International trust and estate planning typically involves structuring wealth, inheritance, and succession across multiple international jurisdictions.
When foreigners establish or purchase property to protect their wealth, they generally engage in international trust and estate planning. This planning typically includes an international tax component, which helps optimize taxes, ensure legal compliance, and safeguard family assets worldwide.
High-net-worth individuals use tax strategies to preserve wealth for future generations. They aim to minimize U.S. estate tax exposure, ensure cross-border compliance, and protect family businesses and real estate assets.
Let’s discuss the U.S. tax implications of international trust and estate planning, which are as follows:
For foreign individuals who are non-U.S. residents (non-resident non-domiciled, or NRND), U.S. estate planning requires careful navigation. U.S. estate tax applies only to U.S.-situs assets such as real estate, tangible property, and certain securities. Unlike U.S. residents, who have an exemption of $13.99 million in 2025, NRND individuals have only a $60,000 exemption. Estate tax can apply at rates up to 40 percent. The marital deduction is generally limited for transfers to non-U.S. citizen spouses, unless a Qualified Domestic Trust (QDOT) is used.
Effective international estate planning for cross-border families, therefore, requires a holistic approach that considers tax treaties, state regulations, and U.S. federal filing requirements. The goal is to preserve family wealth while minimizing the risk of double taxation and ensuring smooth intergenerational transfers.
In addition, careful international gift planning is often used to transfer wealth during a lifetime in a tax-efficient manner, reducing exposure to U.S. gift and estate taxes. Let’s understand the tax aspects of international gift planning in the next section.