Expatriation as an Out-of-Body Experience: Part IIExpatriation as an Out-of-Body Experience: Part II

In Part 1 of our article, which appeared in the November 2019 issue of Trusts & Estates, we began our discussion of the U.S. inheritance tax under Internal Revenue Code Section 2801, which can follow U.S. expatriates for many years after they leave the United States. Our article included some tips on how to plan for this dreaded tax. We’ll now offer some other strategies for helping clients, who have or are contemplating expatriation, avoid the tax. 

Transfers Subject to Tax

Before advisors can follow our suggestions, they must have a thorough understanding of which transfers are subject to the inheritance tax and which aren’t.

Transfers subject to tax. The most important term in IRC Section 2801 is “covered gift or bequest.” This term incl...