Does US estate tax apply if I never lived in America?
It can. The charge follows the situs of the asset rather than the residence or nationality of the person who owned it, so someone who never set foot in the United States is within reach if the holdings are US-situs. The exemption available to a non-resident is much smaller than the one a US person receives, which is why an estate that would be unremarkable at home can produce a US charge here. The question is therefore not whether the deceased lived there, but what the deceased owned and where each holding sits.
Which of my assets count as US-situs for estate tax?
Situs is a property of the asset, not of the account that holds it or the currency it is denominated in. Real property in the United States is the obvious case. Shares in a US-incorporated company are commonly treated as US-situs even when the brokerage account holding them is outside the country, which is why a portfolio that never crossed the border can still be in scope. Other holdings sit outside it, and the distinction turns on the nature of the asset rather than on how the statement is addressed. Because the charge is on value rather than on gain, the schedule has to be built holding by holding before any exposure can be estimated.
Why is my US estate tax exemption smaller than an American's?
Because the two are different reliefs. A US person is measured against the exemption that system gives its own; a non-resident is measured against a much smaller one, applied only to the US-situs part of the estate. So the size of the worldwide estate can be irrelevant to whether relief is available while being highly relevant to how much US-situs value is exposed. Families usually discover the gap after a death, when the values are fixed and nothing can be reorganised. Where a treaty covers estate tax, a resident of the other country may have relief beyond the domestic exemption, but it is claimed on a filing rather than applied automatically.
Why will the broker not release my late father's US shares?
Custodians of US-situs assets commonly hold a position until they have evidence that the US side has been dealt with. That is how most families first learn this tax exists: not from a notice, but from a transfer that will not complete. The work is to establish the situs of each holding, quantify what is exposed, make the US filing the custodian is waiting on, and obtain the clearance it will accept. None of that sequence is triggered by a demand, so it does not begin unless the executor begins it, and the account stays frozen meanwhile.
Is US estate tax the same as an inheritance tax?
No, and the difference decides who bears it. An estate tax is charged on the estate, by reference to the value of what was held at death. An inheritance tax is charged on the person receiving. Canada takes a third route again: there is no estate tax, and death is instead treated as a disposition, so what is measured is the gain rather than the value of the holding. A family can therefore face a charge computed on value in one country and a charge computed on gain in the other, on the same shares, in the same week.
Does US estate tax reach a holiday home I own in the United States?
Real property in the United States is squarely US-situs, so owning a holiday home puts the question on the table. What follows is arithmetic rather than argument: the value at death enters the US-situs total, the non-resident exemption measured against that total is far smaller than a US person's, and the estate cannot be settled until the position is documented. It is worth establishing in advance how the property is held and what else in the estate is US-situs, because the choices that make a difference are all made while the owner is alive, and none of them are available afterwards.
Do non-residents pay US estate tax?
Yes, on US-situs assets — and with a far smaller exemption than a US citizen or domiciliary receives, which is why exposure can arise at values people assume are safe. US real property, tangible property located there and shares issued by US companies are generally in; foreign-issued securities and certain deposits generally are not. An estate tax treaty, where one exists, can improve the position considerably. See US estate tax for non-resident aliens.
Branch or subsidiary — which should we use to expand?
A branch keeps one taxpayer: results consolidate at home, losses are usable sooner, and the exposure is that the branch is a permanent establishment whose profit the host country taxes, sometimes with a branch tax on repatriation. A subsidiary is a separate taxpayer with limited liability and local rates, at the cost of withholding on dividends home and transfer pricing on everything between them. The deciding facts are usually expected losses, liability and exit plans. See branch against subsidiary.
