British Expatriate Network

Quote:

From Yahoo News
By MARY DALRYMPLE, AP Tax Writer

WASHINGTON - The House voted Wednesday to permanently end taxes on inherited estates, rejecting a Democratic effort to retain the tax for the country's wealthiest families.

"What we're talking about here is fairness to families," said House Speaker Dennis Hastert, R-Ill. "They ought to have the comfort and relief to pass that business on to the next generation, to their children and to their grandchildren."

The bill, passed 264-163, would permanently abolish taxes on estates and reduce revenue by $162 billion through 2013. A law passed in 2001 eliminates the tax in 2010, only to resurrect it a year later, a quirk forced by Senate rules designed to prevent lawmakers from deepening budget deficits

Does anyone here work for HR Block?
Does this affect the estate of a foreign spouse? or do they still get taxed to the eyeballs on a US spouses death?

It isn't a foreign spouse's estate that is affected - it is when the foreign spouse is the beneficiary that taxes are paid. The reason being that it is assumed that an alien will leave the country with US-generated wealth. If you don't plan to leave the US, it is easy enough to set up a simple trust where you basically promise to keep the money on US soil.

The spousal exemption is a perk, more than anything, as the US government will get their money on the death of the second spouse. In the case of a foreign spouse, they get half their money when the first spouse dies, and half when the second dies (simplistically-speaking, of course).

I don't know how the new law will affect a foreign beneficiary, as there is the issue of leaving the US with US-generated wealth, for it to be spent overseas and not trickle back into the US economy.

I'm not a Democrat, but I must say, I would have supported them on this issue. It seems reasonable to me to tax the estates of millionaires and billionaires. I can also see the rationale behind the foreign spouse issue too.

British Expatriate Network

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