Tag Archives: citizenship

Citizenship Can Impact Asset Transfers Between Spouses

Large asset transfers are taxable in the United States. We have a federal estate tax that carries a 40 percent top rate, and there is also a federal gift tax. The gift tax and the estate tax are unified, so they have the same rate. There is a relatively large unified lifetime exclusion that you can use to facilitate tax-free asset transfers up to a certain point. For the rest of 2015, the amount of this unified exclusion or credit is $5.43 million. Inflation adjustments are applied on an annual basis, so when a new year rolls around, you may see a slightly larger figure. Asset transfers that exceed the amount of this exclusion would potentially be subject to the federal estate tax, with one exception. If you are legally married in the eyes of the law, and you are married to an American citizen, you can use the unlimited marital deduction to transfer unlimited assets to your spouse free of taxation. Why would the citizenship stipulation be in place? Giving everything to your spouse tax