US Estate Tax for Non-US Citizens

The US does not levy an inheritance tax on the European model. Instead, it taxes the undivided estate. So when you compare US estate tax with inheritance tax back home, the first thing to know is that the US tax applies to the estate as a whole, and an estate that is tax-free in the US does not automatically mean a tax-free inheritance in your home country. US estate and gift tax law is extremely complex, and it gets even more complicated for non-US citizens. This guide answers the key questions on how estate and gift planning differs for US citizens, foreigners resident in the US ("resident aliens") and foreigners not resident in the US ("nonresident aliens" or "NRAs"). For simplicity, we sometimes say inheritance tax in this text; we always mean the US estate tax.

Please note: this guide covers only the US side of taxation. In cross-border inheritance cases, though, estate and inheritance taxes are often due in more than one country.

Example: you live in Europe and a relative resident in the US leaves you US real estate worth $1,000,000. Thanks to the high exemptions, no tax is due in the US. Your home country, however, may tax the full inheritance. If you inherit from the US, run the numbers for both tax systems together, because a zero US tax bill says nothing about what you owe at home.

We do not cover the non-US tax side of inheritance here. If in doubt, assume that taxes will be due in your country of residence, even if no US estate tax arises.

And of course: get thorough, expert advice!

1How do residence and domicile affect US estate and gift tax?

Gifts, bequests and similar transfers by US citizens and by non-citizens resident in the US ("resident aliens") are subject to estate and gift tax worldwide.

Nonresident aliens (NRAs), meaning people who are neither US citizens nor resident aliens, are subject to estate and gift tax only when they transfer assets located in the US ("US situs assets").

So the first question for any non-citizen (and their financial advisor) is whether they count as a "resident alien" for gift and estate tax purposes.

For gift and estate tax purposes, a person is a "resident alien" if they are domiciled in the US at the time of the gift or of death. US Treasury regulations define "domicile" as follows:

"A person acquires a domicile in a place by living there, for even a brief period of time, with no definite present intention of later removing therefrom. Residence without the requisite intention to remain indefinitely will not suffice to constitute domicile, nor will intention to change domicile effect such a change unless accompanied by actual removal."

Because domicile depends on a person's intent, there is no clear-cut test for whether someone has become a resident alien for gift and estate tax purposes.

Factors considered in determining domicile include:

• Length of stay in the US and abroad
• Size, cost and type of the person's home or other residences (owned or rented)
• Where family and close friends live
• US visa status
• Location of business interests and where the person votes
• Declarations of domicile in wills, trusts, deeds, etc.

1.1Planning note

Who actually counts as a resident alien for US income tax differs significantly from the domicile test above. Non-citizens are generally resident aliens for income tax purposes if they have the right to live permanently in the US (the "green card" test) or if they spend a certain number of days in the US within a three-year period ("substantial presence").

So it is possible, if not especially common, for someone to be a resident alien for US income tax but not for gift and estate tax.

In this guide, "resident aliens" means people who meet the domicile test for transfer tax purposes.

2Who is subject to US estate and gift tax?

This guide answers this question in detail.

First, though, a basic summary:

• Individuals who are "US persons" (US citizens and resident aliens) are subject to gift, estate and generation-skipping transfer (GST) tax on their worldwide assets.
• Individuals not resident in the US are subject to gift and estate tax only on assets that count as located in the US ("US situs assets").

Summary: transfer tax treatment of residents and nonresidents

3Are there special rules for US citizens living in US territories?

Special rules apply to certain residents of US territories, namely Puerto Rico, Guam, American Samoa, the Northern Mariana Islands and the US Virgin Islands.

Under §2209 of the Internal Revenue Code (IRC), a decedent who was a US citizen and a resident of a US possession at the time of death is treated as a nonresident alien for estate tax purposes. This only applies, however, if the person acquired US citizenship solely because they:

1. are a citizen of the US possession, or
2. were born in or reside in that possession.

3.1Example

Cynthia, a citizen of Puerto Rico, dies in Puerto Rico on October 1, 2020, while residing there. Cynthia is considered to have acquired US citizenship solely because she is a citizen of Puerto Rico. She is therefore treated as a nonresident alien under US estate tax law. The same rules apply when determining whether a resident of a US possession is liable for gift tax or generation-skipping transfer tax.

4What gift and estate tax rules apply to resident aliens?

Resident aliens are generally subject to the same gift and estate tax laws as US citizens. In other words, all of a resident alien's assets are subject to US estate and gift tax, whether they are located in the US or in another country.

Resident aliens are entitled to the full applicable US estate tax credit amount, just like US citizens. The Tax Cuts and Jobs Act of 2017 doubled this amount from $5 million to $10 million (adjusted annually for inflation).1 For 2026, the current amount is $15 million.

Transfers by resident aliens are also subject to generation-skipping transfer (GST) tax in the same way as for US citizens. The GST tax exemption for 2026 is $15 million.

Resident aliens can make gifts to anyone in the US that qualify for the annual gift tax exclusion ($19,000 in 2026).

5Is there relief from US transfer tax when a transfer is also subject to gift or estate tax in another country?

All of a resident alien's assets are subject to US estate and gift tax, whether they are located in the US or in another country.

However, if a decedent's estate owes inheritance or estate tax to another country, the US estate may receive a credit for the foreign tax paid.

No such credit against US gift tax is available for foreign gift taxes, which can lead to gifts of foreign assets being taxed more than once.

Some countries have tax treaties with the US that can often reduce or eliminate double taxation of gifts. You will find more on treaties in question 17.

6What estate tax rules apply to nonresident aliens (NRAs)?

Unlike US citizens and resident aliens, who are subject to estate and gift tax on their worldwide assets, nonresident aliens (NRAs) are only subject to estate and gift tax on assets considered US situs property. The next question explains what counts as US situs property.

If an NRA owns US situs property that is subject to transfer tax, the exemption from that tax differs from the one available to US citizens and resident aliens.

Nonresident aliens can generally transfer up to $60,000 in assets at death without owing US estate tax (the actual tax credit is $13,000, which equals an exemption of $60,000).

This NRA exemption was not changed by the Tax Cuts and Jobs Act of 2017.

7Which assets count as US situs property for NRA estate tax purposes?

Nonresident aliens (NRAs) are subject to US estate tax only on US situs property as defined in IRC §§2103-2105 and the applicable regulations.

The following (non-exhaustive) list includes assets that are US situs property:

• Real estate and tangible personal property located in the US
• Shares in a US corporation and mutual funds
• Certain US bank deposits
• Debt obligations of a US person, the United States, a state or any political subdivision thereof, or the District of Columbia
• Certain intangible assets issued by or enforceable against a US resident, a domestic corporation or a government entity2
• A retained interest and/or beneficial interest in a trust holding US situs property (including foreign trusts)
• The cash surrender value of a US life insurance policy, or the replacement value of a policy the decedent held on another person's life
• Deferred compensation and pension benefits paid by a US employer

7.1Real estate

If US real estate owned by an NRA is subject to a non-recourse mortgage, only the equity in the property is subject to US estate tax. With a recourse mortgage, the full market value of the property is included in the taxable estate.

7.2Equity holdings

If an NRA is a citizen of a country that has an estate tax treaty with the US, US shares may be exempt from estate tax. Other tax provisions may also differ for citizens of that country, depending on the terms of the treaty.

7.3US bank deposits

Personal bank balances in the US (such as cash and certificates of deposit) are normally not US situs property under IRC §2105(b), unless the accounts are connected to a trade or business the decedent conducted in the US.

Deposits with a domestic branch of a foreign corporation, however, are US situs property if that branch is "engaged in the commercial banking business."3

Conversely, deposits with a foreign branch of a domestic corporation or partnership engaged in banking are generally not US situs property (even if they are effectively connected with a US trade or business).4

If a bank deposit is held by a US bank acting as trustee or custodian, the deposit will likely be treated as US situs property.5

7.4Other cash deposits

Cash held with US brokers, money market accounts with US mutual funds and cash in US safe deposit boxes are generally treated as US situs property.6

7.5Trusts

In general, trust assets consisting of US situs property (determined at the time of transfer or at the NRA's death) are only included in an NRA's taxable estate if those assets would also be included in the taxable estate of a US citizen or resident alien under IRC §§ 2033-2038.

If the assets are owned by an irrevocable trust set up by the NRA, they are generally exempt from US estate tax, although the three-year look-back rule applies to transfers of US situs assets.

8Which assets do not count as US situs property for NRA estate tax purposes?

Only US situs property owned by an NRA is subject to US estate tax. IRC §2105 and the related regulations list assets that are generally not US situs property, including but not limited to:

• Life insurance proceeds
• Personal deposits with a US bank and certain other bank deposits
• Shares in companies based outside the US
• Works of art on loan for an exhibition
• Some US Treasury debt obligations

8.1Proceeds from an NRA's life insurance

Amounts received as insurance on the life of a deceased NRA are not subject to US estate tax. However, if an NRA decedent owns a policy issued by a US company on someone else's life, the policy will likely be included in the estate, either as a debt of a US person under the debt obligation rules or as intangible personal property enforceable against a US company.

8.2Planning tip

Unlike proceeds from a life insurance policy owned by a US citizen or resident alien, proceeds from insurance on an NRA's life are generally not included in the NRA decedent's US gross estate, no matter who owns the policy. This means an NRA can own a US policy on their own life directly, instead of having to transfer ownership to an irrevocable trust, as US citizens and resident aliens often do.

9Are NRAs subject to gift tax?

A gift of property by an NRA is subject to US gift tax only if the property transferred is real estate or tangible personal property located in the US. As a result, gifts of intangible property (see below) by an NRA are not taxable, wherever that property is located and whatever its value.

9.1Gifts of cash and currency

The IRS and the courts have generally taken the position that US or foreign currency, and cash located in the US at the time of the gift, are treated as tangible property.7 So a gift by an NRA to a US recipient in the form of a check drawn on a US bank account, or a wire transfer to a US account, may be treated as a transfer of cash.

However, the IRS has also ruled that a transfer of cash by a check drawn on a foreign bank and payable by a US bank is not subject to gift tax, because it is considered property located outside the US.8

Intangible property: assets treated as intangible personal property, and therefore not subject to gift tax when given by an NRA, include:

1. shares issued by a US or foreign corporation, and
2. debt obligations, including bank deposits, where the primary obligor is a US person, the United States, a state or political subdivision, the District of Columbia, or an agency or instrumentality of any such government.9

9.2Planning tip

Because the gift tax rules for intangible property are more favorable to nonresident aliens than the estate tax rules, NRAs should consider giving intangible property (such as shares in a US company) to US citizens, US residents or other NRAs during their lifetime, rather than holding on to it until death.

US-situs property

Below is a summary of the estate and gift tax rules that matter for NRAs:10

10Is there an annual gift tax exclusion for NRAs?

Yes. Nonresident aliens, just like US citizens and resident aliens (that is, US persons), can use the annual exclusion for gifts of present interests.

Unlike US persons, however, NRAs are not entitled to a lifetime gift tax exemption for gifts above the annual exclusion limit.

For 2026, the annual gift exclusion is $19,000 per recipient. For gifts to a spouse who is not a US citizen, the limit rises to $194,000.

11What are an NRA's gift tax reporting obligations? And what must US citizens and NRAs report when they receive gifts from NRAs?

If a nonresident alien makes a taxable gift of US real estate or tangible personal property that exceeds the annual exclusion (or does not qualify for it), the gift must be reported on a gift tax return (Form 709) by April 15 of the following year.

The donor is also responsible for paying the gift tax on the transfer. If the IRS cannot collect the gift tax owed from the NRA, liability may shift to the recipient of the gift.

US recipients of gifts and bequests worth more than $100,000 (including trusts) must report the gift or bequest to the IRS on Form 3520, no later than the due date (including extensions) of the recipient's income tax return for the tax year of the gift.

To determine whether a US person received gifts of more than $100,000 from a foreign donor during the tax year, the US recipient must add together gifts from foreign persons whom they know, or have reason to believe, are related within the meaning of IRC § 643(i)(2)(B).

For example, if a mother and father (both NRAs) each give their US son $60,000, the gifts are added together, the $100,000 reporting threshold is exceeded and the son must report both gifts. Once the $100,000 threshold is reached, the recipient must list each gift over $5,000 separately.

Form 3520 is purely a reporting requirement, but the penalty for failing to file can be steep: 5% of the value of the gift for each month the failure continues (up to a total of 25%). No penalty applies if the recipient can show that the failure was due to reasonable cause and not willful neglect. Not knowing the law is not reasonable cause.

12Are nonresident aliens (NRAs) subject to the generation-skipping transfer (GST) tax?

A transfer by a nonresident alien is subject to GST tax only if it is also subject to US estate or gift tax, which is only the case when it consists of US-situs property.11 NRAs currently have a GST tax exemption of $15 million (2026), the same as the exemption for US citizens and resident aliens.12

13What happens when you make a gift to a spouse who is not a US citizen?

Gifts to a spouse who is not a US citizen (whether or not that spouse lives in the US) do not qualify for the unlimited gift tax marital deduction, which applies only to gifts to a US citizen spouse.13 However, a spouse can make a gift to a non-US-citizen spouse that should qualify for a higher annual exclusion under IRC §2523(i)(2) ($194,000 in 2026).

14What is a qualified domestic trust (QDOT) and when is it used?

The unlimited estate tax marital deduction is not available to estates where the surviving spouse is not a US citizen. The only exceptions are:

1. the surviving spouse becomes a US citizen before the estate tax return is filed, or
2. the assets pass to the surviving spouse through a QDOT.

14.1Planning tip

The citizenship of the deceased has no bearing on whether the marital deduction is available; only the citizenship of the inheriting spouse counts.

For example, if a US citizen is married to a spouse who is not a US citizen, the US citizen's will or trust should include QDOT provisions to secure the marital deduction.

Alternatively, the non-US-citizen spouse could leave assets to the US citizen spouse outright or in trust and claim the marital deduction without needing a QDOT.

Under IRC §2056A, a trust qualifies as a QDOT if:

• at least one trustee is a US citizen or a US corporation;
• it is administered under the jurisdiction of a US state or the District of Columbia;
• it meets the general marital deduction requirements of US estate tax law (for example, the qualified terminable interest rule of IRC §2056), and
• an election to treat it as a QDOT is made on the decedent's estate tax return (Form 706).

Income distributions from the QDOT to the surviving spouse are not subject to estate tax, but distributions of QDOT principal to the surviving spouse are, unless they are made on account of hardship.

If a married couple is putting an estate plan in place and plans to become US citizens in the future, they may not need QDOT provisions in their living trust: if a death occurs before naturalization, the executor can elect after death for the marital trusts to qualify as QDOTs.

15How is jointly owned property included in the gross estate when a US citizen is married to a non-US citizen?

For US citizens, only 50% of jointly owned property is included in the estate when the first spouse dies, regardless of who paid to buy or maintain it.

For spouses who are not US citizens, however, the full value of jointly owned property is included in the estate of the first spouse to die, minus any contributions the surviving spouse can prove they made.

That is why it can make sense to "unwind" joint ownership of assets while both spouses are alive, if the estate is expected to be taxable. The annual exclusion for gifts to a spouse or the lifetime gift exemption can be used for this.

16What retirement planning issues arise when a US citizen is married to a non-US citizen?

Assets left to a surviving spouse who is not a US citizen only qualify for the marital deduction if they are held in a QDOT. So the best option for a surviving spouse who inherits qualified plan or IRA assets is often to roll the plan benefits into an IRA QDOT trust.

An IRA QDOT lets the surviving spouse keep deferring income tax on the retirement assets left in the IRA and receive the IRA's income free of estate tax. However, as with a standard QDOT, distributions of principal to the surviving spouse are subject to both estate tax and income tax.

17How do treaties with other countries affect US transfer tax? Which countries have treaties with the US?

US treaties with other countries can allow a higher gift or estate tax exemption than the one generally available to nonresident aliens (NRAs).

For example, Canadian citizens who are NRAs with US-situs assets receive, in 2026, a prorated estate tax exemption of up to roughly $15 million, based on the ratio of their US-situs assets to their worldwide assets (US-Canada tax protocol, Article XXIX B).

The US has tax treaties with a number of countries, including Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. NRAs should therefore speak to an attorney who specializes in cross-border planning for more information.

1. The reduction to $5 million (inflation-indexed) originally scheduled for the end of 2025 was scrapped by the One Big Beautiful Bill Act of 2025; since 2026, a permanent exemption of $15 million (inflation-indexed) applies.
2. Treas. Reg §20.2104-1(a)(4)
3. IRC §2104(c)
4. IRC §2105(b)(2)
5. Rev Rul. 69-596
6. IRC §2104(c)
7. IRC §2104(c)
8. Treas. Reg. §25.2511-3
9. PLR 8210055; PLR 200340015
10. Please note that this table reflects the general position under US federal estate and gift tax law. A treaty in force between the US and another country can modify or change these rules. Talk to your tax advisor about this.
11. Treas. Reg. §26.2663-2
12. IRC §§2631(c), 2010(c). See also Treas. Reg. §26.2663-2 (referring to the $1 million GST exemption, which mirrored the GST exemption for both US citizens and US residents when the regulation was issued; presumably intended to track later increases in the exemption).
13. IRC §2523

For more on the US tax system, see our beginner's guide and our compact introduction to US tax law for European entrepreneurs. For an overview of moving money between the US and Europe , click here.

Find out here whether you need to fill in a Form W-8. And here, how to file a US tax return as a non-US citizen.

Thinking about investing in a vacation home in Florida? Here you'll find everything about how Florida vacation properties are taxed. And if trusts are on your radar, our page on US trusts for non-resident clients and our Tax hub will take you further.

In short

• US citizens and resident aliens are subject to estate and gift tax on their worldwide assets; nonresidents only on their US assets.
• Whether you count as a resident for these taxes depends on your domicile, not on the income tax test.
• Nonresidents can generally transfer only $60,000 tax-free at death. US persons have an exemption of $15 million in 2026.
• US assets include US real estate and shares in US companies, among other things; personal deposits at US banks generally do not count.
• Estate tax treaties, including with several European countries, can allow a higher exemption.

How we help you

• US Tax ConsultationYour US tax question, answered by people who know both sides.
• US blocker for real estateBuying US property through a US C Corporation with a UK holding company.
• Your US Tax ReturnForm 1040 or 1040-NR, handled in English.
• ConsultationOne hour with the firm: your case, your questions, a clear answer.