established throughout the United States
Recent demographic metrics indicate that there is a steadily growing base of foreign nations becoming established throughout the United States as successful business men and women. Even those who are not living full time in the U.S. are visiting regularly and conducting business across the country. From owning property to owning industrial, manufacturing and retail businesses, non-U.S. citizens are an important subset of the population and economy. As a note there are also a growing number of situations where non-U.S. citizens are partnering with a spouse who is a U.S. citizen to conduct business.
Potential Tax Exposure Implications
Regardless of the specific scenarios there are a host of potential tax exposure implications that must be considered as a foreign national. In the most basic of terms anyone who is a non-resident alien (non-U.S. citizens who reside permanently in a foreign country) and resident aliens (non-U.S. citizens who reside permanently in the U.S) are all affected in one-way or another.
Life Insurance Policy In Force
Improved tax efficiency is best achieved in many cases by taking full advantage of a life insurance policy as a foreign national. Smart and effective planning will typically result in enjoying better estate tax credits. Without the benefit of a life insurance policy a non-U.S. citizen may only be able to shelter $60,000 from estate taxation in the U.S. Conversely, with a life insurance policy in force, the federal exemption can be well over $5 million dollars. This is a key consideration especially when purchasing real estate in the United States. Gift related tax efficiency can also benefit in terms of transferring assets to a non-U.S. citizen spouse.
Life Insurance Offers The Following Benefits:
· Helps to preserve the surviving spouses quality of living or standard of life by allowing the transfer of additional funds to a spouse who is a non-citizen.
· Provides for beneficial liquidity that is necessary in order to pay federal estate taxes in the U.S.
· Compliments an existing estate plan
· Improves the ability of an estate to retain existing property thereby reducing the need to conduct a forced-sale in order to generate cash flow needed to cover tax liabilities.
· Flexibility that can be changed and adjusted as needed
Silver Rock Partners does not offer tax advice or legal advice. The information conveyed here is only for educational purposes and should not be construed as tax, accounting or legal advice. Consult with your attorney or accountant for specific information or advice. Estate planning strategies are based on current and existing federal and state tax laws. Please note that existing tax laws are always subject to change. There are no express or implied warranties with regard to the information provided here.
Comments Or Questions
Send comments or amplifications regarding this posting to Ron Roth via direct email here. Ron is a managing partner and expert advisor with Silver Rock Partners and brings decades of experience to the table in working with ultra-high net worth clients and business owners. Ron specializes in assisting the affluent in achieving higher levels of federal tax efficiency when estate planning. Learn more about solutions for the uninsurable today with Silver Rock.