Unfortunately, not everyone who needs an estate plan decides to create one. Many falsely believe that only a small group of people will benefit from estate planning: wealthy and elderly U.S. citizens.
But this could not be further from the truth. Estate planning offers several powerful advantages, allowing you to protect not just your property but also your family and values. Have you just become a lawful permanent resident? Are you a U.S citizen, but your spouse is not? Are you bringing your foreign fiancé to the U.S.? No matter your age, class, or legal status, you and your loved ones will greatly benefit from a well-devised estate plan.
The Critical Next Step for Mixed-Status Families
If you just obtained your green card, you may have waited months or even years for this moment and all the benefits that come with permanent residency. One of these benefits is the estate tax exemption, wherein U.S. citizens and lawful permanent residents can exempt more than $5 million in assets from estate taxes, the rate of which may be up to 40%. Nonresidents, meanwhile, can only exempt up to $60,000.
Unfortunately, lawful permanent residents do not automatically access all the same rights as U.S. citizens in estate planning. For example, green card holders do not benefit from the unlimited marital deduction, which is what allows for the tax-free transfer of unlimited wealth from the deceased spouse to the surviving spouse. The unlimited marital deduction is only available to couples where both spouses are U.S. citizens.
Additionally, courts do not evenly split jointly owned property if only one spouse is a U.S. citizen. For example, let’s say a couple jointly owns a $300,000 house. One spouse is a U.S. citizen, and the other is a permanent resident. When the U.S. citizen dies, all $300,000 of the house’s value would be included in the citizen’s estate, rather than only $150,000.
Finally, a couple may be subject to the gift tax if only one spouse is a U.S. citizen. When both spouses are U.S. citizens, they do not have to pay taxes on assets they give to one another, either before or after death. This is not the case when one spouse is a permanent resident. The gift tax may even apply if a couple jointly purchases a vehicle or home, but only one of them is a citizen. If the citizen technically paid for the entire asset, half of it may be considered a gift to the permanent resident (and, therefore, subject to the gift tax).
These issues can be particularly problematic for lawful permanent residents who make most of their household income. To fully protect your estate from these complications (both during your life and after), you will need a well-devised estate plan. Certain types of trusts, when drafted properly, can help spouses transfer upto 100% of their wealth and assets to each other—regardless of legal status.
Begin Your Estate Planning Process Today
Estate planning may involve wills, trusts, guardianships, and much more. What you need in an estate plan will depend on your unique circumstances and long-term goals. No matter your background, level of wealth, or type of legal status, The Gaston Law Firm, P.A. is here to help you grow your American future. As an immigration law firm, we understand what it takes for someone to navigate U.S. laws without the full benefits of U.S. citizenship.