Non-US residents holding US stocks are liable to US estate tax of 40%!

"U.S. Estate Tax

Certain assets located in the United States which are beneficially owned by non-U.S. citizens or residents are subject to estate tax at graduated rates. Such assets include certain types of securities held in a brokerage account which were beneficially owned by the deceased person at the time of death. As for joint accounts, the surviving joint tenant will have the burden of proving his/her respective contributions in order to determine the amount subject to tax.

Investments which are subject to U.S. estate tax:
• Stock issued by U.S. companies
• U.S.-registered mutual funds (including money market funds)

Investments which are NOT subject to U.S. estate tax:
• Stock issued by non-U.S. companies
• Non-U.S.-registered mutual funds
• Bonds and commercial paper issued by any U.S. or non-U.S. issuer (provided interest on such bonds or commercial paper is exempt from withholding tax as described above)
• U.S. Treasury securities
• U.S. government agency securities"

https://international.schwab.com/public/file/P-6133620/US_Tax_Est_Disclosure_to_NonUS.pdf
 
Re: "To avoid this estate tax, one can own these US situs assets in a foreign trust or company rather than in their personal name. By doing so, the shares of the company or trust rather than the actual asset automatically pass to the beneficiaries, meaning there is no estate tax."

My understanding is if the US situs assets are held by a foreign company then no US estate tax. With a trust ( foreign or domestic) if the trust is irrevocable then no US estate tax, It the trust is revocable then the US estate tax is owed. The same applies to foreign foundations.

The IRS treats revocable trusts as flow through (disregard) entities. Be careful with revocable trusts. The best option for a NRA to avoid US estate tax is to hold the US situs assets in a foreign company. The download is of this option is;

(1) if the NRA lives in a double taxation treaty country, then the reduced tax treaty rate applied to interest /dividends is lost

(2) It is very hard to find a US broker (other than IB) to open a brokerage account for a foreign corporation. Lightspeed may open a brokerage account but you need to pay monthly data fees as a professional trader.

(3) I have never been able to find a US bank that will open a bank account for a foreign corporation that does not conduct business in the US.
 
There are two things that are 100% certain in life. One is that a person will die and the other is that person will pay taxes. For first one I am not sure.
 
Maverick2608 said:
"The biggest thing to keep in mind though is that non-US residents holding US assets (including shares, ETFs or property) are liable to US estate tax (up to 40%).

If you are a non-US resident you should try to hold stocks based outside the US. There are ETFs that trade US stocks that are domiciled outside the US.

There is big exemption for US residents from estate tax (5.45 million) but only $60,000 for non-U.S. residents.

It is nuts and it is amazing that this isn’t more widely known. It has nothing to do with whether the brokerage is based in the US or outside. It is about where the assets (i.e. the company that the shares are in) is domiciled. Although note, money on deposit in a US bank is not considered to be US “in situ” but money in a US brokerage is.

IRS link: https://www.irs.gov/individuals/int...s-with-us-assets-must-file-estate-tax-returns
Deloitte: https://www2.deloitte.com/content/d...rules-for-resident-and-nonresident-aliens.pdf"

The above excerpt is taken from this link:
https://www.quora.com/What-is-the-b...ctable-companies-allow-International-accounts

My comment: WTF!?
More...

Here is the comprehensive guide to estate and gift taxation of greencard holders and nonresident aliens.

https://probatestars.com/estate-and-gift-tax-chart-for-non-us-persons-greencard-holders-and-nras/
 
I’m trying to open a trading account from Canada in the USA ; I was thinking of forming an LLC and trade though there cause taxes are way to high in Canada and if I can get the llc in the right state I avoid a lot of taxation ; any suggestions ?
 
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