Setting up a Trust

MinimalistJourneyman wrote:

Hello,

I searched the site and have found no information.

I'm looking into securing my estate for my Filipina wife.  I would be interested in how other US citizens have done this for their non-US spouses.

This passage on a legal US trust site caught my attention.

“A Qualified Domestic Trust is an estate planning trust that is specifically designed to facilitate the transfer of assets from a US citizen to his or her non-citizen spouse at the time of death. The unique benefit of a QDOT is that it allows for deferral of estate taxes, which can be as high as 40 percent for a non-resident. However, since these taxes are deferred, this means that they ultimately have to be paid, and this most commonly occurs on the second spouse's death when the assets pass to the couple's children or other beneficiaries.”

Obviously I would not want a 40% tax burden put on my estate.  I also am not keen to bring my estate over here for long term stability issues.

There are 2 ways I know you can go around that:

1. To qualify for unlimited estate federal tax exemption, she should become a US citizen.
2. There is a 2019 annual exclusion gift of $155,000 for non-US citizen spouses. It´s indexed every year.
Assuming you´re a multi-millionaire, you can give her the gifts of $155,000 every year- whittling your estate away to the 2019 $11.4 million federal estate tax exemption. Anything above the $11.4 million, 40% tax is collected. A gift of $15,000 to every child could also be implemented to reduce your estate size.

robal

robal wrote:

MinimalistJourneyman wrote:

Hello,

I searched the site and have found no information.

I'm looking into securing my estate for my Filipina wife.  I would be interested in how other US citizens have done this for their non-US spouses.

This passage on a legal US trust site caught my attention.

“A Qualified Domestic Trust is an estate planning trust that is specifically designed to facilitate the transfer of assets from a US citizen to his or her non-citizen spouse at the time of death. The unique benefit of a QDOT is that it allows for deferral of estate taxes, which can be as high as 40 percent for a non-resident. However, since these taxes are deferred, this means that they ultimately have to be paid, and this most commonly occurs on the second spouse's death when the assets pass to the couple's children or other beneficiaries.”

Obviously I would not want a 40% tax burden put on my estate.  I also am not keen to bring my estate over here for long term stability issues.

There are 2 ways I know you can go around that:

1. To qualify for unlimited estate federal tax exemption, she should become a US citizen.
2. There is a 2019 annual exclusion gift of $155,000 for non-US citizen spouses. It´s indexed every year.
Assuming you´re a multi-millionaire, you can give her the gifts of $155,000 every year- whittling your estate away to the 2019 $11.4 million federal estate tax exemption. Anything above the $11.4 million, 40% tax is collected. A gift of $15,000 to every child could also be implemented to reduce your estate size.

robal

So if your estate is worth less than $11 million you are good.  Politics could be your biggest problem, as there are presidential candidates who want to lower the exemption amount closer to older amounts of a few $million.  If your estate is worth less than $2 million you should be good to go.

mugtech wrote:

robal wrote:

MinimalistJourneyman wrote:

Hello,

I searched the site and have found no information.

I'm looking into securing my estate for my Filipina wife.  I would be interested in how other US citizens have done this for their non-US spouses.

This passage on a legal US trust site caught my attention.

“A Qualified Domestic Trust is an estate planning trust that is specifically designed to facilitate the transfer of assets from a US citizen to his or her non-citizen spouse at the time of death. The unique benefit of a QDOT is that it allows for deferral of estate taxes, which can be as high as 40 percent for a non-resident. However, since these taxes are deferred, this means that they ultimately have to be paid, and this most commonly occurs on the second spouse's death when the assets pass to the couple's children or other beneficiaries.”

Obviously I would not want a 40% tax burden put on my estate.  I also am not keen to bring my estate over here for long term stability issues.

There are 2 ways I know you can go around that:

1. To qualify for unlimited estate federal tax exemption, she should become a US citizen.
2. There is a 2019 annual exclusion gift of $155,000 for non-US citizen spouses. It´s indexed every year.
Assuming you´re a multi-millionaire, you can give her the gifts of $155,000 every year- whittling your estate away to the 2019 $11.4 million federal estate tax exemption. Anything above the $11.4 million, 40% tax is collected. A gift of $15,000 to every child could also be implemented to reduce your estate size.

robal

So if your estate is worth less than $11 million you are good.  Politics could be your biggest problem, as there are presidential candidates who want to lower the exemption amount closer to older amounts of a few $million.  If your estate is worth less than $2 million you should be good to go.

You´re correct...

Thank you Robol for the excellent answer.  I have already ascertained that I was confused on this as I was assuming the “non-resident” pertained to a foreign spouse receiving an inheritance.  There is a 40% withholding on US assets owned by a foreign citizen.  I wish however I did belong to that $ 11 million estate tax club ha ha....a good problem to have.

Thanks Mugtech....yes I figured out this does not pertain to my situation....although I wish it did.  Good problem to have,