Impact of Estate Tax Reform on Multinational Families


Tax reform bills are currently making their way through the House of Representatives and Senate that could result in the most comprehensive tax reform in decades. Instead of immediately repealing the estate and generation skipping transfer taxes, the House bill would phase them out over the next six years. This would start by doubling the current, inflation-adjusted $5 million exemption to $10 million next year. There is no repeal under the Senate bill.

Nevertheless, one must still be a tax resident to qualify for the increased exemption. Foreigners remain limited to a paltry $60,000 exemption for their U.S. assets. The House bill also includes a reduction in the gift tax rate to 35% (but no repeal), so all gifts will still need to be planned carefully, including from foreigners to US persons. Distributions from qualified domestic trusts created to avoid taxes on transfers to non-citizen spouses would still be subject to taxation for at least an extra ten years until 2034. Neither proposal expressly removes the “succession tax” that applies when US persons receive gifts or inheritances from certain US citizens and residents who had expatriated.

Again, substantial changes will mostly likely be made as the House and Senate bills are passed and reconciled before being presented to the President and becoming law. The biggest difference between the House and Senate bills in terms of estate tax reform right now is whether the estate tax will be repealed in 2024 or not at all. Even if the House version prevails, a new Congress might just as easily revoke the repeal at any time during the next six years before the repeal actually takes effect in 2024. We will continue to monitor the progress of this new tax reform and remain available as always to help reduce your tax burden to the legal minimum.

Contact us at 305-444-7662 or e-mail to schedule a confidential meeting in person, over the phone or via videoconference to learn more about how our multidisciplinary team of attorneys and accountants can help.

More than 20 years helping American and multinational families reduce their tax burden, protect their businesses and assets from legal risks, and plan for the eventual transfer of their wealth.