Estate Tax Exposure for Non-US Residents Holding US Assets

Non-US residents who hold US assets, property, brokerage accounts, or US-listed securities, face a significantly different estate tax regime than US citizens and domiciled residents, and the gap is often larger than clients expect.

The Exemption Gap

US citizens and domiciled residents benefit from a federal estate tax exemption in the millions of dollars. Non-resident foreign nationals, by contrast, are limited to a exemption of only USD 60,000, a figure that has remained fixed for decades and is not indexed to inflation. Above that threshold, US-situs assets can be taxed at rates up to 40%.

What Counts as a US-Situs Asset

• US real estate, regardless of the owner's residency or citizenship

• Shares in US corporations, including US-listed stock held directly

• Tangible personal property physically located in the United States

• Certain US-based business interests

A non-resident with even a moderate US property holding or US brokerage account can find a meaningful portion of that value exposed to estate tax on death, a liability that falls on the estate and can create real complications for beneficiaries trying to settle it.

Why Life Insurance Is a Direct Fit for This Problem

The death benefit paid out under a properly structured life insurance policy is generally exempt from US federal estate tax for non-residents, provided the policy itself is not a US-situs asset. This makes life insurance one of the most direct planning tools available to offset a specific, quantifiable estate tax exposure, rather than a general wealth planning product being repurposed for the job.

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For advisors working with non-US clients who hold, or plan to acquire, US assets, mapping out the estate tax exposure early, before the holding grows significantly, gives far more planning flexibility than addressing it after the fact. This is a specific, calculable numbers problem, and life insurance solves a specific, calculable part of it.

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International Assurance Limited PCC does not provide financial, investment, tax, or legal advice. All decisions should be made in consultation with appropriately qualified professional advisors, based on the client's individual circumstances, objectives, risk profile, and jurisdictional requirements.