U.S. Estate Tax for Foreign Nationals

U.S. estate tax applies to nonresident foreign nationals on their assets located in the U.S., with an exemption of only US$60,000 and rates that reach 40%. For a Latin American family with an apartment in Miami or U.S. stocks held in one person's name, that can mean a significant share of the estate stays in the U.S. before it reaches the children. What decides how much is paid is not the asset, but the way it is held.

What is the U.S. estate tax?

The estate tax is a federal tax on the estate of a deceased person. It is paid by the estate, meaning all of the deceased's property, before the heirs receive anything.

It is calculated on the market value of the assets at the date of death, not on the purchase price. Debts, funeral expenses and administration expenses can be deducted if they are documented.

The difference between an American and a foreign national is enormous. A citizen or resident has a US$15 million exemption in 2026. A nonresident foreign national has an effective exemption of US$60,000, a figure that is not adjusted for inflation.

• Exemption in 2026: citizen or resident, US$15,000,000; nonresident foreign national, US$60,000 (not inflation-adjusted).
• Taxed assets: citizen or resident, worldwide estate; nonresident foreign national, only assets situated in the U.S.
• Top rate: 40% in both cases.
• Filing: citizen or resident, Form 706; nonresident foreign national, Form 706-NA, within 9 months of death.

Which assets of a foreign national are subject to U.S. estate tax?

The tax only reaches assets with U.S. "situs," meaning those the law considers located in the country. What is outside the U.S. does not enter the U.S. calculation.

• U.S. real estate held in the person's name: Yes
• Shares of U.S. companies, even if the account is abroad: Yes
• Tangible property located in the U.S. (art, cars, jewelry): Yes
• Shares of a foreign corporation: No
• Life insurance on the foreign national's life: No
• Certain bank deposits and bonds that qualify under the law: No

The rule on stocks is the one that surprises people most. Under the law, a foreign national's shares are considered located in the U.S. only if they were issued by a U.S. corporation. A portfolio of Apple or Microsoft shares in an account in Switzerland is still a U.S. asset for this tax.

Interests in LLCs (limited liability companies) and partnerships require case-by-case analysis. It is one of the points worth settling with lawyers before investing, not after.

How much is paid: an example with numbers

A person in Guayaquil buys an apartment in Miami in their own name. At death, the apartment is worth US$1,000,000 and has no debt.

Under the rate table in the law, the tax calculated on US$1,000,000 is US$345,800. The nonresident credit of US$13,000 is subtracted. The result: US$332,800 in tax, close to a third of the property's value.

Above one million, every additional dollar is taxed at 40%. A US$3 million U.S. estate in one person's name can leave more than US$1.1 million in taxes. This is a simplified calculation: debts, expenses and other assets change the result.

The concrete risks for a Latin American family

Before talking about how to reduce the tax, it helps to understand where the money is lost.

• Property held in your own name. It is the most common way to buy in the U.S. and the most exposed. No structure protects an asset that was never structured.
• U.S. stocks in a personal account. Many families believe that holding them at a bank outside the U.S. protects them. The law looks at who issued the share, not where the account is.
• No treaty to help. The U.S. has estate tax treaties with 15 countries. None is in Latin America. Without a treaty, nothing ensures one tax is credited against the other.
• Liquidity at the worst moment. The return is due 9 months after death, and the IRS issues a transfer certificate only once the tax has been paid or secured. If the family has no cash in dollars, it may end up selling the asset in a hurry.
• Structures that solve one problem and create another. A foreign corporation can take an asset out of the estate tax, but it changes how taxes are paid on a sale, on rental income and on repatriating the money. A badly built structure can cost more than it saves.
• Nobody knows where everything is. Accounts, powers of attorney, policies and deeds spread across two or three countries, with no inventory an heir can find.

What changes in Mexico, Colombia, Chile, Argentina and Ecuador

The U.S. estate tax does not replace taxes in the home country. It adds to them. That is why the same inheritance can be taxed in two places.

• Mexico: Inheritances are exempt from income tax (art. 93, section XXII), but must be reported when they exceed 500,000 pesos.
• Colombia: Inheritances are taxed as occasional gains, at a 15% rate since the 2022 reform.
• Chile: Inheritance tax (Law 16,271), with progressive rates from 1% to 25%.
• Argentina: The Province of Buenos Aires applies a tax on the gratuitous transfer of assets (Law 14,044).
• Ecuador: Income tax on inheritances, legacies and gifts; in 2026 the exempt bracket reaches US$78,527 and the top marginal rate is 35%.

For a Mexican family, the estate tax can be the main cost, because in Mexico an inheritance pays no income tax. For an Ecuadorian or Chilean family, the risk is overlap: two taxes on the same asset, with no treaty to coordinate them.

The practical conclusion is the same in all five countries. The U.S. structure is designed together with the lawyer and accountant in the home country, not separately.

How families organize themselves: the most common structures

There is no single correct structure for everyone. Each one solves something and complicates something else.

• Foreign corporation that holds the asset. What it solves: shares of a foreign corporation are not a U.S. asset for estate tax. What it complicates: it changes taxation on a sale and on repatriation; it requires maintenance and substance.
• Trust. What it solves: it orders succession and can avoid court proceedings. What it complicates: its tax effect depends entirely on the design.
• Life insurance. What it solves: it gives heirs liquidity to pay taxes without selling. What it complicates: it has an annual cost; it does not replace a structure.
• Investing through investment vehicles. What it solves: it can separate the investor from direct ownership of the asset. What it complicates: each vehicle has its own treatment and has to be reviewed one by one.

The question is not which structure is best. It is which one fits what the family owns, where each heir lives and how it plans to exit the investment. We expand on the context in our guides What is a family office? and for investors outside the U.S.

What we have learned

When I review an opportunity at Infinity⁹, the tax and legal structure is the fourth layer of the analysis and the one almost nobody audits. A deal can have the best operator and the best asset, and if it is badly built for the international investor, the result does not reach the family in full.

What almost nobody mentions when presenting an investment is this: if a Latin American investor dies with U.S. assets in their own name and no structure, the U.S. government can keep up to 40% before it reaches their children. It is real and it is legal.

I have seen it from the other side too. I have seen fortunes disappear not because of a market collapse but because of a family dinner: an ambiguous will, an heir who wants to try his luck, no written rules. We don't inherit money; we inherit decisions.

Three lessons I apply at A9 Family Office, my family's family office:

• Simple before creative. I have seen families receive a clean structure and want to add a holding company on top of another holding company, routed through three countries. In this field, creativity tends to destroy value. If a structure takes three meetings to understand, it is probably hiding a risk.
• The structure is decided before buying. Changing an asset's ownership afterward can trigger other taxes. The cheap moment is before signing.
• A drill once a year. Imagine that tomorrow you are unreachable for 90 days. Who signs? Who pays? Where is everything? What does each family member think would happen? If the answers don't match, the problem isn't tax. It's governance.

One question sums it all up, and it is worth asking before any investment in the U.S.: what happens to this position if I die tomorrow?

Frequently asked questions

How much is U.S. estate tax for foreign nationals?

A nonresident foreign national pays estate tax on assets situated in the U.S. above an effective exemption of US$60,000. Rates are progressive and reach 40% on the portion above US$1 million.

Does a foreign national pay estate tax on a house in Miami?

Yes, if the house is in their name. Real estate in the U.S. is a U.S. asset for estate tax, regardless of where the owner or the heirs live.

Do stocks held in an account outside the U.S. pay estate tax?

Yes, if they are shares of U.S. companies. The law considers shares issued by U.S. corporations to be located in the U.S., even if the account is in another country.

Is there an estate tax treaty between the U.S. and any Latin American country?

No. The U.S. has estate tax treaties with 15 countries, none in Latin America. That is why a family from Mexico, Colombia, Chile, Argentina or Ecuador does not have that protection.

How long is there to file estate tax for a foreign national?

Form 706-NA is due 9 months after death, unless an extension is requested. The IRS issues the transfer certificate only once the tax has been paid or secured.

Is life insurance subject to estate tax?

Life insurance on the life of a nonresident foreign national is not considered a U.S. asset for this tax. That is why many families use it to give heirs liquidity.

Does your family hold assets in the U.S. and want to review how they are structured? Request a private conversation at infinity9.com/request-private-briefing.

This content is educational and does not constitute legal, tax or investment advice, or an offer of securities. The figures cited reflect rules in force in 2026 and may change. Each family should consult its own advisors in the U.S. and in its home country.

Sources

• IRS, Estate tax for nonresidents not citizens of the United States
• IRS, What's new: Estate and gift tax
• IRS, Estate and gift tax treaties (international)
• IRS, Transfer certificate filing requirements for the estates of nonresidents not citizens
• 26 U.S. Code § 2001, § 2102, § 2104 and § 2105, Cornell Law School
• IDC Online, Herencias: ¿deducibles o exentas de impuestos? (Spanish)
• Actualícese, Reforma tributaria: nueva tarifa de ganancias ocasionales (Spanish)
• Meganoticias, Recibir una herencia: impuesto y plazos (Spanish)
• Abogados.com.ar, Notas al impuesto a la transferencia gratuita de bienes de la Provincia de Buenos Aires (Spanish)
• NMS Law, Tablas del impuesto a la renta para 2026 en Ecuador (Spanish)