When Your Spouse or Your Heirs Are Not U.S. Citizens

Immigration status and estate planning are usually handled by different people who never speak to each other. That works until someone dies, at which point the family discovers that the ordinary assumptions of American estate planning quietly stopped applying.

The unlimited marital deduction has a citizenship requirement

A U.S. citizen can leave an unlimited amount to a U.S. citizen spouse with no federal estate tax at the first death. That deduction is not available where the surviving spouse is not a U.S. citizen, whatever their immigration status. A lawful permanent resident spouse is still a noncitizen for this purpose.

The concern behind the rule is that a noncitizen survivor could leave the country with the assets before the tax is ever collected. The solution Congress provided is the qualified domestic trust, a QDOT, which preserves the deferral so long as the assets are held in a trust meeting statutory requirements, including a U.S. trustee, with tax collected on distributions of principal and at the survivor’s death.

A QDOT can be created by the will or trust, and in some circumstances established after death, but the planning is far cleaner in advance.

Lifetime gifts between spouses are also capped

Gifts to a U.S. citizen spouse are unlimited. Gifts to a noncitizen spouse are not. For 2026, the first $194,000 of gifts to a noncitizen spouse is excluded, and the amount is indexed annually. That matters more than it sounds, because retitling a house into joint names or moving money into a joint account can be a taxable gift when one spouse is not a citizen.

The trap for the nonresident who owns U.S. property

This one causes real damage. Where the decedent is not a U.S. citizen and not domiciled in the United States, the estate tax exemption for U.S. situated assets is $60,000. Not fifteen million. Sixty thousand, and it is not indexed.

A nonresident parent who bought a modest rental house in Houston or a condominium in Chicago can therefore leave a taxable U.S. estate, and the family may face a filing obligation and a tax bill on property they thought was too small to matter. U.S. situated assets include real estate and, importantly, shares of U.S. corporations.

Whether a treaty softens this depends on the country, which is a question to ask before buying rather than after a death.

Where the two practices meet

Domicile is the pivot, and domicile is a facts and circumstances question about where you intend to remain, not a box on a form. A person can be a nonresident for income tax and domiciled here for estate tax, or the reverse. Pending immigration matters, planned departures, and property held abroad all bear on it.

If you are planning to naturalize, the timing of that step can change the analysis entirely, which is a good reason for the immigration file and the estate file to be read together.

This week: Confirm your spouse’s exact citizenship status, not just immigration status. Check how the house and the main accounts are titled, because retitling can be a taxable gift. If naturalization is in progress, tell both your immigration and estate lawyers.

If your spouse is not a citizen, or your heirs live abroad, the standard documents are probably not built for your family. Call or text 512.761.8479.