My father in law has an estate in VA worth about $500K and would like to leave it to the relative with the least tax impact.

He and his wife are GC holders and his wife does not live in the US. She is also not interested in the estate. My wife and I are G4 visa holders, while our children are US citizens (minors). We all live in VA.

He would like to know whether residency/citizen status has a US tax implication. If not, his preference is to leave the estate to my wife. And if it does, he would like to leave it to our children.

Please kindly advise. Thank you.

It sounds like your father in law is domiciled here in the U.S. (for estate tax purposes residency is based on domicile). As a U.S. resident, he can leave up to $2.0 million (for the year 2008) to anyone without the imposition of a U.S. estate tax (I assume that all of the property is here in the U.S.). His noncitizen status should not be an issue with an estate of $500,000.

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Originally Posted by IntlTax

It sounds like your father in law is domiciled here in the U.S. (for estate tax purposes residency is based on domicile). As a U.S. resident, he can leave up to $2.0 million (for the year 2008) to anyone without the imposition of a U.S. estate tax (I assume that all of the property is here in the U.S.). His noncitizen status should not be an issue with an estate of $500,000.

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Many thanks. Can I assume that the recipient (not taking into consideration any foreign taxes, if any) of the estate will also not be liable for taxes regardless of residency? (ie: if my wife, who is a G4 receives the assets) Thank you.

Yes. U.S. estate taxes are imposed are imposed on the decedent's estate and not on the person inheriting the assets. Some states may have inheritance taxes that impose tax on the person receiving the assets, but I believe that this is only a few states, if any.