With an increasing number of people relocating and forming international relationships, it has become quite common for American citizens to marry non-citizens. While all couples should take the time to create a comprehensive estate plan, doing so is especially important if your spouse is not a U.S. citizen. Without careful planning, your surviving spouse could be exposed to financial hardship and legal complications. Fortunately, there are tools available to help you protect your spouse and your estate. The Indianapolis attorneys at Frank & Kraft explain how you can safeguard a non-citizen spouse with a comprehensive estate plan in Indiana.
Understanding the Unique Estate Planning Needs of Mixed-Nativity Couples
Over the past few decades, advances in transportation and communication have made it easier than ever for people to travel, work, and fall in love across borders. As a result, many married couples living in the United States today include at least one spouse who was born abroad. Some of those spouses have gone on to become naturalized U.S. citizens, but others remain non-citizens due to personal choice, immigration restrictions, or pending applications.
When a married couple consists of one U.S. citizen and one non-citizen, traditional estate planning strategies do not always apply. One major obstacle is the limitation on the marital deduction for estate and gift taxes. Typically, married couples who are both citizens enjoy the benefit of being able to transfer an unlimited amount of assets between themselves during life or at death without triggering estate or gift taxes. This is known as the unlimited marital deduction. Unfortunately, this benefit does not apply if your spouse is not a citizen. That can result in a hefty tax bill when assets are transferred after your death. In fact, up to 40 percent of the estate could be lost to federal estate taxes if the right planning measures are not put in place.
International estate planning also involves navigating differing laws between countries. A U.S. Last Will and Testament may not be fully recognized in your spouse’s country of origin. If your spouse maintains dual citizenship or owns property outside the United States, conflicts can arise when two legal systems attempt to claim authority over the same estate. These issues can lead to delays, litigation, and unintended disinheritance of family members.
Planning Strategies That Protect a Non-Citizen Spouse
Fortunately, Indiana residents have several options available to address these challenges. One strategy involves making use of the annual exclusion for gifts to a non-citizen spouse. As of 2025, you can transfer up to $190,000 per year to your spouse without incurring gift tax or reducing your lifetime gift and estate tax exemption. Over time, this approach can significantly reduce the size of your taxable estate and help ensure your spouse receives meaningful support.
Another important tool to consider is a Qualified Domestic Trust, or QDOT. A QDOT is a type of trust designed specifically for situations where one spouse is not a U.S. citizen. When you transfer assets into a QDOT, your non-citizen spouse can receive income generated by the trust without triggering estate taxes. The trust principal remains protected, and distributions from it can only be made under specific, limited circumstances, such as extreme financial hardship. This allows you to provide for your spouse while still preserving tax advantages that would otherwise be unavailable.
Assets remaining in the QDOT after your spouse’s death can be passed on to your children or other chosen beneficiaries. While estate taxes may eventually apply when the principal is distributed, using a QDOT defers those taxes and allows your spouse to maintain financial security in the meantime.
In addition to these strategies, some couples may benefit from reviewing international tax treaties between the United States and the spouse’s home country. Certain treaties contain provisions that can reduce or eliminate double taxation and offer more favorable treatment of cross-border transfers. An experienced attorney can help you determine whether such a treaty applies to your situation and advise you on how to take advantage of it.
Can We Help You Create an Estate Plan to Protect Your Non-Citizen Spouse in Indiana?
For more information, please join us for an upcoming FREE seminar. If you would like assistance creating an estate plan in Indiana that protects your non-citizen spouse, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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