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Estate administration strategy affected by non-citizen spouses

When it comes to estate planning, most people are worried about avoiding tax liabilities from the estate tax. One of the most common ways that people do this is by making sure to leave as many of their assets to their spouse as possible. This is usually a good estate administration strategy because the current law allows unlimited exemptions for assets left to a spouse in Maryland and other states. However, this strategy does not work the same way when one or both spouses is a non-citizen.

Most of the estate tax laws apply in the same way for citizens as it does for non-citizens living in the United States, otherwise known as resident aliens. This means resident aliens also receive the same exemption for the estate tax as any other individual, which as of 2014 is $5.34 million per person. However, resident aliens are not eligible for the usual exemption for assets given to spouses.

On the other hand, there are several options for overcoming the problem with the estate tax for non-citizen spouses. One option is to have the resident alien spouse become an American citizen. This can happen after one has passed away, but the spouse must have obtained citizenship before the due date for filing the estate tax return to the Internal Revenue Service.

After one has determined the best estate administration strategy in Maryland, he or she will need to implement the strategy. This will require drafting the necessary legal documents which will make up an estate plan. It is important to carefully word the estate planning documents in order to ensure they do what one has intended. Even a small mistake can cause future legal problems for intended heirs — so it can be important to have a proper understanding of all applicable laws.

Source: MarketWatch, Estate planning with a non-citizen spouse, Bill Bischoff, Feb 19, 2014


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