Beware of Leaving a Big Tax Bill Behind with Your Surviving Spouse

Have you thought about how your spouse might be impacted if you were to pass away first?

If you are part of a couple, it is just as important to plan for spousal protections as it is for your own estate planning. If you and your partner together are wealthy enough to be exposed to the federal estate tax, some advanced planning with the help of an experienced Pasadena estate planning attorney can help you to minimize your tax obligations or avoid them entirely, but you need to take action now.

One common situation in which this comes up is when one or both spouses are resident aliens. In general, resident aliens and American citizens are covered by the same federal estate tax rules. This means that if the estate is worth $11.4 million or less, no federal estate tax is due.

You might be able to gift a limited amount to your spouse while still living, provided that he or she is a US citizen without a federal gift tax bill. But there are issues that emerge with a non-citizen spouse. The unlimited marital deduction privilege is not available to a spouse who is not a US citizen, regardless of whether or not you as the person passing it on are a citizen.

Your spouse can become a citizen, you can set up a qualified domestic trust, or you can gradually reduce your taxable estate, are some of the most common steps made to address these concerns.

Are you stuck on how to best leverage your estate planning documents and tools? If this describes you, sitting down with an estate planning lawyer in Pasadena can help you figure out what works for your family whether or not your spouse is a U.S. citizen.

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