If you are living in the U.S. on a green card, a work visa, or as a permanent resident who has not yet become a citizen, estate planning works differently for you than it does for U.S. citizens. The gaps in protection are significant enough that they can affect your family’s financial security in ways most people never anticipate.
This blog is for non-U.S. citizens living in New York who want to understand how U.S. estate tax applies to them in 2026, what happens when one spouse is not a citizen, and what legal structures exist to protect families in mixed-citizenship households. By the end, you will have a clear picture of where the risks are and what planning actually looks like for someone in your situation.
How the U.S. Taxes Non-Citizens on Their Estates
The first thing to understand is that U.S. estate tax treatment depends entirely on how you are classified at the time of death and that classification is not simply about citizenship.
If you are a resident alien, meaning you hold a green card or meet the substantial presence test and are domiciled in the U.S., you are taxed the same way U.S. citizens are. Your entire worldwide estate is subject to U.S. estate tax, and you receive the full federal estate tax exemption, which as of 206 is $15 million per individual. For most resident aliens, the practical estate tax exposure is the same as for a U.S. citizen.
If you are a non-resident alien, meaning you were neither a U.S. citizen nor domiciled in the U.S. at the time of death, the rules are dramatically different. You are taxed only on U.S.-situated assets, however your exemption is just $60,000. That is not a typo. The contrast between $15 million and $60,000 is the single most important number in estate planning for non-citizens, and it catches families off guard constantly.
U.S.-situated assets subject to estate tax for non-resident aliens include:
- U.S. real estate and Tangible personal property physically located in the U.S.
- Stock in U.S. corporations; and
- U.S.-based retirement accounts, including IRAs and 401(k)s
The estate tax rate reaches up to 40% on amounts above the applicable exemption. For a non-resident alien with $500,000 in U.S. assets, the taxable exposure above that $60,000 threshold is both real and immediate.
Living in New York adds a layer of complexity. New York’s estate tax exemption for 2026 is $7,350,000. Unlike the federal system, New York has a “tax cliff.” If your estate exceeds this amount by more than 5% ($7,717,500), you lose the exemption entirely, and the state taxes the entire estate from the first dollar. For non-citizens living in New York, managing this threshold is vital to avoid a sudden 16% state tax bill.
What Happens When One Spouse Is Not a U.S. Citizen
Under normal U.S. estate tax rules, U.S. citizen spouses can transfer unlimited assets to each other free of estate tax. This is called the unlimited marital deduction, and is one of the most powerful tools in standard estate planning. When a surviving spouse is not a U.S. citizen, though, that deduction does not apply. Without planning, assets passing to a non-citizen surviving spouse are fully taxable at the first spouse’s death.
For a couple that has spent decades building a life together in Brooklyn, Queens, or Manhattan, this can mean an enormous and unexpected tax bill arriving at the worst possible moment.
This is where the Qualified Domestic Trust, commonly called a QDOT, becomes one of the most important tools in estate planning for non-citizens in mixed-citizenship marriages.
A QDOT allows a U.S. citizen or resident to pass assets to a non-citizen surviving spouse while deferring the estate tax that would otherwise be due immediately. The tax is not eliminated, rather it is deferred until one of the following occurs:
- The surviving non-citizen spouse dies
- A distribution of principal is made from the trust (income distributions are generally permitted without triggering tax)
- The trust ceases to qualify as a QDOT
To be valid, a QDOT must meet specific IRS requirements, including having at least one U.S. citizen or domestic corporate trustee, being established and funded before the estate tax return is filed, and for trusts holding more than $2 million in assets, meeting additional security requirements such as having a U.S. bank as trustee or posting a bond.
A QDOT is not just a tax planning tool. For many mixed-citizenship families, it is the structure that allows a surviving spouse to continue living on the family’s assets without facing an immediate financial crisis. Families navigating these questions alongside broader concerns about how foreign assets and U.S. law interact often find that multiple planning layers need to work together.
Do Tax Treaties Help Non-Citizens with U.S. Estate Planning?
The U.S. has income tax treaties with dozens of countries, but estate and gift tax treaties are far more limited. As of 2025, U.S. estate tax treaties exist with only a small number of countries, including the United Kingdom, France, Germany, the Netherlands, Australia, Japan, Finland, Sweden, Denmark, Greece, Ireland, Italy, South Africa, and Switzerland.
What these treaties can do for eligible families:
- Provide a higher estate tax exemption, sometimes equivalent to the full U.S. citizen exemption, prorated based on the share of worldwide assets held in the U.S.
- Reduce or eliminate double taxation where both the U.S. and a foreign country would otherwise tax the same assets
- In some cases, extend the unlimited marital deduction to a surviving spouse who is a citizen of the treaty country
What they don’t do:
- They do not apply automatically. Treaty benefits must be claimed, typically on the relevant IRS filing with proper disclosures
- They do not eliminate the transfer certificate requirement for non-resident alien estates
- They do not cover countries outside the treaty network, which includes Colombia, Mexico, China, India, and most of Latin America and Southeast Asia
For families from non-treaty countries, the standard $60,000 exemption and full estate tax rates apply. The only way to reduce that exposure is through advance planning through structures like a QDOT, a foreign trust, or holding U.S. assets through an LLC or other entity designed to reposition the asset for tax purposes.
For families who have already dealt with a loss and are now working through the U.S. process for the first time, understanding how transfer certificates and IRS filings fit into the larger picture is often the most urgent starting point.
What Non-Citizens Living in New York Should Do Now
The most common mistake we see is a couple who has built a life in the U.S. but relies on a “standard” estate plan. A generic Will does not address QDOT requirements, and a standard beneficiary designation on a 401(k) can trigger a massive tax bill for a non-citizen spouse.
Estate planning for non-citizens is not a variation of standard planning; it is a distinct legal discipline. You need a plan built around your immigration status, the location of your global assets, and the 2026 tax landscape.
The right time to address this is before a death, not after. Once assets are frozen and tax obligations are triggered, the options for your family narrow considerably.
If you are a non-citizen living in New York and want to make sure your estate plan actually reflects your situation, reach out to The Village Law Firm to schedule a consultation and book a call here.
FAQs
Does a green card holder need a different estate plan than a U.S. citizen?
In most cases, a green card holder who is domiciled in the U.S. is taxed the same way as a U.S. citizen and receives the same federal estate tax exemption. That said, green card holders face unique considerations around domicile, the treatment of assets in their home country, and what happens if they lose or give up their green card. A plan that accounts for those possibilities is worth having in place.
What is the estate tax exemption for non-resident aliens in 2025?
The federal estate tax exemption for non-resident aliens is $60,000 on U.S.-situated assets. This applies to individuals who were neither U.S. citizens nor domiciled in the United States at the time of death.
Can a non-citizen spouse inherit from a U.S. citizen spouse tax-free?
Not under standard rules. The unlimited marital deduction, which allows spouses to transfer unlimited assets to each other free of estate tax, does not apply when the surviving spouse is not a U.S. citizen. Assets passing to a non-citizen spouse are taxable above the applicable exemption at the first spouse’s death. A Qualified Domestic Trust (QDOT) can defer that tax, but it must be properly established as part of an advance estate plan.
