U.S. Estate and Gift Tax Framework
The federal estate and gift tax system imposes a single 40% rate on taxable transfers above the lifetime exemption, with separate rules for U.S. citizens and residents, non-resident aliens, and recipients of gifts from covered expatriates.
2026 thresholds (under the One Big Beautiful Bill Act, effective January 1, 2026):
- Lifetime estate and gift tax exemption: $15 million per individual ($30 million for a married couple), indexed for inflation
- Annual gift tax exclusion: $19,000 per recipient (unchanged from 2025), or $38,000 for a married couple electing to split gifts
- Top federal estate and gift tax rate: 40% on the taxable amount above the exemption
The OBBBA permanently repealed the Tax Cuts and Jobs Act sunset provision that would have reduced the exemption to approximately $7 million on January 1, 2026. The exemption is now stable at $15 million indexed forward — a meaningful planning environment for the next several years.
For non-resident aliens, the U.S. estate tax exemption on U.S.-situs assets is just $60,000 — unindexed and far lower than the citizen/resident exemption. Above $60,000, the 40% rate applies. This is why a non-resident’s ownership of U.S. real estate, U.S. stocks held in U.S. brokerage accounts, and certain U.S.-situs tangible property requires advance structuring to avoid disproportionate estate-tax exposure.
The Core Tools We Use
The right combination depends on family situation, asset mix, and jurisdictions involved. Common tools we deploy:
Irrevocable trusts. The foundation of most cross-border plans — removing assets from the taxable estate, controlling distributions across generations, and providing creditor protection. Structured as U.S. domestic trusts (Wyoming, Nevada, South Dakota), as foreign trusts (Cook Islands, Nevis), or as hybrid arrangements layering both.
Family Limited Partnerships (FLPs). Allow parents to retain control over family assets as general partners while transferring limited partnership interests to children — capturing valuation discounts that materially reduce gift and estate-tax exposure on intergenerational transfers.
Grantor Retained Annuity Trusts (GRATs) and Qualified Personal Residence Trusts (QPRTs). U.S. techniques for transferring appreciating assets out of the taxable estate at low gift-tax cost.
Generation-skipping (dynasty) trusts. Long-duration trusts — often situated in South Dakota or other no-rule-against-perpetuities jurisdictions — that allow wealth to pass to grandchildren and later generations without triggering estate or GST tax at each level.
Spousal Lifetime Access Trusts (SLATs). Used by married couples to lock in the current exemption while preserving one spouse’s indirect access to the trust assets.
Annual exclusion gifting programs. Coordinated annual transfers within the $19,000/$38,000 exclusion to systematically reduce the taxable estate without using lifetime exemption.
Charitable lead and remainder trusts. Combine philanthropic intent with estate-tax efficiency.
Crypto special-purpose trusts. Where significant wealth sits in digital assets, dedicated structures address custody, key management, beneficiary access, and post-death recovery — issues conventional estate plans typically miss.
Closely-Held Business Succession
For clients whose wealth is concentrated in an operating business, estate planning and business succession are the same problem.
We design and implement domestic and offshore holding structures for operating businesses, and integrate those entities into the client’s overall holding structure and estate plan.
Our work spans the full business life cycle:
- Advising clients on the U.S. tax consequences of establishing a U.S. business presence, and how that presence affects their overall holdings and estate plan
- Designing holding companies (domestic and offshore) that own the operating business, with the holding company itself held by trusts or family entities
- Coordinating buy-sell agreements, voting/non-voting share structures, and FLPs to control ownership transitions
- Tax-efficient sale, redemption, or recapitalization structures when liquidity events are planned
- Cross-border succession planning where the business has operations or owners in multiple countries
- Pre-immigration and pre-expatriation restructuring for owners changing tax residency
Cross-Border Families: Forced Heirship and Treaty Coordination
Civil-law countries — including most of continental Europe, much of Latin America, and parts of the Middle East — apply forced heirship rules that reserve fixed shares of an estate for specified family members and override the decedent’s testamentary wishes.
U.S.-style trusts are often unrecognized or recharacterized in these jurisdictions, which can defeat the planning if not properly addressed.
We coordinate with foreign counsel in the client’s home jurisdiction to:
- Structure around forced-heirship rules using lifetime gifts, prenuptial agreements, and entity-based transfers
- Use cross-border real estate trusts and LLCs to hold European property (Austria, Portugal, Italy, Spain, and others) through IRS-compliant structures that simplify inheritance and asset protection
- Apply U.S. estate tax treaties — currently in force with 15 countries — to allocate taxing rights, claim treaty credits, and avoid double taxation.
Swiss Private Banking as a Wealth-Preservation Tool
For HNW clients seeking geographic and currency diversification, Swiss private banking remains one of the most effective wealth-preservation tools — and, in 2026, one of the most actively used.
Major U.S. banks generally cannot open Swiss accounts for clients directly, but a small number of SEC-registered Swiss banks accept U.S. clients on a fully FATCA-compliant basis.
We help U.S. and international clients legally open and structure Swiss private bank accounts as part of comprehensive estate planning and asset protection — for:
- Currency and geographic diversification away from concentrated U.S.-dollar exposure
- Crypto custody through Swiss banks offering institutional-grade digital-asset custody and trust-friendly structures unavailable from most U.S. custodians
- European real estate financing at EU mortgage rates currently 1.7%–2%, materially lower than comparable U.S. rates, for property purchases in Switzerland, Spain, Portugal, Italy, and elsewhere
- Physical gold storage through Switzerland’s specialized refining and storage infrastructure
- Plan B residency and second-citizenship planning in coordination with Swiss-domiciled banking relationships
All Swiss banking relationships we structure are fully aligned with FATCA, FBAR, and IRS reporting obligations, and integrated into the client’s broader legal and tax framework.
Reporting Obligations
Cross-border estate and wealth-transfer planning carries continuing reporting obligations independent of the underlying tax position. We coordinate compliance with:
Penalties for missed or incorrect filings frequently exceed the underlying tax — often by significant margins — and can apply even where no tax is owed.
State Estate Tax Considerations
Federal estate tax is only one layer. Seventeen states and the District of Columbia impose their own estate or inheritance taxes, with exemptions often far lower than the federal threshold:
- New York: $7.16M exemption (2025), with a “cliff” that can eliminate the exemption entirely for estates exceeding 105% of the threshold
- Massachusetts: $2M exemption
- Oregon, Washington, Connecticut, Illinois, Maryland, and others — each with distinct rules, exemptions, and rates
For clients with New York real estate, business interests, or residency, state estate tax planning is often more consequential than federal.
Why Engage Counsel
Cross-border estate planning fails most often not from the underlying tax analysis but from the coordination — between the U.S. plan and foreign-jurisdiction inheritance law, between the trust structure and the operating business, between the private bank and the trustee, between the lifetime-gifting program and the annual reporting.
We design the plan and stay with the client through implementation, because the gaps between disciplines are where the cost shows up.
Contact Us
If you are planning the transfer of significant wealth — across generations, across borders, or both — contact us for a confidential consultation at info@dilendorf.com or 212.457.9797.
We will assess your current structure, identify exposure points, and design a coordinated plan that holds together across every jurisdiction in which you and your family operate.
Government & Regulatory Resources
