Estate Planning for Americans with Assets in India

New Jersey is a fairly diverse state, and I find that more and more of my clients are of Indian heritage. So, as with many of the items I write on this blog, I thought I would share some of the advice that I regularly give clients on this topic:

1) India does not have an estate or an inheritance tax;

2) There is no treaty with respect to the US and India on Estate and Inheritance Taxes;

3) As a US citizen, all of your assets, worldwide, will be subject to an estate tax;

4) If you are also a NJ domiciliary; all of your assets in NJ will be subject to both NJ Estate and Inheritance taxes.  Note, New Jersey also has the right to tax some worldwide assets for estate and inheritance tax purposes);

5) There IS a treaty between the US and India with respect to income taxes (see: http://www.unclefed.com/ForTaxProfs/Treaties/india.pdf) Tax returns need to be coordinated and you will receive a deduction for income taxes paid in India. This may still result in higher taxes as you must report income on worldwide profits.

6) You can do planning to minimize the estate tax burden.

U.S. Citizens Can Vote Abroad

All U.S. Citizens can vote in a general election, regardless of where they live.

YES, you can vote in the US presidential elections, even if you have no “home state” or have never lived in the US! For more information, go to this government website. http://www.fvap.gov/pubs/faq.html

Please consider forwarding this to all citizens you know who are living abroad. Many do not realize that they can vote or how the deadlines for registering.

Questions regarding the above which cannot be answered locally may be referred to the

Director, Federal Voting Assistance Program
Department of Defense
1155 Defense Pentagon
Washington DC 20301-1155

You may also reach the FVAP via email at vote@fvap.ncr.gov, telephone (703) 588-1584, DSN 425-1584, toll free at 1-800-438-8683 or from 64 countries at www.fvap.gov/services/tollfree.html.

Federal Estate Tax Reform - Not Happening Any Time Soon

For a while now, I have been telling my clients (and really anyone who asked) that I did not think there was going to be any major change in the Federal Estate Tax regime until after the presidential election. A recent Wall Street Journal article that I read is in line with this thinking. For the complete article written by Tom Herman, goto: What Congress Is Likely To Do to Your Tax Bill.

Under the current federal estate tax laws, a person is allowed to pass on up to $2,000,000 to anyone they choose plus an unlimited amount to a surviving spouse (as long as he or she is a citizen). In 2009, this "exemption amount" is supposed to go up to $3,500,000 per person. In 2010, the federal estate tax is theoretically supposed to disappear, and in 2011, it goes back to the pre-Bush era exemption amount of $1,000,000.

In all likelihood, no one in their right mind will support any exemption amount of less than $2,000,000. In my personal opinion, the exemption amount will settle somewhere between $3,500,000 and $5,000,000 for the years 2010 forward.