Estate Rules for People Who Are Not Citizens

US estate tax is something most American families never pay, because each person can pass a very large amount free of it. Two groups of readers of this book are treated differently, and the difference can be dramatic: people who are not US citizens and are not domiciled in the US, who get a far smaller exemption on their US assets, and married couples in which the surviving spouse is not a US citizen, who lose the unlimited marital deduction most couples rely on. This chapter explains both, with the figures the IRS publishes for 2026. It is an orientation for a conversation with an estate attorney, because the right answer depends on your domicile, your spouse's citizenship and, often, a treaty.

The first question: where are you domiciled?

For estate tax, the test is not the one used for income tax. You can be a US resident for income tax under the substantial presence test and still not be domiciled in the US for estate tax, and the reverse. The IRS explains that whether a person who is not a citizen was a nonresident for estate tax "is determined based on the decedent's domicile at the time of death." Domicile means living in a place with the intention of staying there indefinitely. It is judged from the facts: your immigration status, where your home and family are, how long you have lived here, where you vote, your stated plans, and similar evidence.

Broadly:

• A green card holder living in the US with no plan to leave is usually domiciled here.
• A work-visa holder may or may not be, depending on the facts. The temporary nature of the visa points one way; decades of residence and a home here can point the other.
• Someone who has left the US and lives abroad is usually not domiciled here, even if they still own US investments.

Because so much turns on this, it is the first thing to settle with an attorney.

If you are domiciled in the US: same exemption, different spouse rules

A person domiciled in the US, citizen or not, is taxed on their worldwide estate and gets the same basic exclusion as a citizen: $15,000,000 for deaths in 2026. Above it, the tax rate reaches 40%. For most households that exclusion means no federal estate tax at all.

The difference is the spouse. Between citizen spouses, everything can pass at death free of estate tax through the unlimited marital deduction. That deduction is not allowed when the surviving spouse is not a US citizen, with two routes back to it:

• A qualified domestic trust (QDOT). Property left to a QDOT, a trust meeting the requirements of section 2056A, including at least one trustee who is a US citizen or a US corporation, and for which the executor makes the election, can qualify for the marital deduction. Estate tax is then deferred rather than removed: it can become due when principal is distributed from the trust or when the surviving spouse dies.
• The spouse becomes a citizen before the estate tax return is filed, having stayed a US resident since the death. The marital deduction is then allowed as usual.

During life, the same idea applies to gifts. A citizen can give a citizen spouse unlimited amounts free of gift tax. Gifts to a spouse who is not a citizen are free of gift tax only up to $194,000 in 2026, against $19,000 per recipient for gifts to anyone else. Above that, the gift uses up part of the giver's lifetime exclusion.

For most couples below the basic exclusion, none of this produces tax. It matters for larger estates, for couples who own a home and accounts jointly, and for couples who expect to inherit, because the exclusion is per person and the structure decides how much of both can be used.

If you are not domiciled in the US: a much smaller exemption

This is the rule that catches people who leave and keep their US investments. For a person who is neither a US citizen nor domiciled in the US, only US-situated assets are subject to US estate tax, but the protection is far smaller. The unified credit is $13,000 in general, which shelters roughly the first $60,000 of US assets. The executor must file Form 706-NA if US-situated assets, together with certain lifetime taxable gifts, exceed $60,000, within 9 months of death unless an extension is granted. The rates rise quickly to the 40% top rate.

What counts as a US asset. The IRS lists real estate located in the US, tangible personal property in the US, and stock of US corporations, which in practice includes shares in US companies and US-registered funds and ETFs. What generally does not: bank deposits not connected with a US business, securities that pay portfolio interest (many bonds), and certain life insurance proceeds. How US retirement accounts are treated in a nonresident's estate is a technical question to raise with an adviser rather than assume.

That combination means a family that leaves the US with a brokerage account of US stocks can face US estate tax on most of it, with no tax at all on the same value held as a US bank deposit.

Treaties can change it. An estate tax treaty can exempt some or all US assets of a resident of the treaty country; the IRS nonresident estate FAQ explains how such a claim is made on Form 706-NA. Some treaties also allow a larger, prorated credit; the Form 706-NA instructions name treaties with Australia, Canada, Finland, France, Germany, Greece, Italy, Japan and Switzerland as having such provisions. Many countries have no US estate tax treaty. The IRS list of estate and gift tax treaties has fifteen countries, mostly in Europe plus Australia, Canada, Japan and South Africa; India and China, which send large numbers of visa holders, are not on it. Check the list for yours.

Getting assets released. US banks and brokers generally will not release a nonresident's US assets to heirs without evidence that estate tax has been dealt with, which can mean filing Form 706-NA or obtaining an IRS transfer certificate even when no tax is due. That takes months; heirs abroad should know where to start.

Practical steps that do not depend on the tax

Whatever your domicile, a few things protect your family more than any tax strategy.

• Beneficiary designations. Retirement accounts and many bank and brokerage accounts pass by the beneficiary form, not the will. Keep them current, name contingent beneficiaries, and give your family the account list.
• A will in each country where you own property. A US will may not be effective abroad, and probate in two countries is slow and expensive. Wills drafted in coordination avoid one revoking the other.
• Title and joint ownership. How a home or account is titled between spouses decides what passes automatically, and with a non-citizen spouse, the tax result as well.
• A letter of instruction. Where accounts are, how to reach your adviser, which forms are needed. Heirs abroad dealing with US institutions will need it.