Estate Planning for Miami Residents with Foreign Spouses: Navigating International Complexities

Estate planning for Miami residents with foreign spouses is uniquely complex, requiring careful strategies to protect your family, minimize taxes, and ensure your wishes are honored. Miami’s international community often includes couples where one spouse is not a U.S. citizen, making it essential to understand the legal and tax implications of cross-border estate planning.

Why Estate Planning for Miami Residents with Foreign Spouses Is Complex

Unlike traditional estate planning for two U.S. citizens, estate planning for Miami residents with foreign spouses faces additional hurdles. The unlimited marital deduction, which allows married couples to transfer assets without incurring federal estate tax, does not automatically apply when the surviving spouse is not a U.S. citizen.

This can expose families to significant estate tax liabilities—up to 40% on amounts above the federal exemption—unless special planning tools are used.

Understanding U.S. Estate Tax Rules for Foreign Spouses

For Miami residents with foreign spouses, U.S. estate tax law is particularly strict. While U.S. citizens and residents are taxed on their worldwide assets, non-residents are only taxed on their U.S.-situs assets.

However, when a U.S. citizen leaves assets to a non-citizen spouse, the IRS limits the marital deduction due to concerns about assets leaving the U.S. tax system. As a result, any inheritance above the federal exemption ($13.61 million in 2024) may be taxed unless you implement specific strategies.

Using Qualified Domestic Trusts (QDOTs) in Estate Planning for Miami Residents with Foreign Spouses

A Qualified Domestic Trust (QDOT) is a crucial tool in estate planning for Miami residents with foreign spouses. A QDOT allows a U.S. citizen to transfer assets to a non-citizen spouse and still benefit from the marital deduction, deferring estate tax until distributions are made or the surviving spouse passes away.

To qualify, the trust must meet strict IRS requirements, including having at least one U.S. trustee and providing for tax withholding on distributions.

Key Benefits of a QDOT

• Defers estate tax until assets are distributed or the surviving spouse dies

• Protects family wealth from immediate tax liability

• Ensures compliance with U.S. tax law for cross-border families

Lifetime Gifting Strategies for Miami Residents with Foreign Spouses

Gifting during your lifetime is another effective strategy in estate planning for Miami residents with foreign spouses. However, gifts to non-citizen spouses are not unlimited. For 2024, the IRS allows an annual exclusion of $185,000 for gifts to a non-citizen spouse; gifts above this amount reduce your lifetime exemption.

Using this exclusion effectively can help reduce the taxable estate and transfer wealth efficiently.

Managing International Assets and Cross-Border Issues

Many Miami residents with foreign spouses own assets in multiple countries. Estate planning must account for:

• Different inheritance laws (such as forced heirship in some countries)

• Double taxation risks if both the U.S. and another country tax the same assets

• Foreign property ownership structures to minimize taxes and simplify transfers

Coordinating with legal and tax professionals in both the U.S. and the spouse’s home country is essential to ensure your plan is valid and tax-efficient in all relevant jurisdictions.

Choosing the Right Legal Tools for Estate Planning with Foreign Spouses

Irrevocable Trusts and Family Limited Partnerships

For high-value international estates, irrevocable trusts and family limited partnerships can provide additional asset protection, tax benefits, and control over how assets are managed and distributed.

These tools are especially useful for Miami residents with foreign spouses who own significant overseas property or business interests.

Coordinating with International Attorneys

Estate planning for Miami residents with foreign spouses often requires collaboration with attorneys familiar with both Florida law and the laws of other countries.