Navigating US Estate Tax: Key Insights for Non-US Persons with US Assets

The US imposes an estate tax on the US situs assets owned by a non-US person on death (a person who was not a citizen or a domiciliary – an NRNC in IRS-speak). The most common types of situs assets subject to US estate tax are US real estate, stock and debt obligations (bonds) issued by US corporations, US retirement plans, as well as tangible property held in the US (this includes cash held in a US bank). 

Increasingly, where a bank or broker identifies US situs assets in the portfolio of a deceased customer, they freeze the account until the executor can produce a transfer certificate. A transfer certificate is a form issued by the IRS which confirms that any US tax imposed upon the estate has been fully discharged. 

An exemption of only $60,000 is available against the value of US situs assets of the estate of an NRNC. If the value of the US situs assets exceeds $60,000, the estate must file Form 706-NA United States Estate (and Generation-Skipping Transfer) Tax Return Estate of nonresident not a citizen of the United States. This form is used to compute any US estate tax liability, with tax rates currently ranging from 18% to 40%. 

If the value is $60,000 or less, no Form 706-NA is required. 

To obtain a Transfer Certificate, and where a Form 706-NA was required, the executor must fax a copy of the Form to the IRS which will issue the Certificate once the examination of the 706-NA is completed. If no 706-NA was required, the executor must submit various estate related documents and an affidavit detailing the US situs assets. We note that examination of a Form 706-NA can take 18 months or more, while issuance of a Transfer Certificate can take six to nine months – so the executor and heirs need to arm themselves with patience. 

We note that the US has entered into a limited number of estate tax treaties (currently 16) which may modify certain situs rules, define estate taxing rights, and provide additional tax relief. So, where the decedent is a citizen or resident of a country with an estate tax treaty with the US, this is the first area to be reviewed. 

Proper planning can reduce exposure to US estate tax and the accompanying delay in the release of the assets to the estate’s beneficiaries. Such planning frequently focuses on avoiding direct individual ownership of US situs property through the use of a foreign holding company. However, this must take into account both the US and the investor’s home country rules and may limit the availability of a reduced US tax rate under an income tax treaty. Another common technique is to invest in foreign ETFs, which track US stocks. 

Please note this information does not apply to US citizens or non-citizens who are considered US domiciliaries, who are subject to US estate tax on their worldwide estate, but who are provided with $13.6M exemption for 2024 decedents ($13.99M for 2025). 

Finally, please note that the tax provisions relating to the estate tax exemptions will sunset on December 31, 2025, but it is widely thought that the new US administration will modify these sunset provisions.

Gregory Dean is a director at USTAXFS SARL, based in their newly expanded Geneva office. Greg is a US attorney with over 20 years’ experience working internationally advising private clients, family offices, financial institutions, and fiduciary companies on planning and US tax matters. He works in the Estates and Trusts Team advising on trust planning and related US tax and tax reporting.