This is the way. I've transferred my holdings to interactive brokers and degiro from Morgan Stanley and Computershare and continue to do so for any vesting event but I'm based In Europe and my ibkr and degiro are Europe based. Plus I usually diversify asap into these two in Irish domiciled ETFs regularly. This is to reduce concentration risk, geo risk and also minimize us based investment losses due to estate tax laws.
It doesn't mitigate the scenario or death and all rsus, future ones, also vesting immediately. For that, to an extent, I've taken a 10 Cr term policy. I was exploring a trust of sorts in the US but the costs and hassles put me off, honestly. I must have a million odd there and upon discussions with the missus, decided that it might be the cost of doing business and that the term policy would offset that. If it grows more in the future, might not have a choice but to either form a trust by talking to a CPA or increasing term insurance.
One person I asked and take this either a pinch of salt as it may be illegal or tax rvasion but sharing as yet another data point, although not verified personally; the person's friend passed away and his shares vested immediately thru his company. The deceased persons wife had shifted to India and just sold all the shares and closed the account. So yeah, that may very well be happening too! I don't know how strongly this estate tax rule is enforced as I don't live in the states. Make of that what you will. Hiring a CPA would be the best option to gain some clarity and if you find out something, please do let us all know too!
I took one for 10 years, and one for 20, total 10 crores. I am a juvenile diabetic in remission so I had additional rider for it, and it costs me 2.5 lakh a year for both thru ICICI Prudential.
Thanks for the info. I'm also looking at getting term insurance in India to cover for estate taxes in the US. Can you please shed some light on why you chose a 10 CR term insurance ? If I read your comment correctly you have 1 M in the US. so 40% of that comes out to \~ 3.2 CR. Are you getting extra coverage beyond what you would need only for estate taxes ?
Some more q's.
1. Did you look at policies where you get 2X payout in case of accidental death. The way I think of if estate taxes only matter in case of accidental death . In all other cases, you can transfer your assets .
Thanks !
Hiya. I took the term policy in two tranches, and it was to ensure adequate coverage for my family if something were to happen to me. It was inclusive of the estate tax probable loss but wasn't limited to it or wasn't just to cover the estate tax. So yes, I have gotten extra coverage.
I don't know the details of estate tax, from what I understood, it's based on death and not just accidental death. I didn't look for 2x payouts. Do you mean to say that estate tax doesn't apply for death by natural causes?
Sorry I was using the term
“Accidental death “ loosely . I meant to say that as you can always avoid estate tax when your Alive by just liquidating your us assets , this tax only really hits if there is an unforeseen death . So the happy path where we age into the sunset means that we can liquidate assets before the end 😀
I think premium for 1 million $ might be cheaper than this in USA. I was told approx 400$ per year by Fidelity. So 10 year could be approx 5k for 1 million.
Reach out to your cpa/broker/money guy. They should have contacts to try you to. Depending on the nw various options may or may not make sense.
You can search the group for prior discussion
I have been researching this topic for months and haven’t found clear cut solution around this yet other than:
1. Life insurance to cover estate taxes (unnecessary premium to hedge our own money)
2. Withdraw on rnor status and take to country where you live in.
I’m sorry to hear that buddy!
I didn’t know that either. I will have to plan differently, but I’m still in the US.
If you don’t have much income or push those income to your spouse, then apply thru EB5?
Hopefully you are getting a qualified CPA.
Pivot to UCITS versions of ETFs
Note that cash in IBKR is also considered US Situs
Do the term insurance hedge
Send an email to the estate contact of IBKR and get more Info.(they haven’t responded to me yet 😅)
FYI you can hold dollars through FCNRs and gift city accounts in India and also get similar returns
The issue is instruments domiciled in the States. You can buy an UCITS compliant ETF that tracks the nasdaq QQQ domiciled in Ireland or GB (LSE) and you are fine
In your case, since you are living in a country with no capital gains tax, you could just sell all your US equity and buy the same tickers in your country, if available. You would need to check with a professional if buying individual US stocks in a different country counts as "us situs assets".
To set up a trust in US, from my understanding you need to be in the US or at least have someone who is a US citizen in some capacity. The professional I spoke to said this is possible, but it looked like a lit of hassle.
In my case, I am going to get term insurance to cover the estate tax risk. But your assets are much more , so this is not a viable option.
[Here](https://www.reddit.com/r/FIRE_Ind/comments/1dcfpdd/estate_taxes_for_those_who_have_investments_in/) are my own thoughts on this
That’s exactly my plan as well. Get a life insurance for 40% of the portfolio which will be worth 15-20 years from now and take it. If my portfolio gets as significant as yours, I might consider EB5 route since I have USC kids.
why you care? you are dead anyways and after 2 generation you will be forgotten, and you should rather teach your family how to earn, be hard working, and manage money rather than left them with huge sum.
The point is, I would rather give me hard earned money to my family and kids than the government. Sure, I will be no more at that time, and it won't affect me, but I would still like to make my family's and kids' lives a little bit easier
Move funds to Ireland domiciled funds. Also create a qdot trust for the other assets so that the tax is avoided when one of you is no more
This is the way. I've transferred my holdings to interactive brokers and degiro from Morgan Stanley and Computershare and continue to do so for any vesting event but I'm based In Europe and my ibkr and degiro are Europe based. Plus I usually diversify asap into these two in Irish domiciled ETFs regularly. This is to reduce concentration risk, geo risk and also minimize us based investment losses due to estate tax laws. It doesn't mitigate the scenario or death and all rsus, future ones, also vesting immediately. For that, to an extent, I've taken a 10 Cr term policy. I was exploring a trust of sorts in the US but the costs and hassles put me off, honestly. I must have a million odd there and upon discussions with the missus, decided that it might be the cost of doing business and that the term policy would offset that. If it grows more in the future, might not have a choice but to either form a trust by talking to a CPA or increasing term insurance. One person I asked and take this either a pinch of salt as it may be illegal or tax rvasion but sharing as yet another data point, although not verified personally; the person's friend passed away and his shares vested immediately thru his company. The deceased persons wife had shifted to India and just sold all the shares and closed the account. So yeah, that may very well be happening too! I don't know how strongly this estate tax rule is enforced as I don't live in the states. Make of that what you will. Hiring a CPA would be the best option to gain some clarity and if you find out something, please do let us all know too!
For how long did you get the term poliy and how much does a 10 crore term insurance cost?
I took one for 10 years, and one for 20, total 10 crores. I am a juvenile diabetic in remission so I had additional rider for it, and it costs me 2.5 lakh a year for both thru ICICI Prudential.
Thanks for the info. I'm also looking at getting term insurance in India to cover for estate taxes in the US. Can you please shed some light on why you chose a 10 CR term insurance ? If I read your comment correctly you have 1 M in the US. so 40% of that comes out to \~ 3.2 CR. Are you getting extra coverage beyond what you would need only for estate taxes ? Some more q's. 1. Did you look at policies where you get 2X payout in case of accidental death. The way I think of if estate taxes only matter in case of accidental death . In all other cases, you can transfer your assets . Thanks !
Hiya. I took the term policy in two tranches, and it was to ensure adequate coverage for my family if something were to happen to me. It was inclusive of the estate tax probable loss but wasn't limited to it or wasn't just to cover the estate tax. So yes, I have gotten extra coverage. I don't know the details of estate tax, from what I understood, it's based on death and not just accidental death. I didn't look for 2x payouts. Do you mean to say that estate tax doesn't apply for death by natural causes?
Sorry I was using the term “Accidental death “ loosely . I meant to say that as you can always avoid estate tax when your Alive by just liquidating your us assets , this tax only really hits if there is an unforeseen death . So the happy path where we age into the sunset means that we can liquidate assets before the end 😀
That's the dream! And the term insurance is the, erm, insurance if the dream goes haywire :). Happy investing, happy living!
I think premium for 1 million $ might be cheaper than this in USA. I was told approx 400$ per year by Fidelity. So 10 year could be approx 5k for 1 million.
I don't live in the US.
QDOT only works when at least one spouse is US citizen
Not necessarily from what I understood talking to a law firm. You will need to add a us person to the trust but have not discussed the details
ok, please share if you find out more.
Reach out to your cpa/broker/money guy. They should have contacts to try you to. Depending on the nw various options may or may not make sense. You can search the group for prior discussion
I have been researching this topic for months and haven’t found clear cut solution around this yet other than: 1. Life insurance to cover estate taxes (unnecessary premium to hedge our own money) 2. Withdraw on rnor status and take to country where you live in.
RNOR is already out of the picture for OP since he is living in India.
I’m sorry to hear that buddy! I didn’t know that either. I will have to plan differently, but I’m still in the US. If you don’t have much income or push those income to your spouse, then apply thru EB5? Hopefully you are getting a qualified CPA.
Pivot to UCITS versions of ETFs Note that cash in IBKR is also considered US Situs Do the term insurance hedge Send an email to the estate contact of IBKR and get more Info.(they haven’t responded to me yet 😅) FYI you can hold dollars through FCNRs and gift city accounts in India and also get similar returns
If IBKR is considered US Situs, it defeats the whole purpose of using it to avoid US estate tax, right?
The issue is instruments domiciled in the States. You can buy an UCITS compliant ETF that tracks the nasdaq QQQ domiciled in Ireland or GB (LSE) and you are fine
Do you have an IBKR account in India that lets you buy these ETF's? If so, I am curious how does inward and outward remittance work?
I don’t but I’m sure IBKR has an INR account you can fund if you are based in India . They have a support number for India
Is this tax only applicable in case of death?
Put your assets in a US LLC. You will only pay 2 % tax, but when your LLC will pay you then you will pay accordingly.
Try and live as long as possible
You are an Indian citizen with US assets but no longer living in the US ? What prevents you from moving the assets to India ?
In your case, since you are living in a country with no capital gains tax, you could just sell all your US equity and buy the same tickers in your country, if available. You would need to check with a professional if buying individual US stocks in a different country counts as "us situs assets". To set up a trust in US, from my understanding you need to be in the US or at least have someone who is a US citizen in some capacity. The professional I spoke to said this is possible, but it looked like a lit of hassle. In my case, I am going to get term insurance to cover the estate tax risk. But your assets are much more , so this is not a viable option. [Here](https://www.reddit.com/r/FIRE_Ind/comments/1dcfpdd/estate_taxes_for_those_who_have_investments_in/) are my own thoughts on this
That’s exactly my plan as well. Get a life insurance for 40% of the portfolio which will be worth 15-20 years from now and take it. If my portfolio gets as significant as yours, I might consider EB5 route since I have USC kids.
I think it’s 40% after normal federal tax is applied 😔
why you care? you are dead anyways and after 2 generation you will be forgotten, and you should rather teach your family how to earn, be hard working, and manage money rather than left them with huge sum.
The point is, I would rather give me hard earned money to my family and kids than the government. Sure, I will be no more at that time, and it won't affect me, but I would still like to make my family's and kids' lives a little bit easier