Simplest Setup to avoid US Estate tax on US Stocks

[kekmaw]

I just found out that even owning publicly listed stocks and index funds in the US would become subject to 40% estate tax on the holdings despite where you live or your citizenship.

What would be the simplest and most straightforward option to go around this without any taxes? I understand dividend etc will be subject to WHT etc which is fine.

My understanding is that a US LLC would not help.

Could a tax-transparent flow-through entity from another jurisdiction do the trick, or would it still be subject to US estate tax?

I believe Belize has a flow-through LLC option, for example.

 

[zzzzzz]

Non-US legal entity owns US situs assets. Some countries have agreements regarding this tax, so you better check if your country of citizenship/residency is among those.

 

[Xshore]

Easiest is to buy index funds listed in London

 

[JackAlabama]

I just found out that even owning publicly listed stocks and index funds in the US would become subject to 40% estate tax on the holdings despite where you live or your citizenship.

What would be the simplest and most straightforward option to go around this without any taxes? I understand dividend etc will be subject to WHT etc which is fine.

My understanding is that a US LLC would not help.

Could a tax-transparent flow-through entity from another jurisdiction do the trick, or would it still be subject to US estate tax?

I believe Belize has a flow-through LLC option, for example.

you need a holding company owning your llc 100% which owns the us assets.

 

[kekmaw]

you need a holding company owning your llc 100% which owns the us assets.

I see, so just an LLC alone (even though foreign like the Belize LLC) wouldn't do the trick?

 

[Clank]

I see, so just an LLC alone (even though foreign like the Belize LLC) wouldn't do the trick?

Yes but you need to find a brokerage account for such company.

 

[Cloudbanck]

If you are young dont worry about it, and when you reach like 70, start switching into assets where there is no US estate tax, or transfer over such assets to your children. And dont die suddenly!

 

[JackAlabama]

Yes but you need to find a brokerage account for such company.

yup not gonna be quite that easy. But its the way to go.

 

[thomasparra]

Stocks as individual companies will be tough without a proper structure I think.

For ETFs, just any Irish domiciled fund will be fine, doesn't matter where it's traded (on LSE, in Amsterdam or Italy/Switzerland all work as the fund itself is still domiciled in Ireland).

Any broker will do including IB for your company as the entity but I have no experience with that as all the investments are made under my name (never had to worry about capital gain or dividend tax where I am and I can prove SOF on everything I have)

 

[Xshore]

yup not gonna be quite that easy. But its the way to go.

What the problem? To find a broker that accepts a foreign company?
With a foreign company the US llc is not needed, as it is disregarded for taxes.

 

[Radko]

I just found out that even owning publicly listed stocks and index funds in the US would become subject to 40% estate tax on the holdings despite where you live or your citizenship.

What would be the simplest and most straightforward option to go around this without any taxes? I understand dividend etc will be subject to WHT etc which is fine.

My understanding is that a US LLC would not help.

Could a tax-transparent flow-through entity from another jurisdiction do the trick, or would it still be subject to US estate tax?

I believe Belize has a flow-through LLC option, for example.

If you want to be 100% protected you will form an LLC, preferably a MMLLC, and then have a Panamanian Trust owning that MMLLC. This is what a lot of people are currently doing.

Interactive Brokers & Charles Schwab will let you open an account with the MMLLC (Schwab has a minimum deposit of $250K)

 

[Clank]

If you want to be 100% protected you will form an LLC, preferably a MMLLC, and then have a Panamanian Trust owning that MMLLC. This is what a lot of people are currently doing.

Interactive Brokers & Charles Schwab will let you open an account with the MMLLC (Schwab has a minimum deposit of $250K)

Do you have an specific service provider for a Panamanian Trust?

 

[kekmaw]

If you want to be 100% protected you will form an LLC, preferably a MMLLC, and then have a Panamanian Trust owning that MMLLC. This is what a lot of people are currently doing.

Interactive Brokers & Charles Schwab will let you open an account with the MMLLC (Schwab has a minimum deposit of $250K)

A Panamanian trust is cheaper than Cook Islands or why the Panamanian route? You tend to hear most about Cook Islands for trusts on this forum.

 

[Radko]

Do you have an specific service provider for a Panamanian Trust?

You can contact James Baker CPA, he can do everything for you (MMLLC, Panamanian Trust, Brokerage account, etc).
Look him up, he is in Florida, you can schedule a free consultation via his website, or via his YouTube channel.

A Panamanian trust is cheaper than Cook Islands or why the Panamanian route? You tend to hear most about Cook Islands for trusts on this forum.

Panamanian Trust is cheaper, faster, easier than most other options out there.

 

[whatspat]

I'm also curious about this topic. I'm a non-US national, residing outside the USA, and have a US SMLLC in a "community property" state (New Mexico). While I intend to consult a lawyer to get a proper answer, does anyone know if such an LLC will avoid probate in the event of my death due to the community property treatment? In other words, if I die, will my wife retain legal ownership/possession of the LLC without passing through probate and therefore avoid estate tax?

If so, it seems the only thing I need to do is ensure that the management of the LLC (separately from the ownership) can also be automatically transferred to my wife, which I understand can be written into the operating agreement. Appreciate any comments or feedback.

 

[Clank]

I'm also curious about this topic. I'm a non-US national, residing outside the USA, and have a US SMLLC in a "community property" state (New Mexico). While I intend to consult a lawyer to get a proper answer, does anyone know if such an LLC will avoid probate in the event of my death due to the community property treatment? In other words, if I die, will my wife retain legal ownership/possession of the LLC without passing through probate and therefore avoid estate tax?

If so, it seems the only thing I need to do is ensure that the management of the LLC (separately from the ownership) can also be automatically transferred to my wife, which I understand can be written into the operating agreement. Appreciate any comments or feedback.

Do you use the US LLC to hold your investments in stocks in the US?

 

[whatspat]

Do you use the US LLC to hold your investments in stocks in the US?

Currently no, however I intend to do so in relatively near future. I'm still working age, so death is hopefully not imminent, and I have plenty of time to change my setup, hence seeking information at this point.

Actually, to add to this, I do currently hold stocks in the US directly under my own name (not the LLC), and obviously these would be subject to the estate tax if I were to perish. If the LLC can protect against this due to the community property concept, one idea I've had is to transfer these holdings to the LLC.

 

[Xshore]

You can contact James Baker CPA, he can do everything for you (MMLLC, Panamanian Trust, Brokerage account, etc).
Look him up, he is in Florida, you can schedule a free consultation via his website, or via his YouTube channel.



Panamanian Trust is cheaper, faster, easier than most other options out there.

I don't understand all this talk about LLCs and trusts. Why isn't a single foreign company not enough to avoid estate taxes?

 

[whatspat]

I'm also curious about this topic. I'm a non-US national, residing outside the USA, and have a US SMLLC in a "community property" state (New Mexico). While I intend to consult a lawyer to get a proper answer, does anyone know if such an LLC will avoid probate in the event of my death due to the community property treatment? In other words, if I die, will my wife retain legal ownership/possession of the LLC without passing through probate and therefore avoid estate tax?

While I don't yet have the answer to this question, I have learned that as an Australian citizen not domiciled in the US, due to an Australia-US taxation treaty, my estate is entitled to the same estate tax exemption as a US citizen. Even after the planned 2025 reduction to $5M for this exemption, it's still well above a point that it affects me. Now my question about probate for the LLC is only relevant in my circumstances with respect to the difficulty/time involved in filing the paperwork.

 

[Martin Everson]

And dont die suddenly!

Sarcasm at it's finest I hope...lol.

What would be the simplest and most straightforward option to go around this without any taxes?

Don't invest in US Stocks.