Probate for U.S. Assets; Estate Tax for Non-Resident Aliens

pot of goldDear Liza: My brother and I are dual citizens (Japan and US).  We both reside in the US. Our Japanese mother recently passed away. She had some cash/ stock/ annuities/ mutual funds in the US, and some property in Japan that we will inherit jointly, with no disputes. She has a social security number and had a green card at one time, many years ago. She has not lived in the US for over 30 years. There was no will. Given that she was a non-resident foreign national, do we have to go through probate to distribute her US assets (around $650,000)?  Sorry about your Mom. To settle your Mom’s U.S.-based estate you are going to need a probate proceeding to transfer the assets because your mother didn’t leave a Will. This is not because she was a non-resident alien.  This is because she owned significant property in her own name.  That means that you and your brother are going to inherit her property as the intestate heirs (that’s state law for who inherits when someone dies without a Will). Because she owned property worth more than a minimal amount, you will need a court order to get those assets transferred to you, which is the end result of a probate proceeding.

The issues that relate to her citizenship status is this: your mother’s estate is going to have to pay U.S. estate tax.  The rules for non-resident, non-citizen owners of U.S.-based property are complex, but basically, her estate will be taxed on U.S. assets worth more than $60,000. Japan, though, has a taxation treaty with the U.S., so her estate won’t be subject to double estate taxation (in both the U.S. and Japan).   Click here for a link to an IRS summary of these rules.