Cross-Border & International Estate Planning (QDOT, Domicile, and Treaties)

Non-Citizen Spouse?

You Likely Need A QDOT

A citizen-to-citizen plan can use the unlimited marital deduction at the first death. Not so when the surviving spouse is not a U.S. citizen: the marital deduction is denied unless assets pass to a QDOT or the survivor becomes a citizen and meets strict timing/conditions.

QDOT Essentials (Plain English):

• Purpose: Defer estate tax at the first death while supporting your non-citizen spouse; tax occurs later (at distributions of principal or at the spouse’s death).

• Trustee Requirements: At least one U.S. trustee (often a bank/ trust company if assets > statutory thresholds) and, for large trusts, bond or letter of credit.

• Distributions: Income to spouse; principal generally triggers estate-tax withholding unless for hardship.

• Portability & GST: DSUE/portability rules are constrained in non-citizen contexts; we file Form 706, make QDOT elections, and coordinate GST if dynasty planning matters.

• Blended Families: Combine QTIP-like support for spouse with remainder locked for children you choose.

We often pair a QDOT with a CST (Credit Shelter Trust) to use the decedent’s exemption and shelter post-mortem growth, then funnel the rest through QDOT for marital deduction eligibility.

U.S. vs. Foreign—What’s Taxed?

If You Are U.S.-Domiciled (Transfer Tax):

• Worldwide assets subject to U.S. estate/gift tax, with unified exemption and annual exclusions; foreign tax credits or treaties may reduce double taxation.

If You Are an NRA (Non-Resident, Non-Domiciled for Transfer Tax):

• U.S. estate tax applies to U.S.-situs assets (e.g., U.S. real estate, certain tangible property in the U.S., stock of U.S. corporations), with only a small default exemption unless a treaty says otherwise.

• Gifts: NRA gifts of U.S. real/tangible property may be taxable; gifts of intangible property (e.g., stock of U.S. corps) by an NRA are generally not U.S. gift-taxable—but watch treaties and anti-abuse rules.

Treaties: Income-tax treaties ≠ estate/gift treaties. Some countries have transfer-tax treaties changing situs, exemptions, or credits. We check both.

Foreign Trusts, Foreign Gifts & Reporting (3520/3520-A)

• Received a large gift or inheritance from abroad? U.S. persons must often file Form 3520 when foreign gifts exceed thresholds.

• Named as grantor/beneficiary of a foreign trust? Ongoing 3520/3520-A filings may apply—with draconian penalties for late/missed filings.

• Pre-Immigration Planning: If moving to the U.S., we review existing foreign trusts, consider “check-the-box”/grantor status, and restructure before residency to avoid §684 gain recognition traps.

• Post-Mortem: Inheritances from a foreign trust carry special throwback rules; we model before distributions.

We build a compliance calendar with your CPA (FBAR, FATCA, 3520/3520-A, 8938, 709/706).

Retirement Accounts & Cross-Border Heirs

• U.S. IRAs/401(k)s flowing to non-U.S. heirs face withholding and treaty issues; we often route to an SRT (Stand-Alone Retirement Trust) with accumulation terms to control tax timing and protect beneficiaries.

• Foreign pensions and U.S. persons: we coordinate treaty treatment, PFIC exposure inside wrappers, and beneficiary designations.

Real Estate, the Jersey Shore, and Out-Of-State Property

Domestic Properties within the U.S.

Why We Call Out “The Shore.”
Shore homes (Monmouth, Ocean, Atlantic, Cape May) carry unique wrinkles: condos/HOAs, flood and windstorm coverage, seasonal rentals, multi-owner family usage, and bigger title/insurance scrutiny. Those factors often collide with estate planning—especially funding your Revocable Living Trust (RLT) and deciding what should land in a Credit Shelter Trust (CST) or QDOT at the first death. Getting this right keeps your family out of probate and out of fights over holiday weeks and repair bills.

Titling: RLT vs. LLC (Or Both).
For a personal-use shore home, we typically deed it directly into your RLT via Bargain & Sale Deed so it avoids probate and passes per your trust terms. If the property is heavily rented or you want liability separation, we may use an LLC for operations and have your RLT own the LLC membership interest (the RLT still avoids probate; the LLC helps with liability and bookkeeping). We’ll coordinate with your carrier to ensure the named insured matches reality (RLT or LLC), and with the HOA/condo board if approvals or certificates are needed.

Mortgages And Due-On-Sale.
Transfers of 1–4 family dwellings into a grantor’s inter vivos trust are commonly permitted by lenders, but we always confirm before recording—especially for second homes and investment properties. If an LLC is appropriate, we’ll discuss lender consent or refinancing options.

Insurance & Flood/Wind.
Shore properties often require NFIP flood and separate windstorm/named-storm coverage. After we retitle, we update the policies so the RLT or LLC is correctly listed as insured; otherwise claims can be delayed or denied. We also add the trustee as an additional insured where appropriate.

Condo/Co-Op/HOA Practicalities.
Condo associations typically require notice and an endorsement when the owner of record changes to a trust or LLC. Co-ops (less common at the NJ shore but present in some areas) transfer by stock and proprietary lease, not deed—we’ll handle the board package and ensure your RLT is recognized as the shareholder.

Rentals And Taxes.
If you rent the property, we help your CPA/EA keep the ledgers clean (trust vs. LLC accounts) and preserve any 1031 optionality in case of a future exchange. A grantor-type RLT usually preserves “same taxpayer” treatment; post-death, a CST owner changes the tax analysis, so we model sales timing with basis and estate goals.

Family Governance for the Shore House.
To avoid sibling disputes, your trust should spell out: who gets what weeks, how expenses are shared or reimbursed, a reserve for capital items (roof, bulkhead, HVAC), pet/smoking/rental rules, and buy-out/exit formulas if one branch wants cash while another wants continued use. We can add a right of first refusal and require professional property management if needed.

NJ Inheritance Tax And Class Issues.
Class A (spouse/lineal) are exempt; gifts at death to non-Class-A (siblings, nieces/nephews, friends) can trigger NJ inheritance tax. If a shore place is meant for a sibling or friend, we’ll plan timing and structure to avoid surprise tax bills.

Tidelines, Riparian, And CAFRA Footnotes (Title).
Shore parcels can be affected by tidelands/riparian claims or coastal permitting histories. We coordinate with title to clear (or at least flag) issues before transfer so your trustee isn’t stuck later during a sale or refinance.

Bottom Line for the Jersey Shore or Vacation Home(s):
Deed to your RLT (or RLT-owned LLC), correct the insurance, document the family usage rules inside the trust, and decide in advance whether the asset should fund a CST (for protection and growth shelter) or QTIP/QDOT (for spouse support or non-citizen spouse) at the first death. That’s how we keep the house—and the family—out of court and out of conflict.

Foreign Property (Outside The U.S.)

Why Foreign Property Is Different.
Foreign real estate is governed by local law. Many countries require notarial deeds, apply forced-heirship (mandatory shares for spouses/children), or won’t honor a U.S. trust without extra steps. If you only sign a U.S. will/trust, your heirs can end up in double probate (U.S. plus the foreign country) and months of translation/apostille headaches.

Situs Wills (Local Wills) And Trust Recognition.
We commonly prepare a limited, country-specific will (or work with local counsel to do so) that covers only assets in that country, in the local language and form, and that does not revoke your U.S. plan. This prevents accidental revocation and speeds local probate or notarial transfer. In trust-friendly jurisdictions, we may hold the property in a local entity or trust that your U.S. RLT owns indirectly.

Coordination With Your U.S. Plan.
Your U.S. RLT remains the “hub,” but for many civil-law countries the immediate transfer vehicle will be a situs will or local holding company. We make the documents cross-reference each other so beneficiaries, guardians, and fiduciaries match—and we avoid a “last in time revokes all” clause.

Forced-Heirship And Spousal Rules.
Countries like France, Spain, Portugal, and parts of Latin America may reserve fixed portions for spouses/children and limit disinheritance or trust-like arrangements. In some EU jurisdictions you can elect your national law to apply to succession; in others you cannot. We’ll coordinate with foreign counsel to decide whether to rely on an election, use a local will that respects forced shares, or hold via an entity to reach the intended outcome.

Taxes, Currency, And Reporting.
Expect local transfer taxes at death or sale, possible stamp duties, and currency conversion logistics. Your U.S. return may claim credits under a treaty, but we still plan for cash to pay foreign notaries/registries. If you own the property through a foreign trust or company, U.S. reporting (FBAR/FATCA; Forms 3520/3520-A for foreign trusts) may apply—we set a compliance calendar with your CPA.

Insurance, Liability, And Property Management.
We’ll confirm local insurance names the correct owner (trust/entity) and that your successor trustee has authority with the local manager. Where local law doesn’t “see” your U.S. trustee, we appoint an on-the-ground agent in the situs documents.

Practical Playbook For Foreign Homes.
We keep in your vault: the local deed, cadastral/parcel ID, tax number, HOA/utility contacts, insurance, a bilingual “death/transfer” instruction sheet, and a contact for foreign notary/counsel. Your successor trustee won’t be starting from zero.

Sell, Keep, Or Gift?
At design time we’ll decide whether the foreign home is: (a) meant to be sold promptly (proceeds flow to the U.S. trust), or (b) kept for family use. If kept, we copy the same usage/budget/buy-out mechanics from your shore-house section into the situs will or local trust so expectations match.

What We Do (So You Don’t Have To)

1. Title & Underwriter Check (NJ + U.S. States): confirm the right deed (usually Bargain & Sale for NJ), HOA/condo approvals, lender sign-off, and insurance changes; avoid ancillary probate by placing out-of-state properties into your RLT or an LLC owned by your RLT.

2. Shore-House Governance: write distribution/usage rules, reserves, repair authority, rental policy, and buy-out math directly into your trust; add a neutral tie-breaker or professional manager if siblings disagree.

3. Foreign Counsel Coordination: craft a situs will (or local entity/trust) that dovetails with your U.S. RLT/CST/QTIP/QDOT; avoid revocation conflicts; prepare apostilles and translations.

4. Tax & Compliance: align with your CPA/EA on inheritance/transfer taxes, FBAR/FATCA, and any 3520/3520-A filings for foreign trusts; map cash sources for notarial and transfer fees.

5. Funding, Then Maintenance: record deeds, update policies, store confirmations in your vault; re-audit annually through AMP or quarterly in CCP—especially before summer rental season and before international travel.

 

Inbound Movers

To The U.S./NJ

• Document or avoid U.S. domicile depending on goals; manage residency day counts.

• Clean up foreign structures pre-residency to avoid punitive regimes; review life insurance and annuity wrappers for U.S. tax treatment.

• Build RLT + CST/QDOT as needed; map accounts to avoid probate in multiple countries.

Outbound Movers

Leaving U.S./NJ

• Clarify abandonment of domicile facts; review exit income-tax issues (e.g., expatriation for citizens/long-term green card holders).

• Retool trusts for the destination country’s rules; adjust powers of appointment and add Trust Protector flexibility.

NJ-Specific Touchpoints

• Inheritance Tax: Class A (spouse/lineal) exempt; others (siblings, nieces/nephews, non-relatives) may trigger NJ inheritance tax. Structure remainders and timing with non-citizen families carefully.

• Surrogate & Probate: We avoid NJ probate where possible with a funded RLT and post-mortem QDOT elections handled on the 706.

• TBE (Tenancy by Entirety): Available for married couples on NJ real property; interacts with cross-border title choices.

Mistakes we often Come Across

• No QDOT: Citizen decedent leaves everything outright to a non-citizen spouse → marital deduction denied, tax due immediately.

• Assuming Portability Works Normally: DSUE doesn’t port cleanly to a non-citizen spouse; proper 706/QDOT work is required.

• Ignoring 3520/3520-A: Missed foreign trust/gift filings with 5-figure penalties per year.

• Confusing Residency With Domicile: Day-count residency ≠ transfer-tax domicile; wrong assumption = worldwide estate tax unexpectedly.

• Mismatched Beneficiary Forms: U.S. accounts naming individuals overseas—no protection, wrong tax. Use RLT/SRT where appropriate.

• Unfunded Trusts: No deeds, no retitling, no beneficiary alignment—plan fails, foreign probate ensues.

How We Work (Design → Draft → Fund → File → Maintain)

1. Design & Discovery Meeting (DDM): People, passports, visas/green cards, treaties, assets by country/situs, and goals.

2. Architecture: RLT hub; CST; QDOT if a spouse is non-citizen; SRT for retirement; SNT/MAPT if needed; Trust Protector for change-of-law.

3. Funding: We handle deeds, titles, and beneficiary changes; keep confirmations in your secure vault.

4. Compliance Calendar: Coordinate with CPA on FBAR, FATCA, 3520/3520-A, 706/709, and treaty positions; create country-specific playbooks.

5. Maintenance: AMP (annual review/scorecard, funding audit, trustee training) or CCP (quarterly Advisor Summits with CPA/EA, CFP®/RIA; foreign counsel coordination).

Diving Deeper for Professionals...

• QDOT Mechanics: U.S. trustee requirement; bond/LOC thresholds; principal distribution tax; hardship exception; interaction with reverse QTIP for GST on QDOT property.

• Portability: 706 filing is still recommended; DSUE availability limited with non-citizen spouse unless citizenship occurs before filing/conditions met.

• Situs Rules: U.S. stock is U.S.-situs for estate tax (NRA decedent) regardless of certificate location; bank deposits may be excluded for estate tax but not gift tax—verify by asset class and treaty.

• Foreign Trusts: Grantor vs. non-grantor status under §§671–679; §684 recognition on becoming U.S.-resident; DNI, UNI, and throwback computations for distributions.

• Treaties: Distinguish income-tax treaty tie-breaker residency from estate/gift treaties; apply credits under §2014 and treaty relief articles.

• SECURE Act: “Eligible Designated Beneficiary” status for non-U.S. persons; separate-account deadlines; W-8BEN-E/W-8BEN withholding with treaty rates to foreign trusts/beneficiaries.

FAQs

Q: My spouse isn’t a U.S. citizen. Can I still leave everything to them tax-free?
A: Not outright. Use a QDOT (or citizenship with strict timing) to secure the marital deduction.

Q: We’re green-card holders—do we need a QDOT?
A: If the surviving spouse is still not a U.S. citizen at the first death, a QDOT is typically required for the marital deduction.

Q: Do I need to file 3520 if I inherit money from parents overseas?
A: Often yes, if above thresholds. We’ll coordinate with your CPA—penalties for non-filing are steep.

Q: I’m moving abroad. Will NJ still consider me domiciled?
A: Possibly, unless you change the facts (home, registrations, relationships) and document intent. We prepare a domicile memo and checklist.

Q: Can my foreign trust own U.S. assets directly?
A: Sometimes, but beware U.S.-situs estate tax for an NRA grantor and U.S. reporting (3520/3520-A). We may interpose entities or restructure.

Q: Do treaties fix everything?
A: No. Many treaties address income tax only; estate/gift treaties are fewer. We verify the exact treaty and article before planning.