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Non-US investors who have cash in their U.S brokerage accounts, say Interactive Brokers, will be subjected to U.S estate tax. What are some securities, ETFs that are close to cash that these foreign investors can purchase to minimize the risk exposure to U.S estate tax?

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Securities and ETFs are also subjected to Estate Tax.

Some ways:

  1. Draft a "Transfer on Death" instruction to the broker, that triggers a transfer to an account in the beneficiary's name, in most cases avoiding probate. If the broker does not support it, find another broker.

  2. Give your brokerage and bank password/token to your beneficiary. Have him transfer out holdings within hours of death.

  3. Create a Trust, that survives even after death of an individual.

P.S. ETF is treated as Stock (a company that owns other companies), regardless of the nature of the holdings.

P.S.2 Above suggestions are only applicable to nonresident alien of the US.

  • Where do you get an exclusion for Treasury bonds? The (online) instructions for 706-NA at 'Debt obligations within U.S.' includes 'debts of ... the United States ....' – dave_thompson_085 Feb 23 '17 at 5:44
  • @dave_thompson_085 sorry I mixed up Nonresident Withholding and Nonresident Estate. – base64 Feb 23 '17 at 6:25
  • @dave_thompson_085 on second thought, I do recall that Treasury Bonds are exempt from both income withholding and estate tax. I cannot remember the official documentation, but here is an unofficial reference schwab.com.hk/public/file/P-6133620/… – base64 Feb 23 '17 at 6:37

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