Foreigners are normally subject to tax only on their U.S. income and assets, unless they are considered residents for tax purposes. A myriad of complex tax laws determine when a foreigner becomes a “tax resident” for income tax purposes, thus subjecting their worldwide income to U.S. income taxation. A separate but equally complex set of laws determines when a foreigner becomes a resident for estate, gift and generation skipping transfer tax purposes, thus subjecting their worldwide assets to taxation when transferred during life or upon death. A foreigner may become a tax resident for purposes of either tax, all these taxes, or none; whether or not they have established permanent residence for immigration purposes. Our methodology is used to navigate through these complex tax laws in order to help clients plan ahead and determine what can and should be done to maximize legal advantage, minimize tax and manage risk prior to establishing tax residency and/or transferring wealth to a family member who already is a tax resident. Depending on how far along the client has come, we also assist in implementing those legal options we can identify the options that remain at that juncture. If we determine tax residency has already been established, we help them understand and resolve any non-compliance with minimal taxation, penalties and criminal exposure.
Of course, tax issues do not occur in a vacuum. We are often called upon to assist our inbound clients with other legal and business issues such as:
- Choosing and creating the optimal legal structures for LLCs and other business entities
- Making offers to purchase real estate that become legally binding purchase contracts
- Determining legal rights and obligations contained in Letters of Intent and Asset/Stock Purchase Agreements used in connection with buying an existing business
- Formalizing legal relationships with partners and joint venturers
- Updating onshore trust and estate planning to provide for an unexpected death or incapacity occurring while in the U.S. and subject to domestic jurisdiction
- Coordinating with immigration counsel to avoid premature tax residency without jeopardizing the immigration process
- Domesticating or restructuring obsolete “offshore” legal structures
- Pitfalls of joint ownership of assets and bank accounts
- Estate planning for elder family members who are not immigrating to the U.S.
- Planning for U.S. beneficiaries of foreign trusts and foreign beneficiaries of U.S. trusts
- Asset protection planning for U.S. assets and income streams
Foreign Trust Planning for U.S. Beneficiaries
Whenever a foreign trust has or might have U.S. beneficiaries or assets, the trustee, the beneficiaries, and even in some cases the persons who create or contribute assets to the trust, may each be subject to U.S. tax and reporting obligations. We develop strategies for minimizing any U.S. exposure associated with a foreign trust while helping to accomplish the personal and business objectives of international families. Existing offshore trust structures are also evaluated to develop recommendations aimed at identifying and reducing any U.S. tax exposure.
Foreign Investment in U.S. Businesses or Real Estate
Owning U.S. real estate or businesses exposes foreigners to a variety of U.S. tax and legal issues during the acquisition, operation and ultimate disposition of the investment. The consequences of failing to plan ahead include being subject to U.S. estate taxes upon the foreigner’s death, costly probate or guardianship proceedings, withholding taxes being levied when funds are repatriated from the U.S., disqualification for preferential income tax rates, and inability to deduct expenses associated with the investment. Even vacation property ownership must be carefully structured to reduce tax and legal exposure. Our assistance goes beyond tax advice to cover issues of business and real property law, including the issuance title insurance and real estate closing services.
Estate Tax Planning for Non-Citizen Spouses
Transfers from one spouse to another, whether upon death or during life, are subject to taxation when the other spouse is not a U.S. citizen.
Estate Tax Planning for Multinational Families
Families whose members reside in different countries are faced with additional challenges when planning for the proper administration of their assets as they are passed from one generation to the next. We work with foreign counsel to understand the family’s short and long term objectives and implement a legal structure that will function as desired in every applicable legal jurisdiction while minimizing the worldwide effective tax impact.
Servicio completo en español
Tenemos clientes de todas partes del mundo, y estamos especialmente equipados para proveer servicios, tanto a empresas privadas como a individuos con patrimonios importantes, que prefieren comunicarse totalmente en español con sus consejeros profesionales. Nuestros clientes de América Latina disfrutan de un servicio bilingüe y bicultural en todo momento desde el primer contacto con nuestro bufete.
Contact us at 305-444-7662 or e-mail Ed@AristaLaw.com 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.