One of the most significant reasons why citizenship status matters in estate planning is the tax treatment of estates, particularly when it comes to federal estate and gift taxes. U.S. citizens and permanent residents (green card holders) benefit from the unlimited marital deduction, which allows them to transfer assets to a U.S. citizen spouse without incurring estate taxes. However, non-citizen spouses do not automatically qualify for this benefit, meaning that transfers above the federal exemption amount can be subject to substantial taxation. To address this issue, many estate plans for non-citizen spouses incorporate a qualified domestic trust (QDOT), which allows the estate to defer taxes until the surviving spouse receives distributions from the trust. Without this planning tool, a surviving non-citizen spouse could face unexpected financial burdens due to immediate estate tax liabilities.
Author Bio

Brenton C. McWilliams
Brenton C. McWilliams is an attorney serving clients in Orange Beach, Gulf Shores, Foley and Daphne. Mr. McWilliams also serves clients throughout Baldwin County, Mobile County and the rest of the State of Alabama. Prior to opening his firm in Orange Beach, Mr. McWilliams was a partner in one of Tuscaloosa, Alabama’s oldest law firms concentrating in real estate, estate planning, probate and business needs. Mr. McWilliams has previously served as the city attorney for a local municipality and was appointed as a Deputy Attorney General for the State of Alabama. Mr. McWilliams is admitted to practice law before all courts in the State of Alabama, as well as the U.S. District Court for the Northern District of Alabama.
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