U.S. Pre-Immigration Tax Planning

This video explains why foreign nationals considering a move to the United States must understand how U.S. estate and income tax rules can apply to their U.S. and worldwide assets, and why pre‑immigration planning is essential.

The $60,000 estate tax number

Under U.S. estate tax rules, a nonresident non‑citizen generally gets only a $60,000 estate tax exemption for U.S.‑situs assets (such as U.S. real estate and certain U.S. securities).

Above that amount, the federal estate tax under 26 U.S.C. § 2001 applies at graduated rates up to 40 percent.

In practice, this means that if a foreign national dies owning, for example, a $1,000,000 U.S. condominium while still a nonresident for estate tax purposes, roughly $940,000 could be exposed to the U.S. estate tax, potentially generating a tax bill in the hundreds of thousands of dollars.

How this differs for U.S. citizens and domiciliaries

By contrast, U.S. citizens and individuals domiciled in the U.S. benefit from a much higher federal estate tax exemption through the unified credit in 26 U.S.C. § 2010, which shields a multi‑million‑dollar amount per person from estate tax.

Married couples can generally combine their exemptions, effectively doubling the protection available to the family under current law.

This creates a dramatic gap between the treatment of nonresident non‑citizens with only a $60,000 exemption and U.S. taxpayers with multi‑million‑dollar exemptions.

The “domicile” trap for estate tax

The video then focuses on the concept of U.S. domicile for estate tax purposes, which is different from immigration status.

Under 26 U.S.C. § 2001(a), if an individual is a U.S. citizen or domiciled in the United States at death, the federal estate tax applies to their worldwide assets, not just U.S. property.

Domicile is determined under federal estate and gift tax principles by physical presence plus intent to remain indefinitely, not by the specific visa category (E‑2, H‑1B, L‑1, etc.).

Courts have repeatedly emphasized that intent and factual ties control domicile, including:

• Estate of Newcomb v. Commissioner (early leading authority on domicile focusing on intent and facts of life).

• Estate of Jack v. United States, 54 Fed. Cl. 590 (2002), where the court looked at factors such as family, residence, and long‑term ties rather than the temporary nature of the decedent’s immigration status.

• Estate of Khan v. Commissioner, T.C. Memo 1998‑22, which illustrates how lifestyle, statements, and connections to the U.S. can lead to a finding of U.S. domicile even for a foreign national.

Once U.S. domicile is found, U.S. estate tax can apply to foreign real estate, overseas investment portfolios, private companies, and other global assets owned at death.

Worldwide income tax after U.S. residency

The video also explains that once someone becomes a U.S. income tax resident—often by obtaining a green card (including via EB‑5) or meeting the substantial presence test—the U.S. generally taxes their worldwide income.

Key statutory rules include:

• 26 U.S.C. § 61(a), which defines gross income broadly as “all income from whatever source derived,” covering foreign and domestic income alike.

• 26 U.S.C. § 1, which imposes income tax on taxable income of individuals.

• 26 U.S.C. § 7701(b), which sets out who is treated as a U.S. resident for income tax purposes, including green card holders and those meeting the substantial presence test.

If you bought a foreign property for $100,000 and later sell it for $1,000,000 after becoming a U.S. tax resident, the $900,000 gain is generally taxable in the United States.

This is true even though the property is overseas and most of the appreciation happened before you moved.

The same worldwide‑tax principle typically applies to foreign securities, crypto, private equity, and operating businesses, unless specific planning, a tax treaty, or a targeted exception changes the result.

Why pre‑immigration tax planning matters

The core message is that many of the most effective strategies must be implemented before U.S. tax residency or U.S. domicile is established.

Pre‑immigration planning may include:

• Restructuring ownership of global assets using U.S. and non‑U.S. trusts, closely held entities, or holding companies, to manage estate and gift tax exposure under Subtitle B of the Internal Revenue Code (26 U.S.C. subtitles for estate and gift taxes).

• Coordinating cross‑border ownership of U.S. real estate, U.S. equities, and operating businesses to minimize U.S. estate tax under 26 U.S.C. §§ 2001 and 2101–2107 while preserving treaty benefits where available.

• Implementing insurance‑based planning, especially Private Placement Life Insurance (PPLI) arranged before U.S. residency, so that investment growth occurs inside a properly structured life insurance contract.

For PPLI and life insurance–based structures, the relevant provisions include:

• 26 U.S.C. § 7702, which defines what qualifies as a life insurance contract for U.S. tax purposes.

• 26 U.S.C. § 72, which governs the income tax treatment of amounts received under annuity and life insurance contracts.

• 26 U.S.C. § 101(a), which generally excludes life insurance death benefits from gross income for U.S. income tax purposes, subject to specific exceptions.

Properly designed PPLI can allow tax‑deferred growth inside the policy. The death benefit is generally received income‑tax‑free by beneficiaries under U.S. rules. At the same time, PPLI can be integrated with broader estate planning and asset protection structures.

This is especially powerful for international families who hold concentrated stock positions, private equity, crypto, or operating businesses.

The video stresses that, once U.S. domicile or income tax residency exists, many of these restructuring options either disappear or become far more limited and complex to execute.

Contact Us

Max Dilendorf and Dilendorf Law Firm assist non‑U.S. residents with complex tax planning, structuring U.S. investments in U.S. equities and real estate, and a wide range of private client estate and asset protection matters.

Max has more than 15 years of experience advising U.S. and international high‑net‑worth clients on pre‑immigration tax planning, trust formations, cross‑border investment structures, and U.S. real estate transactions.

To discuss your situation in confidence, you can email Max directly at max@dilendorf.com or contact our firm to schedule a consultation