Non-Citizen, Non-Resident Options for Life InsuranceNon-Citizen, Non-Resident Options for Life Insurance

In Part I of this article (June 2018), we highlighted the recent tax act change that eliminated the retroactive check-the-box election by which advisors to a non-citizen, non-resident (NCNR) decedent with U.S.-based heirs previously were able to use a single foreign corporation (FC) to eliminate U.S. estate tax on assets owned by the FC, avoid controlled foreign corporation (CFC) and passive foreign investment company (PFIC) rules on such FC and achieve a basis step-up in the underlying assets by timing the election (a deemed liquidation of the FC) to the day before the death of the NCNR. The elimination of this provision in the 2017 Tax Cuts and Jobs Act, together with other changes, now requires advisors to recommend a far more complic...