Pre-Immigration Estate and Gift Tax Planning: Foreign Assets, Reporting Requirements, Strategies for Estate Planners

The U.S. imposes a tax on its residents' worldwide income requiring significant planning for would-be immigrants. Trusts and estates counsel must align planning strategies with current U.S. tax law for those seeking to become U.S. residents to avoid unintended tax liability for certain income and foreign assets.

Future immigrants must assess their financial situation and plan accordingly before becoming U.S. taxpayers in order to preserve their wealth. In some cases, for income tax purposes, it may be advantageous to accelerate income and gains and defer deductions/losses before establishing U.S. residency if, for example, the U.S. statutory tax rate is higher than the immigrant's current tax home. In other cases, the focus may be on sheltering worldwide assets from the U.S. tax system, especially if the person has or will inherit significant assets.

With thoughtful planning, clients may avoid unexpected aspects of U.S. tax law that could significantly impact family wealth. Estate planners must review clients' foreign companies and offshore mutual funds, consider the implications of foreign trusts, establish a gifting program, explore the use of insurance, and examine other methods of preserving wealth and minimizing income, estate, and gift taxes.

Listen as our panel discusses strategies for minimizing income, estate, and gift taxes, including basis strategies for non-U.S. situs assets, structuring "drop-off" trusts, and planning for the possibility of the nonresident alien's return to the country of origin.