My spouse is not a US citizen nor a resident, and thus not subject to US tax. I am a US citizen. We have always lived in Europe and probably intend to continue to do so. I've been considering ways to maximize any tax benefits given this circumstance, particularly in regards to investment gains on assets going forward and keeping assets out of reach from the litigious US legal system. With the lifetime gift tax exemption raised to US$5 million for 2011 and 2012, several people have suggested I simply gift her up to that amount (let's assume I had exactly that amount). The gift would use up my lifetime exemption for estate and generation-skipping purposes, but the way I see it is is better to have all gains on those assets grow tax-free under her name for the next 20 or 30 years. When she dies, I am told she can pass the money tax-free to our US citizen children or put them in a trust for their benefit.
The only real downside I can come up with is that she would have all our money. Assuming I am fine with that, are there other downsides I am not seeing? Expensive estate attorneys have suggested I take the money and put it in a dynasty trust or something similar under my own name, but that still leaves it in the US tax system and seems a poor second to gifting it to a non-citizen spouse.
Does anyone have any experience ot thoughts with this approach?
The only real downside I can come up with is that she would have all our money. Assuming I am fine with that, are there other downsides I am not seeing? Expensive estate attorneys have suggested I take the money and put it in a dynasty trust or something similar under my own name, but that still leaves it in the US tax system and seems a poor second to gifting it to a non-citizen spouse.
Does anyone have any experience ot thoughts with this approach?
