Us Citizen W/non-us Citizen Thai Wife

[Spaniel]

Can anyone tell me what the US tax law is concerning inheritance tax for a non-US citizen?

[lanny]

My expertise is with income taxes, not estate taxes, but I do have a little knowledge.

The basic rules is that there is an unlimited marital deduction, i.e. anything left to a spouse is deducted from the total estate in calculating the taxable amount. However, this does NOT apply to a non-resident, non-citizen spouse.

What this means is that all property left to a spouse is taxable to the estate. You can gat around this by leaving the property in a trust that restricts the spouse's ability to take the money out of the U.S. So, even if you do create such a trust, anything already in Thailand (or any other country) would be subject to U.S. estate tax.

Of course, under current law, you don't have to worry about anything if the total estate is less that $1million. Or better yet, die in 2010, when the tax goes away --just don't linger until 2011 when it comes back.