It can change how U.S. estate tax rules apply to your property and your estate.…
For real estate owners with international ties, there is an estate-planning distinction that is surprisingly easy to overlook: Having a green card does not, by itself, conclusively establish that you are domiciled in the United States for federal estate and gift tax purposes.
That’s important because the rules used to determine residency for U.S. income tax purposes are not necessarily the same rules used for estate and gift taxes.
The IRS explains that estate and gift tax residency is essentially based on domicile. Domicile generally involves living in a place with no definite present intention of leaving. The IRS specifically notes that holding a green card is not conclusive evidence of an intent to be domiciled in the United States.
For families with valuable U.S. real estate, understanding that distinction can be critical.
Income Tax Residency and Estate Tax Domicile Are Not the Same Thing
For income tax purposes, green card holders generally qualify as U.S. resident aliens and are generally subject to U.S. income tax rules similar to those applying to citizens.
Estate and gift taxes use a different analysis.
For estate tax purposes, the IRS says a person may be considered a U.S. resident for income tax purposes yet still be considered a nonresident for estate tax purposes. That creates a distinction many property owners may never encounter until estate planning becomes necessary.
Why Domicile Can Matter So Much
A U.S. citizen or person domiciled in the United States generally falls under the federal estate tax regime applicable to U.S. citizens and residents. For deaths occurring in 2026, the federal basic exclusion amount is $15 million per individual.
A person who is neither a U.S. citizen nor domiciled in the United States can face a very different framework.
For a nonresident noncitizen, the federal estate tax generally applies to U.S.-situated assets rather than the individual’s worldwide estate. A Form 706-NA filing may be required when U.S.-situated assets, combined with certain adjusted taxable gifts and the specific exemption, exceed $60,000.
That $60,000 number is one reason this issue deserves attention from anyone holding significant U.S. property.
What Counts as U.S.-Situated Property?
For a nonresident noncitizen, U.S.-situated assets can include:
- Real estate located in the United States
- Tangible personal property located in the United States
- Certain U.S. securities and other intangible assets
- Certain business interests and other qualifying U.S.-based assets
The precise treatment depends on the type of asset and individual circumstances, and an applicable estate tax treaty can change the result.
For California property owners, however, one point is straightforward: California real estate is U.S.-situated property.
A Silicon Valley Property Can Change the Equation
Consider a family that purchased a Silicon Valley property decades ago. The owner may have acquired the property for $500,000. Today, it could be worth $3 million, $5 million, or considerably more.
The family may be focused on capital gains, Proposition 19, trusts, or how title is held. Those are important questions—but if the owner isn’t a U.S. citizen, another question belongs near the top of the list: Where is the owner domiciled for U.S. estate tax purposes?
That determination can affect which estate tax framework applies.
Market Insight: Appreciation Has Made Old Assumptions More Expensive
California’s long-term real estate appreciation means many families are holding properties worth several times their original purchase price. The planning structure created 10, 20, or 30 years ago may no longer match the family’s current wealth, residency, ownership structure, or succession goals.
For internationally connected families, those changes make periodic estate-planning reviews particularly important.
Neural Marketing Insight: The Problem Is Often Invisible Until the Numbers Are Attached
Terms like domicile, nonresident noncitizen, and U.S.-situated assets can sound abstract.
Put a $4 million California property behind those terms, and suddenly the distinction becomes tangible. That’s why effective planning begins by connecting the tax terminology to the assets a family actually owns: the residence, rental portfolio, commercial property, land, business interests, and other investments that will eventually need to transfer.
From Uncertainty to a Plan
The challenge for many families isn’t a lack of planning. It’s that their planning was created under different circumstances.
Perhaps the portfolio has appreciated substantially. Perhaps family members now live in different countries. Perhaps citizenship or residency has changed. Or perhaps no one previously considered how estate tax domicile differs from immigration or income tax status. Those issues can be identified and addressed.
The first step is creating a clear inventory of the family’s assets, ownership structures, citizenship and residency circumstances, and long-term objectives. From there, qualified estate-planning and international tax professionals can determine which rules actually apply.
What Should Property Owners Do Now?
If you or your family own U.S. real estate and have international residency or citizenship considerations, don’t assume a green card provides the answer. Review your current property portfolio, how each asset is titled, where the owners are domiciled, the current market value of the assets, and how those properties are intended to pass to the next generation.
Then bring that information to qualified legal and tax advisors who understand cross-border estate planning.
