Investing in an asset based in a different geographical location to where an investor is resident or domiciled can sometimes have unintended consequences. Such assets are known as ‘situs assets’ and can give rise to a potential liability to inheritance and estate taxes in the country where they are situated.
One such example is United States estate tax are assessable on situs assets regardless of whether the owner of the asset is resident or domiciled in the US.
Non-US domicile with US situs assets
US estate tax is levied on death on US situs assets where the value of the US situs assets is more than US$60,000. Tax is levied at rates of 18% to 40%.
This could be shares in S&P 500 companies such as Apple or Microsoft
Wealth Soloution: Transferring Publicly listed shares to an international offshore portfolio bond?
Transferring US listed shares into a portfolio bond could reduce or eliminate any liability to US estate tax for non-domiciles which would otherwise be assessable on the deceased’s estate.
Where shares are transferred to a portfolio bond, the transfer is unlikely to be liable to estate tax if the portfolio bond is regarded as non-US situs.
For US Nationals: American Expat Financial Planning