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Could citizenship affect what you leave your spouse?

On Behalf of | Jan 22, 2021 | Estate Planning

After spending a lifetime together, you want to ensure your spouse has a certain amount of financial security when you pass away. While some people embrace the philosophy of “dying broke”, you may want your spouse to continue enjoying the same lifestyle as they did before you passed on.

There are specific rules for gifts and inheritances if your spouse is not a citizen. If your spouse is a noncitizen, it could significantly impact how you implement your estate plan.

Here is what you will want to consider as you develop your estate plan if your spouse is not a United States citizen.

Not all spouses are taxed equally

The tax code makes some assumptions about spouses that are beneficial when it is time to give gifts, either during life or after death. One of those assumptions is that when both spouses are citizens, the couple has paid taxes on any gift that one would give to the other.

When one spouse is not a citizen, there are limits to the amount one spouse can give to another before the noncitizen spouse needs to pay taxes on the gift.

Adjusting your plan

As you plan for your estate, it is important to consider the tax implications of what you want for your spouse if they are not a citizen. While your initial plan could leave them with a substantial part of your assets, estate taxes could leave your noncitizen spouse with significantly less than you intended.

It is essential to talk to an experienced estate planning attorney who can guide you through the process and create a plan that supports your goals.


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