's assets from estate tax liabilities.
Considerations for Non-Citizens: Non-citizens need to be mindful of how a trust is structured, particularly if they own property both in the U.S. and abroad. The laws surrounding trusts can vary between jurisdictions, so working with a legal professional from The Real Estate Law Firm can help navigate these challenges.

4. Tax Considerations: Estate and Inheritance Taxes

Taxes are a significant consideration when it comes to estate planning for non-citizens. U.S. estate taxes are levied based on the value of a person's estate and the citizenship or residency status of the deceased.

Estate Tax Exemption: U.S. citizens and residents enjoy an estate tax exemption of over $12 million (2025 threshold). Non-resident aliens, however, face a significantly lower exemption—around $60,000 for estate tax purposes. This means that if the total value of your U.S. assets exceeds this threshold, you could be subject to estate taxes, which may significantly reduce the inheritance your beneficiaries receive.
Inheritance Taxes for Non-Residents: Non-residents are generally not subject to U.S. inheritance tax, but the heirs who inherit U.S. assets may be responsible for paying estate taxes. Understanding these nuances is crucial in avoiding unexpected tax burdens.

5. Healthcare Directives: Planning for the Future

In addition to planning for the distribution of your estate after your death, it’s equally important to consider healthcare directives, especially if you live in the U.S. Healthcare directives, such as living wills and healthcare powers of attorney, allow you to designate someone to make medical decisions on your behalf if you become incapacitated.

Living Wills and Power of Attorney: A living will specifies your preferences for medical treatment if you become unable to communicate your wishes. A healthcare power of attorney designates someone to make healthcare decisions on your behalf in case of incapacity. These documents are crucial for non-citizens who may not have family members in the U.S. or may have loved ones living abroad who are unable to travel quickly in case of an emergency.

6. Cross-Border Estate Planning

One of the most complex aspects of estate planning for non-citizens is dealing with assets in multiple countries. Different countries have different laws governing inheritance, taxes, and the distribution of assets. If you own property or have financial accounts abroad, you’ll need a cross-border estate plan that considers the legal implications of international assets.

International Wills and Probate: Some countries require separate wills for property located in their jurisdiction. Additionally, the probate process can vary significantly between countries, so it's important to understand how your estate will be handled in both the U.S. and abroad.
Double Taxation: Some non-citizens may face double taxation on their estates—once in the U.S. and again in their home country. To address this issue, treaties between the U.S. and certain countries may help reduce the tax burden on your estate. Working with an experienced estate planner can help minimize these potential pitfalls.

Conclusion

Estate planning for non-citizens is a multi-faceted process that requires a thorough understanding of both U.S. laws and the laws of your home country. Whether you're looking to create a will, establish a trust, or plan for healthcare decisions, it’s crucial to work with professionals who specialize in cross-border estate planning. At The Real Estate Law Firm, we are dedicated to helping non-citizens navigate the complexities of estate planning to ensure that your wishes are honored, your assets are protected, and your loved ones are cared for.

FAQs

Do I need a will if I’m a non-citizen living in the U.S.?
Yes, a will is essential for ensuring that your assets are distributed according to your wishes, especially if you own property in the U.S.
Can I create trust as a non-citizen?
Yes, non-citizens can establish trusts in the U.S., which can help avoid probate and provide tax benefits.
What is the estate tax exemption for non-citizens?
Non-citizens are subject to an estate tax exemption of around $60,000 for U.S. assets, which is much lower than the exemption available to U.S. citizens.
How does U.S. estate tax affect my beneficiaries?
If you have U.S.-based assets, your beneficiaries may be subject to estate taxes, depending on the value of the assets.
Do I need a healthcare directive as a non-citizen?
Yes, if you live in the U.S., it’s important to have healthcare directives to ensure your medical wishes are respected in case of incapacity.
Can I leave property in my home country to my heirs?
Yes, but it’s essential to have a will that complies with both U.S. and your home country’s laws to avoid complications.
How do cross-border estates work for non-citizens?
Cross-border estates can be complex, as different countries have different inheritance laws and tax implications. It’s important to have a plan that addresses both U.S. and international assets.
Do non-citizens have to pay U.S. inheritance taxes?
Non-citizens are not subject to U.S. inheritance taxes, but their heirs may be responsible for paying estate taxes.
Can I name a foreign executor in my will?
Yes, but it may be more difficult to carry out the probate process if the executor resides abroad.
What happens if I die without a will in the U.S.?
If you die intestate (without a will), your estate will be distributed according to U.S. state laws, which may not reflect your wishes. It’s crucial to have a will to avoid this outcome.