All individuals residing in the United States should have an estate plan in their state of residence. However, lawful permanent residents who are not U.S. citizens, commonly referred to as “green card holders” or “permanent residents”, face additional considerations that can make estate planning more complex. Key considerations include cross-border planning, residency and domicile, federal estate and gift taxes, and transfers between spouses.
Cohesive Cross-Border Planning for Permanent Residents
If a permanent resident owns assets in their country of citizenship, it is recommended and sometimes necessary to have a will in both the United States and that country. Each will should clearly identify the assets it covers, and care must be taken to ensure that one will does not inadvertently revoke the other.
Available planning strategies depend on the type of asset, any applicable treaty between the U.S. and the country of citizenship, and that country’s laws.
If the country of citizenship uses a language other than English, an English translation of foreign estate planning documents should be available. Similarly, translating U.S. estate planning documents into the language of the country of citizenship can help facilitate cross-border administration.
Understanding U.S. Tax Residency and Domicile
The definition of residency for federal estate and gift tax purposes differs from the definition used for federal income tax purposes.
- Estate and gift tax domicile: For federal transfer taxes, an individual is considered a U.S. resident if they are domiciled in the U.S., meaning they live in the country with the intent to remain indefinitely. An individual can have only one domicile.
- Income tax residency: Permanent residents are automatically considered U.S. residents for federal income tax purposes under the green card test, regardless of the time they spend in the U.S., subject to limited exceptions. Other individuals may qualify as U.S. residents under the substantial presence test, which is based on physical presence.
Under these different standards, an individual may be domiciled in the U.S. for estate and gift tax purposes without being a U.S. resident for income tax purposes, or vice versa.
The transfer tax considerations below assume the permanent resident is also domiciled in the U.S. except where noted otherwise, and the term “permanent resident” is used throughout for simplicity. Permanent residents who are not U.S. domiciliaries may face additional planning considerations.
Federal Estate Tax Marital Deduction for Noncitizen Spouses
Permanent residents domiciled in the U.S. are generally subject to the same estate and gift tax rules as U.S. citizens, but important differences arise when transferring assets between spouses.
U.S. citizens and permanent residents may transfer unlimited assets to a surviving spouse who is a U.S. citizen during life or at death without triggering gift or estate tax using the marital deduction.
However, subject to limited exceptions, the unlimited estate tax marital deduction is not available when the surviving spouse is not a U.S. citizen, even if that spouse is domiciled in the U.S. To qualify for the deduction, the transfer at death must be made to a qualified domestic trust (QDOT).
A QDOT is a specialized trust structure to defer estate tax on assets transferred to a noncitizen surviving spouse until distributions are made from the trust.
Lifetime Gifts and Gift Tax Exclusions
Lifetime gifts to spouses are also subject to different rules depending on citizenship.
A permanent resident who is domiciled in the U.S. may make unlimited lifetime gifts to a U.S. citizen spouse without incurring gift tax. However, lifetime gifts to a noncitizen spouse are subject to an annual exclusion limit of $194,000 in 2026, regardless of whether the spouse is a U.S. resident.
Permanent residents domiciled in the U.S. qualify for the same lifetime estate and gift tax exemption as U.S. citizens: $15 million in 2026. Gifts to nonspouse beneficiaries exceeding the annual gift tax exclusion of $19,000 per recipient in 2026 and gifts to a noncitizen spouse that exceed the annual exclusion limit of $194,000 in 2026 count against the donor’s remaining lifetime exemption.
Although the annual exclusion limit for noncitizen spouses is higher than the standard annual exclusion for gifts to other individuals, it is lower than the unlimited deduction available for gifts to a U.S. citizen spouse.
Other Estate and Gift Tax Considerations for Green Card Holders
Permanent residents domiciled in the U.S. may also benefit from several other estate and gift tax provisions:
- Portability: The ability to transfer unused estate tax exemption to a surviving spouse who is a U.S. citizen or permanent resident, subject to applicable requirements.
- Gift splitting: The ability to elect to treat certain gifts as made equally by both spouses if both spouses are U.S. citizens or permanent residents and the applicable requirements are met.
- Generation-skipping transfer tax exemption: Eligibility for the full generation-skipping transfer (GST) tax exemption.
- Medical and educational expense exclusions: Direct payments to qualifying medical providers or educational institutions for another person’s eligible expenses are generally excluded from taxable gifts and do not use the annual exclusion or lifetime exemption.
Like U.S. citizens, permanent residents domiciled in the U.S. are subject to federal estate and gift taxes on their worldwide assets. Permanent residents are subject to U.S. federal income taxes on their worldwide income.
Tax treaties between the U.S. and other countries may provide relief from double taxation in certain circumstances. This makes coordinated cross-border estate planning important for permanent residents who own assets or have financial interests outside the U.S.
Estate Planning Guidance for Permanent Residents
Understanding how U.S. estate and gift tax laws apply to permanent residents is an important step toward protecting assets, managing potential tax liabilities, and coordinating an estate plan across international borders.
For guidance on estate planning, cross-border assets, or the immigration implications of your planning decisions, contact a Varnum Estate Planning or Immigration attorney.
