A. The answer is yes. In fact, life insurance solves some practical problems faced by foreign nationals.
Let's start by identifying who are the foreign nationals. There are three types of foreign nationals -
- Non-Resident Aliens who own U.S. assets but reside permanently in another country.
- Non-Resident Aliens who are working professionals and spend considerable time in the U.S.
- Resident Aliens or foreign nationals living in the U.S. who own assets subject to U.S. estate tax and U.S. citizens married to non-U.S. citizens.
For the above groups of foreign nationals, they face the following issues:
Non-Resident Aliens:
Usually, only those assets located in the U.S. are subject to Federal estate and gift tax. But they are allowed a $13,000 tax credit, which only protects the first $60,000 of an estate from estate taxes.
Resident Aliens:
Worldwide assets are subject to U.S. estate and gift tax. Also, they do not qualify for certain tax advantages afforded to U.S. citizens, creating a need for careful estate planning. And they may be subject to expatriation taxes when they are no longer U.S. residents.
In our next blog post, we will discuss how life insurance solves the foreign national's problems.