Can anyone enlighten me to the law regarding assets of an Alien resident please? My husband and myself are here on E2's. I have heard that if something happened to us both the american government would take 60% of our assets. We own a business and a home here and have two sons. Any input would be appreciated. Thanks.
Irene
As I understand it
There are inheritance laws in the US that basically taxes the estate of a deceased person. However, the goal is only to tax the same money once in each generation, therefore a spouse can inherit free of tax. Basically, it is deferring taxes on the marital wealth until the second spouse dies.
In the case of an alien surviving spouse, the US govt assumes that they will take this US-created wealth out of the US and return to their home country. This is especially true if you are in the US on a dependent visa, as you pretty much have to return home on the death of your spouse. If you take the money out of the country, when you die it passes onto the next generation untaxed by the USA. Since they assume the wealth was generated in the US, they, quite reasonably, want some of it back and so they tax it immediately.
This does sound quite grim, but there are ways to minimise the tax burden. You are only taxed on your spouse's assets, therefore if you own your home jointly, you won't be taxed on your portion, for example. Ditto for investments, bank accounts etc. With the help of an estate law specialist, you can set up your will with a view to minimising taxes. If you do this, you can have a tax-free inheritance of $650,000 (and I think your sons could have this too, but I'm not sure) - this may have increased to $1,000,000 by now.