I want to invest in Vanguard's S&P 500 ETF. I am not a U.S citizen, but I'm married to an American woman (she got a passport but no SSN) and we are not living in the U.S. and got no other assets in the U.S

What are the chances of me paying inheritance tax if I die and still got shares? What is the best thing to do in my case (for example - who should the account owner be? any other things I should do?)?

  • 2
    I doubt she has no SSN. If you are an American citizen, you have to have an SSN, alone to pay taxes.
    – Aganju
    Jan 2 '20 at 12:47
  • but the US is making citizens to pay taxes even when they're not working in the US and thus paying double tax to both the US and the country the person actually lives in Jan 2 '20 at 13:35

Long story short, if you are a nonresident alien (i.e., not a US citizen and not living in the US), you are subject to US Federal estate tax (the US name for inheritance taxes) only if your US "situs" assets exceed $60,000. Shares issued by a US corporation (including "regulated investment companies" like Vanguard's) would probably constitute US situs assets.

Since your wife is a US citizen, if in your will you leave the shares to her, your estate will have unlimited "marital deduction" which will essentially eliminate any estate tax.

If your country has an estate tax treaty with the US, some more lenient rules may be applicable.

Some people (usually with significant assets) make all US investments through a non-US corporation which generally avoids the issue.

And, totally unrelated, your wife should get an SSN....

  • I'm asking since as I understand, the tax is almost never being applied even when according to the law it CAN be, and that there were only about 200 cases in which this tax was applied for a nonresident alien ever. Also, why should she get SSN if we're not living in the US? Getting it seems to cause alot of headache with paying taxes to both the US and the country we're already living in Jan 2 '20 at 13:34
  • @YonatanNir - It's a very legitimate question, though I'm not sure where you get your statistics from. For example, for the years 2009-2011, almost 2,000 NR estate tax returns were filed (irs.gov/pub/irs-soi/13essprbulnonresaliens.pdf). As to the SSN, it's a totally different issue (and, if you're interested, you should post it as a separate question), but I am fairly confident it's well worth whatever headaches are involded (both for her and you). Jan 2 '20 at 13:50
  • If you want to answer... money.stackexchange.com/questions/118711/… Jan 2 '20 at 14:02
  • @YonatanNir - Will check, but are we done with this question? Jan 2 '20 at 14:04
  • I'd like to keep it open for another day or so since the answer here mostly involves with the regulation, but not about the chance itself if will be aplied Jan 2 '20 at 14:07

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