Estate Planning for Immigrants in New York

New York City has one of the largest immigrant populations of any city in the world — more than 3 million foreign-born residents. Many of them have built significant wealth here, own property, have children who are U.S. citizens, and may also have assets, family, and inheritance rights in their home countries. Standard estate planning advice assumes both spouses are U.S. citizens and all assets are in the United States. For immigrant families, that assumption is wrong in ways that can cost hundreds of thousands of dollars. Here's what you actually need to know.

The Most Critical Issue: Non-Citizen Spouses and the Marital Deduction

This is the issue that surprises immigrant families most. Under U.S. federal law, the unlimited marital deduction — which allows assets to pass between spouses free of estate tax — does not apply when the surviving spouse is not a U.S. citizen. This applies even if the non-citizen spouse is a lawful permanent resident (green card holder) who has lived in the United States for 30 years.

Here's the consequence: If a U.S. citizen husband dies and leaves a $5 million estate to his non-citizen wife, the entire bequest above the applicable exemption may be subject to federal estate tax — up to 40%. Without the marital deduction, the estate potentially owes over a million dollars in federal tax that would have been completely eliminated had the wife been a U.S. citizen.

The policy rationale: the government is concerned that a non-citizen surviving spouse might take the inherited assets and leave the country permanently, taking the deferred estate tax obligation with them. So Congress eliminated the deferred tax benefit for non-citizen spouses.

The QDOT Solution: Qualified Domestic Trusts

Congress did provide a solution for immigrant couples: the Qualified Domestic Trust (QDOT). If assets passing to a non-citizen spouse are held in a QDOT, the marital deduction is preserved — meaning no estate tax is owed at the first spouse's death. The QDOT must meet specific requirements:

• At least one trustee must be a U.S. citizen or a domestic corporation (such as a U.S. bank)
• No distribution of principal from the QDOT can be made without the U.S. trustee having the right to withhold the estate tax that would be owed
• The executor must elect QDOT treatment on the estate tax return
• For QDOTs with more than $2 million in assets, the U.S. trustee must be a bank or the QDOT must provide a security arrangement (bond or letter of credit) to secure potential future estate tax

Estate tax defers under the QDOT — it's not eliminated. When the surviving non-citizen spouse dies, receives principal distributions from the QDOT, or becomes a non-resident alien, estate tax is triggered on the QDOT assets. The strategy is to defer the tax until the second death, by which time the surviving spouse may have become a U.S. citizen (which eliminates the QDOT requirement entirely).

What Happens If You Don't Have a QDOT

If a U.S. citizen dies without a QDOT or other planning, leaving assets to a non-citizen spouse, the situation depends on the estate size:

• If the taxable estate is below the federal exemption (approximately $13.6 million in 2026), no federal estate tax is owed regardless of whether the spouse is a citizen — the exemption applies
• If the taxable estate exceeds the federal exemption, the amount above the exemption that passes to the non-citizen spouse is fully taxable — the marital deduction is not available
• The estate cannot elect QDOT treatment after the fact if the assets were already distributed outright to the non-citizen spouse — the QDOT must be established before or at the time of death

New York State follows the federal rule: the unlimited marital deduction is not available for non-citizen spouses. Given that the New York exemption is only $7.16 million in 2026, many immigrant couples with a home, retirement savings, and life insurance are in estate tax territory for New York purposes even if not for federal purposes.

The Annual Gift Tax Exclusion for Non-Citizen Spouses

The gift tax rules also differ for non-citizen spouses. The annual gift tax exclusion for gifts to a non-citizen spouse is substantially higher than the general annual exclusion — in 2026, it is approximately $185,000 per year (indexed for inflation). This is far more than the $18,000 annual exclusion for gifts to other individuals.

This elevated exclusion allows a U.S. citizen spouse to make substantial tax-free gifts to their non-citizen spouse during lifetime, which may be part of a broader strategy to equalize estate values, fund a QDOT, or reduce the taxable estate of the U.S. citizen spouse.

Estate Planning with an ITIN (No Social Security Number)

Many immigrants who are not yet authorized to work in the United States — or who are here on certain visa types — do not have a Social Security Number. They may have an Individual Taxpayer Identification Number (ITIN) issued by the IRS for tax filing purposes. An ITIN is not a Social Security Number, and it has no immigration status implications.

From an estate planning perspective, a person can execute a valid will, trust, power of attorney, and healthcare proxy regardless of their immigration status. New York doesn't require a Social Security Number to sign legal documents. The estate planning documents themselves are not immigration documents.

The challenge with ITINs arises in financial contexts: some financial institutions require a Social Security Number to open accounts, and the ITIN cannot be used for Social Security benefits. But for the purposes of will, trust, and incapacity planning, immigration status and ITIN status are not barriers.

Foreign Asset Reporting: FBAR and FATCA

If you're a U.S. person (citizen, green card holder, or resident for tax purposes) with assets in foreign bank accounts, investment accounts, or financial institutions, you have federal reporting obligations that many immigrants don't know about — and the penalties for non-compliance are severe.

FBAR (FinCEN Form 114)

If you have a financial interest in, or signature authority over, foreign bank accounts with an aggregate value exceeding $10,000 at any point during the calendar year, you must file an annual FBAR with the Financial Crimes Enforcement Network. The deadline is April 15, with an automatic extension to October 15.

Willful failure to file an FBAR can result in penalties of the greater of $100,000 or 50% of the account balance per violation. Even non-willful violations can result in $10,000 penalties per unreported account per year. The IRS has actively pursued FBAR enforcement for more than a decade.

FATCA (Form 8938)

In addition to FBAR, the Foreign Account Tax Compliance Act (FATCA) requires U.S. taxpayers with specified foreign financial assets above certain thresholds to report them on Form 8938, filed with their federal income tax return. Thresholds vary based on filing status and whether you live in the U.S. or abroad.

FBAR and Form 8938 overlap but are separate requirements with different thresholds and filing procedures. Both may be required for the same accounts. An attorney or CPA with international tax experience should review your foreign asset reporting obligations as part of your estate planning process.

Foreign Assets in Your Estate Plan

Immigrants often own property in their home countries — a family home, rental property, bank accounts, or business interests. These foreign assets create complexity in estate planning that standard domestic plans don't address.

A complete estate plan for an immigrant with significant foreign assets requires coordination between a New York estate attorney and counsel in the relevant foreign jurisdictions. Many clients assume that because they're planning in New York, their foreign assets will be handled automatically. They won't be, and failing to address them can create expensive and time-consuming problems for heirs.

Dual Citizenship Estate Planning

If you hold citizenship in both the United States and another country, your estate planning situation is shaped by both legal systems. Key considerations:

• U.S. estate tax applies to your worldwide assets if you're a U.S. citizen or resident, regardless of where the assets are located. Your citizenship in another country doesn't provide a U.S. estate tax exemption.
• The foreign country may also impose inheritance tax on assets located there — and potentially on assets located anywhere if the country taxes based on citizenship. A handful of countries, like Eritrea, tax their citizens worldwide regardless of residence.
• Tax treaties between the U.S. and foreign countries may provide credits or exemptions to avoid double taxation on the same assets. The U.S. has estate and gift tax treaties with approximately 15 countries, including France, Germany, the UK, Japan, Canada, Australia, and Italy. If your home country is one of them, the treaty terms need to be analyzed as part of your plan.
• Renouncing U.S. citizenship to avoid U.S. estate tax is an option — but it triggers an "exit tax" on the deemed sale of worldwide assets at the time of expatriation. For high-net-worth individuals, the exit tax can be substantial. This is rarely the right approach unless circumstances are exceptional.

New York Probate for Non-Citizens

Both citizens and non-citizens can own property in New York and have their estates administered through Surrogate's Court. When a non-citizen dies owning real property in New York, the New York Surrogate's Court has jurisdiction to probate a New York will or administer the New York portion of the estate under intestacy.

The process is essentially the same as for a citizen — with one key difference: if the decedent had assets in multiple countries, obtaining "ancillary letters testamentary" from each jurisdiction adds time and complexity. A properly structured trust, with real property titled in the trust rather than in the individual's name, can avoid the need for Surrogate's Court probate in New York and simplify the administration of a multi-country estate.

Our guide to estate planning in New York for 2026 provides a broader foundation for understanding how New York's estate planning system works. For the specific immigration intersection, our attorneys regularly work with clients from countries across Latin America, Asia, Europe, and the Caribbean on plans that address both their U.S. and international obligations.

For additional guidance on estate planning for non-citizens and immigrants in the New York area, the Morgan Legal NY estate planning resource page provides supplemental information on planning for diverse family structures and international considerations.