# US Estate Tax: The US-Situs Trap for Non-Residents > Non-residents face only a $60,000 estate tax exemption on US-situs assets (US stocks, real estate), with rates up to 40%. How the trap works and treaty relief. Author: Мария Плотникова — юрист, Family Office (https://wiki.private.law/authors/plotnikova) Last modified: 2026-07-05T08:35:00.000Z Canonical: https://wiki.private.law/en/us-estate-tax Topics: structures Jurisdictions: usa Semantic tags: company --- ## Concept For a non-citizen who is not a US resident, the US estate tax is unforgiving. Only $60,000 of US-situs property escapes the tax; everything above that is taxed on a graduated scale that tops out at 40%. A US citizen or domiciliary, by contrast, has a $15 million exemption in 2026, made permanent by the 2025 tax act and indexed for inflation thereafter. The same death and the same assets can carry a 250-fold difference in the shielded amount, turning on one question: where the deceased was domiciled. > 🍓 What matters is situs, not where the heirs live: US real estate and shares in US companies are taxed at death even when the owner never set foot in the country and held everything through a foreign broker. ## What Counts as US-Situs The catalogue of US-situs property is broad. It takes in US real estate, including a home held through a US LLC; tangible things physically located in the country; shares of US corporations, wherever the certificate or the brokerage account happens to sit; US-domiciled mutual funds and ETFs; and US retirement accounts. Shares of US companies are the trap people walk into without noticing, because holding them through a foreign broker does nothing to move their situs. ### What Usually Escapes the Trap Several categories sit outside the net. Bank deposits not tied to a US business, debt that qualifies for the portfolio-interest exemption, and the proceeds of life insurance on the deceased's own life are generally not US-situs. Nor are shares of a foreign company, even one whose only asset is a Manhattan apartment, which is the whole logic of the blocker structure. The classifications are technical, and the line between taxable and exempt is easy to cross by accident. > ⚙️ The $60,000 threshold is fixed in the statute, never indexed, and unchanged for decades. The estate files Form 706-NA within nine months of death, and it has to file once US-situs assets exceed $60,000 even if a treaty later removes the tax. ## Estate and Gift Tax Treaties > 🔗 **Related** > [domicile](https://wiki.private.law/en/domicile-residence-succession) The US has [15 estate and gift tax treaties](https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international). Seven of them, with the United Kingdom, France, Germany, Japan, Australia, Austria and Denmark, reach both estate and gift tax; the rest, including Italy, the Netherlands, Switzerland and Ireland, cover estate tax alone, while Canada's relief sits inside its income tax treaty. A treaty can swap the $60,000 figure for a slice of the full US exemption, prorated by how much of the worldwide estate is US-situs, or shift the test from situs to domicile. Whether the deceased's country holds such a treaty often changes the bill more than any structure does. ## How to Protect > 🔗 **Related** > [Offshore companies](https://wiki.private.law/en/offshore-companies) · [Succession planning](https://wiki.private.law/en/succession-planning) · [Applicable law and Brussels IV](https://wiki.private.law/en/succession-applicable-law) · [Trusts and inheritance tax](https://wiki.private.law/en/trusts-inheritance-tax) · [Life insurance as a succession tool](https://wiki.private.law/en/life-insurance-succession) · [holding structures](https://wiki.private.law/en/holding-structures) > 🔗 **Related** > Offshore companies · Succession planning · Applicable law and Brussels IV · Trusts and inheritance tax · Life insurance as a succession tool The usual toolkit is structural. US stocks and real estate are held through a foreign company or a layered blocker, so that what the estate owns is shares of a non-US entity rather than US property. Portfolios move from US-domiciled ETFs to non-US ones, often Irish-domiciled UCITS funds that track the same indices without carrying US situs. Life insurance, partnerships and debt secured on US real estate each have their place. These structures have to be built while the owner is alive, because the executor cannot re-cut situs after death. > ⚠️ A foreign investor sitting on US shares in an ordinary brokerage account can leave heirs facing 40% tax on everything above $60,000. It is the most common mistake in cross-border portfolios, and the broker usually raises it only after the death, when little can be done. > 💡 The blocker is usually a single offshore company that owns the US assets, so the estate holds foreign shares instead of US property. See offshore companies and holding structures. ## Lifetime Gifts Follow a Different Map > 🔗 **Related** > [given away during life](https://wiki.private.law/en/gift-tax-lifetime-gifting) Gift tax for non-residents runs on a narrower map than estate tax, and the gap is an opening. During life, a non-resident is taxed only on gifts of US real estate and tangible things physically in the country. Gifts of intangibles fall outside US gift tax altogether, and that includes shares of US corporations. The very shares that would face up to 40% if they passed through the estate can often be given away during life with no US gift tax. The transfer has to be genuine and complete, and the donor's home-country rules and any US income tax on the disposition still apply. > 💡 A non-resident can pass US company shares to children during life with no US gift tax, while the same shares held until death attract estate tax. The split between the two transfer taxes is one of the few clean levers in this area. ## Filing and the Release of Assets The compliance side outlasts the planning. An estate with more than $60,000 of US-situs assets files [Form 706-NA](https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states) within nine months of death, and files even when a treaty erases the tax. Before a US bank, broker or transfer agent releases a deceased non-resident's assets, it normally waits for an IRS transfer certificate on Form 5173, issued once the Service is satisfied the estate tax position is settled. In practice that can freeze an account for the better part of a year, which is its own argument for holding US assets through a structure that never enters the US clearance machinery. ## Where the Rules Are Heading > 🔗 **Related** > [Succession planning](https://wiki.private.law/en/succession-planning) · [Applicable law and Brussels IV](https://wiki.private.law/en/succession-applicable-law) · [Trusts and inheritance tax](https://wiki.private.law/en/trusts-inheritance-tax) · [Life insurance as a succession tool](https://wiki.private.law/en/life-insurance-succession) · [Lifetime gifting and US gift tax](https://wiki.private.law/en/gift-tax-lifetime-gifting) · [Holding structures](https://wiki.private.law/en/holding-structures) · [Inheritance tax map](https://wiki.private.law/en/inheritance-tax-map) The 2025 tax act set the citizen and resident exemption at $15 million from 2026 and made it permanent, indexed to inflation from 2027. For non-residents nothing moved: the $60,000 figure stays frozen, so the distance between an insider and an outsider only grows. The drift toward financial transparency, CRS reporting and registers of beneficial owners changes who can see an asset, not where it sits, so it leaves the estate tax exposure untouched. The planning stays what it has always been: structural, done in advance, and built around situs rather than disclosure. > 🍓 US estate tax for non-residents turns on two things: the situs of each asset and timing. A foreign holding company, non-US funds and lifetime gifts of intangibles move value off US soil before death. Once the owner is gone, the $60,000 ceiling and the 40% rate are fixed, and the structure can no longer be built. **🧭 Check your case**: [Inheritance Navigator](https://wiki.private.law/en/legacy) — an interactive map of your case: applicable law, forced heirship and taxes for your country pair. This material is for informational purposes only and does not constitute individual legal advice. --- ## Factual claims - The US has 15 estate and gift tax treaties. - The 2025 tax act set the citizen and resident exemption at $15 million from 2026 and made it permanent, indexed to inflation from 2027. - 🧭 Check your case: Inheritance Navigator — an interactive map of your case: applicable law, forced heirship and taxes for your country pair.