Moving abroad often means navigating a completely new legal system, including U.S. estate and inheritance laws. Understanding the estate tax rules is critical for anyone with assets in the U.S. or for U.S. citizens and residents.

Who Pays the Estate Tax?
The estate tax is a federal tax imposed on the transfer of a deceased person’s assets. The tax is generally paid by the estate before distribution to heirs. Beneficiaries typically do not pay estate tax themselves, although estate planning strategies can impact their tax obligations.

Exemption Amounts (2025)

Single individuals: The federal estate tax exemption is $13,990,000. Estates valued below this threshold are not subject to federal estate tax.
Married couples: Each spouse has their own exemption. Through estate planning, married couples can effectively exempt up to $27,980,000 of combined assets from federal estate tax.

Estate Tax Rate (2025)
For estates exceeding the exemption, the federal estate tax rate is 40%.

Assets Subject to Estate Tax
The estate tax applies to the decedent’s worldwide assets if they are a U.S. citizen or resident. This includes:

Real estate in the U.S.
Bank accounts, investment accounts, and retirement accounts
Stocks, bonds, and business interests
Life insurance proceeds if the decedent owned the policy

Non-U.S. Citizens and Non-Residents
For non-resident, non-citizens, the estate tax applies only to U.S.-situated assets, such as real estate in the U.S. and tangible property located in the U.S. Assets outside the U.S. are generally not subject to federal estate tax.

Spousal Transfers

Transfers between U.S. citizen spouses are fully exempt, regardless of value.
Transfers to a non-U.S. citizen spouse are exempt up to $175,000 (2025). Amounts above this require careful planning to minimize estate tax liability.

Planning Considerations
Proper estate planning can help reduce estate taxes through tools such as trusts, lifetime gifts, and other strategies. It is essential to determine whether the decedent is considered a U.S. citizen or resident for estate tax purposes, as this determines which assets are included in the taxable estate. Non-resident planning requires particular attention to U.S.-situated assets to avoid unexpected estate taxes.

Important Note
This summary is for educational purposes only and does not constitute legal advice. For guidance on your specific situation, consult a qualified U.S. estate planning attorney. All figures are based on 2025 federal rules and are subject to change.