A non-US person's US-situs assets above just US$60,000 can be taxed at up to 40% on death. Here is exactly how the threshold works — and how to plan around it.
If you are not a US citizen or resident but you hold US shares, funds or property, your estate can face US federal estate tax when you die. The rules are far less generous than those for Americans, and the threshold that triggers them is strikingly low.
What is the US estate-tax threshold for non-residents?
A US citizen can pass on many millions of dollars before federal estate tax applies. A non-resident alien gets an exemption of only US$60,000 of US-situs assets. Above that, the estate is taxed on a rising scale that reaches 40%. For anyone holding a meaningful US equity portfolio, that exemption is exhausted almost immediately.
Which assets count as US-situs?
- Shares in US companies — even held through a non-US broker
- US real estate held directly
- Some US-based business interests
- Generally excluded: appropriately-structured non-US funds that give US market exposure, and US bank deposits (in many cases)
How do you plan around it?
The exposure is manageable once you know it exists. Common approaches include gaining US-market exposure through non-US-domiciled funds rather than direct US-situs holdings; holding US assets inside a suitable structure that sits outside the US estate; and sizing life cover to fund any residual liability so heirs are never forced to sell. The key is that these are decisions best made when the portfolio is built, not discovered by an executor years later.
This is general information, not tax advice — thresholds and treaty positions depend on your circumstances and can change. If you hold US assets and no adviser has raised this with you, it is worth a conversation.
This article is illustrative content provided for information only and does not constitute financial, tax or legal advice. Tax rules and thresholds change and depend on individual circumstances and jurisdiction. Always seek personalised professional advice.