Own Assets in US? Don't Overlook Estate, Gift Taxes

Using US life insurance can also help bridge estate tax gaps and optimize planning

- Suraj Malik & Monika Wadhwa

Indians typically view the US as a stable destination and a land of opportunities. In today's interconnected world, where global mobility is the norm, more Indians have ties to the US, not just family but also business, financial, and other interests. Indian families that have members based in or are citizens of the US face unique and complex estate and tax planning needs, and ignorance often leads to high taxes and penalties. Therefore, careful planning is essential to minimize potential tax liabilities.

Indians who own assets in the US could be subject to US estate taxes, regardless of their citizenship or residency status, even if they live outside the US.

"US persons" (that is, US citizens and resident aliens) are subject to gift, estate, and generation-skipping transfer taxes on their worldwide assets. Others who are non-US citizens, first have to determine whether they are considered a resident alien or a non-resident alien. This classification depends on factors such as time spent in the US, visa status and personal connections, among others. This is important since non-resident aliens are only subject to gift and estate taxes on US-located assets (commonly referred to as US situs assets).