US Situs Assets for Expats
Own US shares, ETFs, property or accounts while living abroad?
You may have a US estate tax issue without realising it.
Many expats assume US tax only matters if they are American, live in the US or file US tax returns.
But for estate tax, the question can be different.
The real question is not only:
Am I a US taxpayer?
It is:
Do I own assets that the US treats as US situs assets, and what could that mean for my family if I die while holding them?
This page explains why US situs assets matter for expats, what types of assets may need reviewing, and why investment, tax and estate planning should be considered together before problems arise.
You have the information. Now get advice on what it means for you.
This page can help you understand the key issues. But the right decision depends on your own pensions, investments, tax position, future plans and family circumstances.
If you are unsure what applies to you, or want to understand the best next step before making a decision, book a confidential introductory call with Josh Clancey.
US situs assets for expats
US situs assets are assets treated as situated in the United States for US estate tax purposes.
For non-US citizens who are nonresident for US estate tax purposes, US estate tax can apply to certain US-situated assets owned at death.
This can affect people who are not American, do not live in the United States and do not think of themselves as connected to the US tax system.
The issue is usually not where you live.
It is what you own.
Common examples that may need reviewing include US company shares, US-listed ETFs, US real estate, US retirement accounts, employer stock plans and certain US brokerage or custodial assets.
For many expats, the blind spot is that the investment account may sit on an offshore or international platform, but the underlying asset may still be US-situated.
That matters because the IRS states that an estate tax return may be required where a nonresident non-citizen dies owning US-situated assets with a fair market value above $60,000.
For globally mobile investors, that threshold can be reached very quickly.
A portfolio of US shares, US-domiciled ETFs, RSUs or US employer stock can create an estate planning issue long before the investor thinks of themselves as having a “US tax problem”.
The starting point should be simple:
If you are an expat with US-linked assets, review the situs, ownership, beneficiary, tax and estate planning position before your family has to deal with it after death.
Who should review US situs assets?
You own US shares or ETFs
Direct US company shares and US-domiciled ETFs may create US estate tax exposure, even if held on an offshore platform.
You are not a US citizen
Non-US citizens can still have US estate tax exposure if they own US-situated assets above the relevant threshold.
You live in the Middle East
Many expats in Dubai, Abu Dhabi, Qatar and Saudi Arabia invest through international platforms and may hold US assets without understanding the estate tax implications.
You have US retirement accounts or stock plans
Old 401(k), IRA, Roth, RSU, option or employer share plans should be reviewed alongside tax, beneficiary and estate planning.
Which assets may create US situs exposure?
US company shares
Direct shares in US corporations may be treated as US situs assets for estate tax purposes, even if they are held through an overseas investment platform.
US-domiciled ETFs and funds
Many popular ETFs are US-domiciled. An expat may see a global equity fund on a platform but still need to confirm whether the fund itself is US-domiciled.
US real estate
Property located in the United States is a core US situs asset and may need specific US estate, legal and tax planning.
US brokerage or custody accounts
The treatment of cash, securities and account assets can vary depending on the institution, asset type and legal ownership. The account location should not be reviewed in isolation.
US retirement accounts
401(k), IRA and Roth accounts should be reviewed for tax treatment, beneficiary nominations, estate administration and cross-border planning.
Employer stock plans
RSUs, shares, options or employee stock purchase plans linked to US companies may create US tax, estate and reporting questions for internationally mobile employees.
US business or partnership interests
Business, partnership or private investment interests connected to the United States can create more complex situs, tax and estate planning issues.
Still scrolling? It is probably time to book a call.
Reading can help you understand the issues. But it cannot tell you what is right for your pension, retirement plans, investments, tax position or family circumstances.
If you are facing a financial decision, or simply know your current arrangements need reviewing, a conversation is usually more useful than another hour of research.
Why the $60,000 US estate tax threshold matters
The US estate tax issue can surprise expats because the threshold for nonresident non-citizens is much lower than many people expect.
US citizens and US domiciliaries have a much larger federal estate tax exemption.
But that is not the same position for someone who is neither a US citizen nor domiciled in the United States for US estate tax purposes.
For nonresident non-citizens, the IRS states that Form 706-NA may be required where the fair market value at death of US-situated assets exceeds $60,000.
That does not mean every estate automatically pays US estate tax.
The final position can depend on the asset type, deductions, treaty position, domicile, ownership structure, debts, local estate rules and the advice taken.
But the filing threshold itself can be a major administration issue.
For an expat family, this can create several problems:
- the family may not know the assets are US situs
- the executor may not know a US estate tax return is required
- the investment platform may freeze assets after death
- beneficiaries may face delays accessing investments
- professional advice may be needed quickly
- tax, probate and estate administration may involve more than one country
This is why the issue should be reviewed during life, not after death.
A US situs asset review is not just about tax.
It is also about making life easier for the people who would have to deal with your estate.
What expats should check
Are you a US person for tax purposes?
Confirm whether you are a US citizen, green card holder, US tax resident, nonresident alien or nonresident non-citizen for estate tax purposes. These categories can lead to very different outcomes.
What US assets do you own?
List all US shares, US ETFs, US funds, US property, US retirement accounts, RSUs, options, employer stock and US business interests.
Where are the assets actually domiciled?
Do not rely only on the platform location. A non-US platform can still hold US-domiciled funds or US corporate shares.
What is the total US situs value?
Calculate the current value of US-situated assets and check how close you are to the $60,000 estate tax filing threshold for nonresident non-citizens.
Is there a treaty position?
Some countries have estate tax treaties with the United States, but treaty relief is country-specific, technical and not automatic.
Who owns the assets?
Review whether the assets are owned individually, jointly, through a company, trust, pension, retirement account or investment platform.
Are beneficiary nominations up to date?
US retirement accounts, employer stock plans and certain investment accounts may pass under beneficiary nominations, so these should be checked alongside wills and estate planning documents.
What happens if you die abroad?
Review who would administer the estate, what documents they would need, whether assets could be frozen and whether US, UK, UAE or other jurisdictions may be involved.
Planning routes to consider
Review the asset location
Understand whether the issue is the platform, the underlying asset, the wrapper, the custodian or the legal ownership structure.
Review the exposure size
The $60,000 threshold can be reached quickly by expats holding US shares, ETFs, RSUs or employer stock.
Check fund domicile
Irish-domiciled or non-US-domiciled funds may be relevant for some investors, but the right structure depends on tax, cost, platform and investment suitability.
Coordinate professional advice
US situs planning often needs financial planning, US tax advice, local tax advice and estate planning to work together.
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US situs assets for expats FAQs
Important information
This page is for general information only and does not constitute personalised financial, tax, legal, estate planning, pension, investment or US tax advice.
US estate tax, gift tax, income tax, treaty treatment and asset situs rules are complex. The position can depend on citizenship, domicile, residence, asset type, ownership structure, account provider, treaty position, beneficiary nominations and personal circumstances.
The $60,000 threshold referred to on this page is based on IRS guidance for nonresident non-citizens and US-situated assets. Filing requirements, tax liability and available deductions or treaty relief depend on the facts of the case.
Specific advice should be taken from a suitably qualified US tax adviser, estate planning lawyer and financial planner before making decisions about US assets, investment funds, retirement accounts, trusts, company structures or estate planning.
Tax rules can change.
Investing involves risk. Investment values can fall as well as rise, and you may get back less than you invest.
