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Estate planning when your spouse is a non-citizen

If you’re married to a non-citizen in Nevada, there are some additional estate planning pitfalls to avoid that other couples don’t generally have to worry about. But with careful planning, you can steer clear of these common marital hurdles.

Estate taxes are due upon transfer

When one spouse passes away, their assets usually go to the surviving spouse. This transfer isn’t subject to any estate taxes until their own death thanks to the unlimited marital exemption – as long as the surviving spouse is a U.S. citizen.

For non-citizens, the estate taxes are due when the transfer takes place. Estate planning law is set up this way so that a non-citizen can’t inherit their deceased spouse’s assets and then return to their home country without ever having to pay estate taxes to the U.S. when they pass away.

Gift tax and joint property

When you’re married to a non-citizen, property that you jointly own doesn’t get divided down the middle as is the case with two U.S. citizens. If the surviving spouse is a non-citizen and you bought a house together, for instance, you have to break down how much each partner contributed to the mortgage. The amount that the surviving non-citizen spouse paid is the percentage of that asset they inherit and is excluded from the decedent’s estate.

When you’re married to someone who isn’t a U.S. citizen, there is a limit on how much you can gift to your spouse without having to pay gift tax. If the value of the gifts is above $164,000 in 2022, the gift tax must be paid. This limit will be raised to $175,000 in 2023.

One final estate planning trap happens when you buy property with your non-citizen spouse. If the spouse with citizenship makes 100% of the purchase, half of that value is legally considered a gift and is thus subject to the gift tax if it exceeds the gift tax limit.