Estate tax and how it is handled...

[nipponguru]

Using animal platform and slowly my investment has reached 60K in US equities. Now I worry about the estate tax in case of something worst happens if I invest more than 60K. I can think of the below options:

Teach my better half on the redemption process and she can redeem the investments in the worst case scenario.

Open another account with my better half's name and channel new investment into that platform.

Can advise how do the investment savvy handle the estate tax?

 

[reddevil0728]

Using animal platform and slowly my investment has reached 60K in US equities. Now I worry about the estate tax in case of something worst happens if I invest more than 60K. I can think of the below options:

Teach my better half on the redemption process and she can redeem the investments in the worst case scenario.

How does this help to avoid estate taxes if the worst case is you are already dead before any redemption?

Open another account with my better half's name and channel new investment into that platform.

Can advise how do the investment savvy handle the estate tax?

Don’t buy us domiciled securities? Buy Irish domiciled?

 

[nipponguru]

How does this help to avoid estate taxes if the worst case is you are already dead before any redemption?

Don’t buy us domiciled securities? Buy Irish domiciled?

Let my better half redeem and enjoy the money instead of funding NASA rocket..

 

[reddevil0728]

Let my better half redeem and enjoy the money instead of funding NASA rocket..

But unless the redemption and withdrawal takes place before you die, it will still be subjected to estate taxes what

 

[nipponguru]

Sorry my understanding so far is the estate tax is levied on stocks which are owned by foreign nationals after their demise. There is cap of $60000 and anything above will be levied at 40%. Is it correct or it doesn't matter whether alive or not, the estate tax is applicable?

 

[reddevil0728]

Sorry my understanding so far is the estate tax is levied on stocks which are owned by foreign nationals after their demise. There is cap of $60000 and anything above will be levied at 40%. Is it correct or it doesn't matter whether alive or not, the estate tax is applicable?

If the person alive is no longer holding all the stocks before they die, then there’s no estate tax no? Nothing to tax

 

[BBCWatcher]

Using animal platform and slowly my investment has reached 60K in US equities. Now I worry about the estate tax in case of something worst happens if I invest more than 60K. I can think of the below options:
Teach my better half on the redemption process and she can redeem the investments in the worst case scenario.

Too late if you're dead. The tax liability attaches immediately upon the death of the owner. (With a 9 month deadline to file the estate tax return and pay the estate tax.)

Open another account with my better half's name and channel new investment into that platform.

Each non-U.S. person gets his/her own US$60,000 estate tax exemption. A couple can hold up to US$120,000 worth of U.S. estate taxable assets without any U.S. estate tax liability as long as the assets are held strictly individually (not in a joint account) and each individual's holdings do not exceed US$60,000 in fair market value.

Can advise how do the investment savvy handle the estate tax?

Simple: don't invest in U.S. estate taxable assets if you (your dead body) want(s) to avoid U.S. estate tax.

Sorry my understanding so far is the estate tax is levied on stocks which are owned by foreign nationals after their demise. There is cap of $60000 and anything above will be levied at 40%. Is it correct or it doesn't matter whether alive or not, the estate tax is applicable?

Not correct. The current U.S. estate tax is 0% on the first US$60,000 of U.S. estate taxable assets then progressive marginal tax rates starting at 18% and rising to 40%. Your estate does not pay a flat 40% tax rate on U.S. estate taxable assets above US$60,000. The effective U.S. estate tax rate is always below 40% assuming the tax is paid in full and on time (no penalties or interest).

Estate tax depends hugely on whether the owner is alive or dead!

 

[BBCWatcher]

There are a couple more ways to avoid U.S. estate tax:

• Bequeath at least the U.S. estate taxable portion above US$60,000 directly to a U.S. citizen (or, some sources say, to a U.S. permanent resident; I'm not sure about that). Then your estate won't owe any U.S. estate tax, although the heir must report the inheritance if it's big enough. No U.S. estate or inheritance tax, though.
  • However, if you are a "covered expatriate" (a former U.S. citizen or former long-term U.S. permanent resident with a high enough net worth, or higher, who exited the U.S. tax system after a certain date) then any U.S. citizen-heir(s) will have to pay a special inheritance tax.
• Bequeath at least the U.S. estate taxable portion above US$60,000 directly to a bona fide U.S. charity — for example, to the New York office of Doctors Without Borders. The charity must be a 501(c)(3) charity, meaning it meets the IRS's definition. Then your estate won't owe U.S. estate tax.

You can have more than one U.S. citizen-heir and/or U.S. charity-heir.

If you want to bequeath your estate to me so that your estate will not pay any U.S. estate tax, I'm not opposed. Or (for example) specify in your will that the New York office of Doctors Without Borders gets $10,000 and BBCWatcher on HardwareZone gets the rest of your estate. That's fine, too.

 

[highsulphur]

Let my better half redeem and enjoy the money instead of funding NASA rocket..

She will essentially be committing tax fraud if she does that

 

[BBCWatcher]

She will essentially be committing tax fraud if she does that

You can strike the word essentially.

"Honey, I love you so much that I want you to commit tax fraud" is not a great estate plan! If you actually care about your heir(s), take care of them properly and legally.

Here's yet another legal way to avoid U.S. estate tax: give money to your heirs while you're still alive! (What a concept!) Then they can invest in a global stock index fund such as VWRA or ISAC (listed/traded in London), invest in a bond index fund such as MBH or CRPA, make a down payment on a home, pay for a niece's tuition at a great university, enjoy a nice dinner with you, start a new small business, donate to an excellent charity that helps prevent disease in Africa...lots of options!

 

[reddevil0728]

You can strike the word essentially.

"Honey, I love you so much that I want you to commit tax fraud" is not a great estate plan! If you actually care about your heir(s), take care of them properly and legally.

Here's yet another legal way to avoid U.S. estate tax: give money to your heirs while you're still alive! (What a concept!) Then they can invest in a global stock index fund such as VWRA or ISAC (listed/traded in London), invest in a bond index fund such as MBH or CRPA, make a down payment on a home, pay for a niece's tuition at a great university, enjoy a nice dinner with you, start a new small business, donate to an excellent charity that helps prevent disease in Africa...lots of options!

Wouldn’t help if heir predecease you

 

[Spirax]

Those millionaires just have to ensure redeem to cash before dying

 

[reddevil0728]

Those millionaires just have to ensure redeem to cash before dying

Don’t need to be millionaire to be subjected to it

 

[nipponguru]

My question seems odd after analyzing more. Since US Citizen himself is subjected to Estate Tax, an alien is not an exception. So decided to open multiple accounts on my and my better half's name and decided to maintain less than 60K on each of the name.

 

[reddevil0728]

My question seems odd after analyzing more. Since US Citizen himself is subjected to Estate Tax, an alien is not an exception. So decided to open multiple accounts on my and my better half's name and decided to maintain less than 60K on each of the name.

i don't believe it makes a difference, because it's on a per name basis

 

[BBCWatcher]

Those millionaires just have to ensure redeem to cash before dying

Two points:

1. Cash (in any currency) held at a U.S. broker is subject to U.S. estate tax.
2. How's that supposed to work? A lot of people die suddenly, without any warning. You can't assume death is like a TV drama, with plenty of time for the person on his/her deathbed to offer a long soliloquy to camera while his/her loved ones grab the laptop and log into a brokerage account. And try to get the funds out of the U.S. brokerage account before the soliloquy ends.

It's ridiculously easy to avoid U.S. estate tax legally if you're concerned about U.S. estate tax. Simply don't hold U.S. estate taxable assets in excess of US$60,000. (Or bequeath your U.S. estate taxable assets in excess of US$60,000 to me.)

My question seems odd after analyzing more. Since US Citizen himself is subjected to Estate Tax, an alien is not an exception.

U.S. citizens who die in 2025 have a U.S. estate tax exemption of US$13.99 million. In 2026 that figure will rise to US$15 million. That compares to the US$60,000 U.S. estate tax exemption that foreigners have.

There aren't too many people who die with estates worth in excess of US$13.99 million.

So decided to open multiple accounts on my and my better half's name and decided to maintain less than 60K on each of the name.

To be clear, the number of accounts (joint and individual) that an individual has doesn't matter for these purposes. The owner(s) of the accounts matter.

The U.S. estate tax computation is based on the total fair market value of all U.S. estate taxable assets that the decedent held individually or jointly on the day he/she died. (Joint accounts are nearly always measured based on the total account value, even if the individual who died is only 1 of 58 joint account holders or whatever.) Your estate cannot avoid U.S. estate tax by splitting (for example) US$100,000 worth of U.S. estate taxable assets into two accounts you hold (jointly or individually), each with US$50,000 worth of assets. But yes, you can give somebody else (such as a spouse) U.S. estate taxable assets which he/she then holds individually and separately (not a joint account with you). Each foreign individual gets his/her own US$60,000 exemption.

Singapore does not have any gift tax, but other tax jurisdictions might. And those rules might apply even for certain people living in Singapore. If for example your gift recipient happens to be Japanese, even as a former resident of Japan (within the past 10 years), Japanese gift taxes may apply.

 

[nipponguru]

Oh..Again apart from the equities I deal with, I have Investment Linked Policies under my name with other insurers having regular savings plan (RSP). Those ILPs involve funds which comprises S&P 500 stocks. Does it come it picture also in the calculation of 60K? If that is the case, I may not be able to hold any stock individually.

 

[reddevil0728]

Oh..Again apart from the equities I deal with, I have Investment Linked Policies under my name with other insurers having regular savings plan (RSP). Those ILPs involve funds which comprises S&P 500 stocks. Does it come it picture also in the calculation of 60K? If that is the case, I may not be able to hold any stock individually.

depends on the where the funds are domiciled.

is like u can hold irish domiciled ETFs but they hold individual us domicilied equities.

what matters is that you hold irish domiciled etfs, you are holding individual us domiciled equities.

hence in this scenario not counted.

 

[BBCWatcher]

Oh..Again apart from the equities I deal with, I have Investment Linked Policies under my name with other insurers having regular savings plan (RSP). Those ILPs involve funds which comprises S&P 500 stocks. Does it come it picture also in the calculation of 60K? If that is the case, I may not be able to hold any stock individually.

It depends on which fund(s) you're holding — where the funds are domiciled. U.S. domiciled funds are U.S. estate taxable. Non-U.S. domiciled funds — even those that happen to hold U.S. listed stocks — are not U.S. estate taxable (unless held by a U.S. person).

An example of the former is S27, the S&P 500 Index fund that's listed/traded on the Singapore Stock Exchange. S27 is actually a U.S. domiciled fund. CSPX, the S&P 500 Index fund that's listed/traded on the London Stock Exchange, is domiciled in Ireland.

 

[CrashWire]

Oh..Again apart from the equities I deal with, I have Investment Linked Policies under my name with other insurers having regular savings plan (RSP). Those ILPs involve funds which comprises S&P 500 stocks. Does it come it picture also in the calculation of 60K? If that is the case, I may not be able to hold any stock individually.

It depends on which fund(s) you're holding — where the funds are domiciled. U.S. domiciled funds are U.S. estate taxable. Non-U.S. domiciled funds — even those that happen to hold U.S. listed stocks — are not U.S. estate taxable (unless held by a U.S. person).

An example of the former is S27, the S&P 500 Index fund that's listed/traded on the Singapore Stock Exchange. S27 is actually a U.S. domiciled fund. CSPX, the S&P 500 Index fund that's listed/traded on the London Stock Exchange, is domiciled in Ireland.

I wonder if ILPs are exempt, since the US-domiciled funds are owned by the insurance companies themselves, who then pay out a lump sum in cash to the estate or beneficiaries.

Maybe this is something that'll be worth writing into the insurance companies to ask. They have in-house legal counsel who are better suited to advise on such matters, for free too, since their salaries would be built into the massive commissions and float the insurance firms earn.