Chapter 7 Estate Planning Involving Non-u.s.-citizen Spouses

• Library: Estate Planning for Same-Sex Couples (ABA) (2015 Ed.)

Chapter 7 Estate Planning Involving Non-U.S.-Citizen Spouses

The Windsor decision removed the impediments facing same-sex couples, whether married or not, when one of them was not a U.S. citizen or a resident alien. The U.S. government recognizes marriages between same-sex couples. Likewise, a lesbian or gay U.S. citizen can sponsor her or his non-U.S.-citizen spouse for residency and citizenship. A U.S. citizen's same-sex foreign national boyfriend can obtain a 90-day fiancee visa and come to the United States to be married.

Noncitizens can inherit property but non-U.S.-citizen spouses do not have the same estate-planning and inheritance rights as married couples where both are U.S. citizens.

The federal unified estate tax exemption amount in 2015 is $5.43 million. This means every person can transfer that amount. The amount increases every year and is published by the Internal Revenue Service. The number of estates it affects is small. The tax applies to transfers of property during one's life and after death. The value of all transfers made is calculated after death.

A. Definitions

The term "alien" describes a person who is not a U.S. citizen. There is a legal distinction between a "resident alien" and a "nonresident alien." Resident aliens are subject to U.S. income, estate, and gift taxes but not in the same way as U.S. citizens.

A "resident alien" is a foreign national who is domiciled in the United States. The resident alien's worldwide property is subject to taxation.

A "nonresident alien" is someone who is domiciled somewhere other than the United States. These people are subject to estate taxes on property located in the United States. This usually does not include death proceeds from a U.S. life insurance policy, U.S. bank deposits,¹ or registered U.S. government bonds or Treasury notes² issued after July 18, 1984. Persons falling into this category pay the same estate tax rates as U.S. citizens.

B. Preliminary Information to Gather

Any client estate-planning questionnaire should be comprehensive and expansive. Gather the following information:

• Citizenship of spouses, children, and their spouses
• Location and value of assets
• How assets are titled
• Where the clients intend to live in the future
• Whether there have been transfers between the spouses
• Whether the spouses intend to transfer assets during life; after death
• Whether there are any community property issues
• If any property is owned in a community property jurisdiction
• If the spouses have

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