Estate tax for expatriates: US estate tax guide
For a 2025 death, a US citizen’s federal gross estate can include worldwide assets, while a noncitizen non-domiciliary is generally exposed only on US-situated property. The key filing thresholds are $13.99 million and $60,000, respectively, under current federal rules.
Federal estate tax can follow a US citizen abroad because it reaches worldwide property. This differs from income-tax residency, although US citizenship-based taxation also continues while a citizen lives abroad.
Federal estate-tax rules use fair market value at death, not original purchase price. The top rate reaches 40%, and the 2025 basic exclusion amount for a US citizen or domiciliary is $13.99 million.
For a noncitizen who is not US-domiciled, IRS estate-tax rules for nonresidents not citizens use a $60,000 Form 706-NA filing threshold. Exposure therefore depends first on citizenship, domicile, and asset situs.
Key takeaways
The following 3 points define the federal starting position for a 2025 estate:
- US citizens are generally subject to US estate tax on worldwide assets, even while living abroad.
- Noncitizen non-domiciliaries are generally within US estate tax only on US-situated assets.
- A 2025 citizen or domiciliary estate uses a $13.99 million basic exclusion; a 2026 death uses $15 million.
Based on our client scenario at TFX: A US citizen in France owns a €6 million home, $4 million of investments, and a $5 million retirement portfolio. At $15 million before deductions, the worldwide estate is above the 2025 $13.99 million exclusion.
What assets count in an expat estate?
For 2025 estate tax, US citizens and US-domiciled decedents generally start with worldwide property, while a nonresident noncitizen generally reports US-situated assets on Form 706-NA. Asset location matters because the NRNC filing threshold is $60,000 under current federal rules.
A gross estate can include cash, securities, real estate, insurance, trusts, annuities, business interests, and retirement assets.
Foreign property can still be in a US citizen’s estate, so review how foreign property tax rules interact with ownership and transfers.
For noncitizen non-domiciliaries, US real estate, US corporate stock, and tangible property in the US can be US-situs.
Certain bank deposits and life-insurance proceeds can be treated as outside the US for this purpose.
For a 2025 US citizen, worldwide assets are generally in scope; for a noncitizen non-domiciliary, situs determines whether an asset enters the US estate.
| Asset | US citizen or US-domiciliary | Noncitizen non-domiciliary |
|---|---|---|
| US real estate | Worldwide estate | Generally US-situs |
| Foreign real estate | Worldwide estate | Generally outside US-situs estate |
| US brokerage holding US corporate stock | Worldwide estate | US corporate stock is generally US-situs |
| Foreign brokerage holding foreign shares | Worldwide estate | Generally outside US-situs estate |
| US bank deposit | Worldwide estate | May be excluded if statutory conditions are met |
| Retirement account | Included based on ownership and estate rules | Situs and account structure require review |
| Life insurance | Policy rights or proceeds may be included under estate rules | Certain proceeds on the decedent’s life are outside US situs |
| US entity interest | Worldwide estate | Classification and situs depend on the interest |
US real estate owned by a nonresident alien remains a US asset for federal tax purposes.
IRS rules for nonresident aliens and US real property also matter if the estate later sells the property.
Investment structure matters before death, too.
Review investment options for American expatriates with estate ownership in mind because direct ownership, funds, entities, and retirement wrappers can produce different tax and reporting results.
The following 5-item checklist is useful before an estate-tax planning call:
- List every asset and its fair market value.
- Record the country where each asset is located or issued.
- Identify the legal owner, joint owner, trust, or entity.
- Note beneficiary designations on retirement and insurance accounts.
- Flag US real estate, US company stock, trusts, and business interests.
Will my estate be subject to federal estate tax?
For a 2025 death, a US citizen or US-domiciled decedent generally reaches the Form 706 filing test when the gross estate plus adjusted taxable gifts exceeds $13.99 million. A noncitizen non-domiciliary can face Form 706-NA once US-situated assets exceed $60,000.
The US estate-tax result turns on estate-tax domicile, not merely where an income-tax return is filed.
A green card, years abroad, a permanent home, family ties, and intent can all be relevant to domicile.
The following 4 yes-or-no questions give a first-pass filing screen:
- Was the decedent a US citizen? If yes, start with worldwide assets.
- If not, was the decedent US-domiciled? If yes, Form 706 rules can apply to worldwide assets.
- If neither, did US-situated assets plus relevant adjusted taxable gifts exceed $60,000? If yes, review Form 706-NA.
- Does an estate or gift tax treaty alter situs, deductions, or credits? If yes, apply the treaty before finalizing the return.
Based on our client scenario at TFX: A US citizen dies in 2025 with a $14.4 million gross estate and $600,000 of allowable deductions.
The rough taxable estate is $13.8 million, but filing Form 706 is required before simply subtracting all deductions.
Foreign investors start differently because the $60,000 rule is a filing threshold, not the $13.99 million citizen exclusion.
IRS guidance on nonresidents with US assets gives the federal situs screen.
See our federal estate tax guide for foreigners investing in the United States for the nonresident framework.
Estate tax expat planning for US citizens living abroad
For 2025 planning, US citizens abroad should inventory worldwide assets, confirm estate-tax domicile, review beneficiaries, and flag trusts or entities before year-end. The 2025 federal basic exclusion is $13.99 million, while a 2026 death uses a $15 million basic exclusion.
Cross-border estate planning should start with an asset map in both US dollars and local currency.
US citizens generally remain within the federal estate-tax system on worldwide property even when they live and file abroad.
Income-tax residency and estate-tax domicile are different concepts.
IRS guidance for US citizens and resident aliens living abroad is useful for filing context, but estate planning still needs a separate domicile and situs review.
Beneficiary designations deserve the same review as wills and trusts.
Retirement accounts, life insurance, jointly held property, and entity interests can pass under documents or contracts that sit outside a will.
Trust or entity planning should be reviewed before transferring assets.
A structure that works for local succession law can create US gift, estate, trust, or reporting consequences.
The 4 planning actions below help identify estate-tax exposure before a 2025 transfer or year-end change.
| Planning action | Why it matters | When to do it |
|---|---|---|
| Inventory worldwide assets | Establishes value, ownership, and situs | At least annually and after major purchases |
| Review domicile and residency facts | Determines which estate-tax regime can apply | Before a move, green-card change, or long stay abroad |
| Check beneficiaries | Coordinates wills with contractual transfers | After marriage, divorce, births, or account changes |
| Review trusts and entities | Tests US and local tax treatment before transfers | Before funding or restructuring |
Based on our client scenario at TFX: A US citizen in the UK owns a $7 million home, $5 million portfolio, and $3 million pension.
Before a 2025 transfer, the family maps $15 million of worldwide assets and checks gift, estate, and UK inheritance-tax effects.
Year-end tax planning can surface large gifts, sales, or ownership changes before December 31.
A US citizen living abroad still has US filing obligations, so estate changes should be coordinated with the income-tax return rather than handled in isolation.
US estate taxes and the non-US spouse
For a 2025 death, property passing from a US citizen to a surviving spouse who is not a US citizen does not automatically qualify for the unlimited marital deduction. A QDOT can preserve a marital deduction, while 2025 lifetime gifts have a $190,000 noncitizen-spouse annual exclusion.
A QDOT is a qualified domestic trust that can defer estate tax on qualifying property for a noncitizen surviving spouse.
Final QDOT regulations, T.D. 10050, took effect July 10, 2026, and updated procedures and references. Estate tax for non-US citizens depends on citizenship, domicile, asset situs, and treaty rules.
A noncitizen spouse can be US-domiciled for estate-tax purposes even if income-tax terminology points elsewhere.
For estate tax for green card holders, the green card alone does not settle estate-tax domicile. A green card holder estate tax exemption analysis must examine domicile facts and whether the decedent was a US citizen, resident, or NRNC at death.
For US estate-tax exemption rules for non-resident aliens in 2026, do not substitute the $15 million basic exclusion. A noncitizen non-domiciliary generally still faces the $60,000 Form 706-NA filing threshold unless treaty relief changes the result.
The IRS nonresident alien estate tax $60,000 filing threshold is not a blanket lifetime exemption.
The same distinction matters in US estate-tax treatment for a nonresident. A nonresident alien US estate tax $60,000 filing threshold analysis must also test adjusted taxable gifts.
Treaties can alter the final result.
A 2026 nonresident-alien US estate-tax exemption analysis starts with the $60,000 Form 706-NA rule, not the $15 million citizen or domiciliary amount.
Estate tax for nonresidents can apply to US real estate, US corporate stock, and other US-situs property. US estate-tax rules for nonresidents are driven by situs, domicile, adjusted taxable gifts, and treaty provisions. US nonresident estate-tax rules can change under an estate or gift tax treaty.
The IRS NRNC estate-tax FAQs explain the $60,000 filing rule and situs approach.
A nonresident estate tax review should also separate estate tax from beneficiary-level inheritance tax.
The US federal system generally taxes the estate transfer rather than imposing a broad federal inheritance tax on the beneficiary.
For that reason, US inheritance tax for nonresidents is usually an imprecise label for federal estate-tax exposure. Foreign inheritance tax can still apply under the law of the country where the decedent, heir, or property is located.
Inheritance tax for non-US citizens is country-specific.
At the federal level, the United States has no broad beneficiary inheritance tax, though state rules can differ.
Estate tax for a non-US citizen can involve different rules for a US citizen spouse, a noncitizen spouse, or children.
Foreign inheritance tax rules and a child’s separate US return for unearned income may also matter after assets pass.
The IRS filing-status tool for a US citizen or resident alien married to a nonresident alien addresses income-tax filing status.
That election is separate from the estate-tax QDOT rules.
For a 2025 US citizen decedent, the unlimited marital deduction generally depends on the surviving spouse being a US citizen or on qualifying QDOT treatment.
| Scenario | Marital deduction available? | QDOT required? | Planning note |
|---|---|---|---|
| Surviving spouse is a US citizen | Generally yes | No | Portability may also require timely Form 706 |
| Surviving spouse is not a US citizen; property passes outright | Generally no | Usually yes for marital-deduction treatment | Review QDOT funding deadline and election |
| Property passes to a qualifying QDOT | Generally yes | QDOT is the mechanism | Principal distributions can trigger section 2056A tax |
| Noncitizen spouse becomes a US citizen under qualifying rules | Potential relief may apply | Fact-dependent | Review timing and statutory conditions |
So, how much can a non-US citizen inherit?
There is no single federal cap on what a non-US citizen may inherit.
The tax result depends on the decedent’s status, asset situs, QDOT treatment, treaty provisions, and whether the transfer is subject to US estate tax.
The following 4 mistakes cause problems in cross-border spouse planning:
- Assuming marriage alone creates an unlimited estate-tax marital deduction.
- Treating a green card as automatic proof of estate-tax domicile.
- Using the $60,000 NRNC filing threshold as if it were the US citizen basic exclusion.
- Funding a QDOT without checking trustee, election, security, and filing requirements.
Expatriation
For a 2025 expatriation, renouncing US citizenship or ending long-term residency can trigger Form 8854 and the exit-tax rules. Covered expatriate tests include $2 million net worth, a 5-year average tax liability above $206,000, or failure to certify 5 years of compliance.
Long-term residence for expatriation purposes generally means lawful permanent resident status in at least 8 of the last 15 tax years, subject to treaty rules.
Renouncing citizenship does not automatically erase US transfer-tax consequences.
Estate planning for US citizens living abroad should be completed before expatriation, not after status changes.
Review our guide to renouncing US citizenship before treating expatriation as an estate-tax strategy.
The following 5-step decision guide covers the 2025 expatriation tax screen:
- Confirm whether you are relinquishing US citizenship or ending long-term resident status.
- Test covered expatriate status against $2 million net worth, the $206,000 tax-liability test, and 5-year compliance certification.
- Prepare Form 8854 and the final US income-tax filing package.
- Model the mark-to-market exit tax, including the 2025 $890,000 gain exclusion.
- Review future covered gifts or bequests to US recipients under section 2801.
Form 8854 is central to the certification test and expatriation reporting.
The IRS also explains that US citizens and resident aliens abroad remain subject to US filing rules until status is properly changed.
Based on our client scenario at TFX: A long-term green card holder expatriates in 2025 with $2.4 million net worth. Even if the 5-year average tax-liability test is below $206,000, the $2 million net-worth test can make the person a covered expatriate.
Current IRS Form 708 guidance implements section 2801 reporting for covered gifts and bequests from covered expatriates. For 2025 and 2026, the section 2801 annual amount is $19,000, and the tax rate is 40% on the net covered amount. A standard Form 708 for covered gifts or bequests received in 2025 is generally due June 15, 2027 under the 18-month rule.
That beneficiary-side tax is separate from the expatriate’s 2025 exit-tax calculation.
Qualifying foreign estate tax paid on a covered gift or bequest can reduce section 2801 tax when the Form 708 requirements are met. This is one reason expatriation planning should cover future family transfers, not only the exit date.
The following 3 groups need prompt review before expatriating:
- US citizens or long-term residents near a covered-expatriate threshold.
- Anyone missing one or more of the 5 prior years of required federal tax compliance.
- Anyone expecting to leave large future gifts or bequests to US citizens, US residents, or domestic trusts.
The top 4 strategies to optimize estate taxes
For 2025, estate tax in the United States depends on citizenship, domicile, asset location, spouse status, and prior gifts. The $13.99 million basic exclusion, $19,000 annual gift exclusion, and $60,000 NRNC filing threshold create different paths for cross-border families.
The current US estate tax exemption for a 2025 US citizen or domiciliary is $13.99 million.
The US estate tax exemption rises to $15 million for 2026 deaths, so the date of death controls which basic exclusion applies.
American estate tax planning should use the year-of-death threshold.
The US estate tax exemption is $13.99 million for a 2025 death, not $15 million.
United States estate tax planning also separates transfer tax from income tax.
A USA estate tax plan should not treat the Foreign Tax Credit and FEIE as estate-tax deductions.
1. Use lifetime gifts deliberately
How it helps: Lifetime gifts can shift future appreciation outside a taxable estate. For 2025, the annual exclusion is $19,000 per recipient, and larger gifts are not automatically taxed. IRS rules for nonresidents not citizens also show why citizenship and domicile change transfer-tax treatment.
A gift above $19,000 can require Form 709 and use part of the donor’s lifetime exclusion without creating immediate gift tax.
The US estate tax exemption and gift-tax basic exclusion are unified for US citizens and domiciliaries.
A taxable lifetime gift can reduce the exclusion remaining at death even when no gift tax is payable when the gift is made.
Based on our client scenario at TFX: A US citizen gives $119,000 to an adult child in 2025. After the $19,000 annual exclusion, $100,000 is generally a taxable gift reported on Form 709 and can use $100,000 of lifetime exclusion.
2. Coordinate spouse transfers and QDOT planning
How it helps: Spousal planning can defer federal estate tax when a transfer qualifies for the marital deduction. For a noncitizen spouse, QDOT rules matter, and 2025 lifetime gifts have a $190,000 annual exclusion rather than an unlimited gift-tax marital deduction.
Estate tax for a nonresident can go wrong when a family assumes every spouse transfer is deductible.
Citizenship of the surviving spouse and QDOT treatment can change the result at death.
Based on our client scenario at TFX: A US citizen’s will leaves a $4 million portfolio outright to a noncitizen spouse. Before death, the documents are reviewed so qualifying property can pass through a QDOT rather than relying on an unavailable unlimited marital deduction.
3. Review trusts, entities, and asset ownership before transfers
How it helps: Trust, entity, and insurance ownership can change who owns an asset, where it is situated, or whether future appreciation remains in the estate. A 2025 plan should be reviewed before transfers because the $13.99 million federal exclusion does not make every trust transfer tax-free.
Estate planning for non-US citizens should start with situs and domicile before choosing an entity or trust.
A structure that changes legal ownership can also create gift tax, trust reporting, income tax, or local-law consequences.
Based on our client scenario at TFX: A nonresident parent holds $3 million of US stock through a foreign corporation and plans a transfer. The family reviews entity classification and situs before changing ownership, because the tax result depends on structure and domicile.
So, how to avoid estate tax for foreigners?
There is no universal structure that eliminates US estate tax for every foreign owner.
The correct plan depends on US-situs assets, domicile, treaty eligibility, family goals, and the tax effects of any transfer or entity created before death.
4. Coordinate foreign death taxes and treaty relief
How it helps: Cross-border coordination can reduce duplicate death-tax exposure through statutory or treaty credits when available, but income-tax relief is a separate system. For 2025, the federal estate tax rate reaches 40%, so foreign death taxes and US estate rules should be modeled together.
The basic exclusion is $13.99 million for 2025 deaths and $15 million for 2026 deaths.
Treaty provisions can change credits, deductions, or situs rules, especially for noncitizen non-domiciliaries.
Based on our client scenario at TFX: A US citizen dies domiciled in a treaty country with tax due on the same property in both countries. The executor checks Form 706 foreign-death-tax credits and the treaty before treating the two tax systems as cumulative.
The four strategies solve different problems: gifting reduces future estate growth, QDOT planning addresses a noncitizen spouse, ownership planning changes legal exposure, and treaty coordination targets duplicate death taxes.
| Strategy | Best for | Primary tax benefit | Complexity | Key tradeoff |
|---|---|---|---|---|
| Lifetime gifting | Estates with expected growth | Moves future appreciation outside the estate | Medium | Uses assets now and can consume lifetime exclusion |
| Spouse/QDOT planning | US/noncitizen couples | Can preserve marital-deduction treatment | High | QDOT administration and later section 2056A tax |
| Trust/entity/ownership review | Concentrated or cross-border assets | Aligns ownership with estate objectives | High | Gift, income, trust, and local-law consequences |
| Treaty/foreign-tax coordination | Estates exposed in 2 countries | Can reduce duplicate death-tax exposure | High | Treaty eligibility and documentation are fact-specific |
Frequently asked questions about US estate tax for expatriates
Yes. A US citizen is generally subject to federal estate tax on worldwide assets, even while living abroad. For a 2025 death, Form 706 filing is generally triggered when the statutory filing test exceeds $13.99 million.
For a US citizen or US-domiciled decedent dying in 2025, the basic exclusion amount is $13.99 million. The filing test also accounts for adjusted taxable gifts and the specific exemption, so the gross estate alone is not the whole calculation.
For a US citizen or US-domiciled decedent dying in 2026, the basic exclusion amount is $15 million. That 2026 amount does not replace the $60,000 Form 706-NA filing threshold for a noncitizen non-domiciliary.
A noncitizen non-domiciliary generally must file Form 706-NA if US-situated assets plus relevant adjusted taxable gifts and specific exemption exceed $60,000. An estate or gift tax treaty can change the final tax treatment.
Not automatically. The unlimited marital deduction is generally unavailable when the surviving spouse is not a US citizen, but qualifying QDOT treatment can preserve a marital deduction. Lifetime gifts have separate rules, including a $190,000 2025 exclusion for qualifying gifts.
No. A 2025 expatriation can trigger Form 8854 and exit-tax rules, and covered expatriate status can expose later gifts or bequests to US recipients to section 2801. Form 708 now provides the reporting and tax mechanism for those covered transfers.
Yes, when an applicable US estate or gift tax treaty grants relief. A treaty can modify situs rules, deductions, or credits, but the exact benefit depends on the treaty and the decedent’s domicile, citizenship, assets, and local death taxes.
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