Estate planning can become more complex when citizenship, domicile, and U.S.-situated assets are involved. For noncitizens, U.S. gift and estate tax exposure may depend on where they are domiciled, what assets they own, and whether they are married to a U.S. citizen or another noncitizen.

Here are key rules and tax planning considerations to understand before transferring assets, updating an estate plan, or making gifts to a spouse or family member.

Domicile Matters More Than You Might Think

Noncitizens can become subject to U.S. gift and estate taxes if they’re domiciled in the United States. Under IRS guidelines, an individual becomes domiciled in a country “by living there, for even a brief period of time, with no definite present intention of later removing therefrom.”

The IRS considers several factors in determining “present intention,” including:

• The amount of time spent in the United States
• Green card or visa status
• Location of business interests and residences
• Location of health care providers, jobs, places of worship, and community ties
• Place where vehicles are registered and where the individual is licensed to drive
• Place where the person is registered to vote
• The domiciles of friends and family members

 
Noncitizens who are deemed to be domiciled in the United States are subject to U.S. gift and estate taxes on their worldwide assets, much like U.S. citizens. And, like U.S. citizens, these U.S. “domiciliaries” are eligible for the federal gift and estate tax exemption ($15 million for 2026) and the gift tax annual exclusion ($19,000 per recipient for 2026).

Marriage To A Noncitizen Changes The Rules

A significant difference between U.S. citizens and noncitizens, and a potential tax trap for the unwary, is that the marital deduction isn’t available for transfers to noncitizens, even if they’re U.S. domiciliaries. Ordinarily, married couples can transfer an unlimited amount of assets between each other, during their lifetimes or at death, without triggering gift or estate taxes. However, estate planning strategies that rely on marital deduction may not be available to noncitizen domiciliaries.

There are ways to manage this limitation. For example, during life, an individual can make tax-free gifts to their noncitizen spouse using a special annual exclusion. For 2026, up to $194,000 of qualifying present-interest gifts may be transferred to a noncitizen spouse without gift tax. This is substantially higher than the regular $19,000 annual exclusion. Larger transfers may also be possible by using the donor spouse’s available gift and estate tax exemption.

Be Aware of Potential Tax Implications

A person who’s neither a U.S. citizen nor a U.S. domiciliary — that is, a “nonresident alien” — is subject to U.S. gift and estate taxes only on assets that are “situated” in the United States. Intangible property — such as corporate stock, bonds, or promissory notes — is generally deemed to be situated in the United States for estate tax purposes (but typically not for gift tax purposes) if it’s issued by a domestic corporation or by a U.S. citizen or the U.S. government.

Here’s where the potential tax implication comes into play: The exemption amount for U.S.-situated assets owned by nonresident aliens is only $60,000, compared with $15 million for U.S. citizens or domiciliaries. Depending on the value of a person’s property in the United States, this can result in significant gift and estate taxes.

In some cases, tax treaties between the United States and a nonresident alien’s country of citizenship may provide some relief. Otherwise, one strategy to avoid these taxes may be holding the assets through a properly structured and operated foreign corporation.

Turn To Us For Help

If you or your spouse is a noncitizen, talk to us about the potential gift and estate planning ramifications. We can evaluate your citizenship, domicile, asset ownership, and family circumstances and develop a plan that addresses the special tax rules that may apply.