STEP Israel

Trust and estate professionals from around the world recently gathered in Tel Aviv, Israel, for the 2019 STEP Israel Conference. The conference panels featured not only Israeli practitioners, but also top global professionals from the U.S., Canada, Europe and Asia.

EisnerAmper’s Karen L. Goldberg, who leads the trust and estate practice in the firm’s New York office, was a participant on a panel covering U.S. estate planning. She addressed the U.S. estate tax implications for U.S. residents who own property in Israel, as well as nonresidents who own property in the U.S.

Specifically, Karen discussed that a U.S. citizen/domiciliary is subject to U.S. estate tax on their worldwide assets, including any property in Israel, but only to the extent these worldwide assets exceed the current U.S. estate tax exclusion of $11.4 million (for 2019). In that scenario, the top 40% federal estate tax rate will apply. Further, if the property is left to a U.S.-citizen surviving spouse, it is eligible for the U.S. marital deduction which postpones the estate tax until the surviving spouse dies. If property is left to a non-U.S. citizen surviving spouse, to achieve this estate tax deferral, the property must go to a special trust called a Qualified Domestic Trust.

Karen also discussed that if a nonresident alien Israeli dies owning U.S. property, such as a residence or a business, that U.S. property will be taxable to the extent its total value exceeds $60,000, with the top 40% estate tax rate applicable once the property’s value exceeds $1 million. If the asset is real property, such as a condo (note: not a housing cooperative, which would be considered stock and intangible property) or tangible personal property located in New York (e.g., artwork, home furnishings), then the asset will also be subject to New York estate tax once its value exceeds $5,740,000 (in 2019) unless the property goes to the decedent’s surviving spouse as discussed above.

Finally, Karen discussed that if an Israeli has an investment account with U.S. securities, the heirs generally will not be able to access or trade the securities until a U.S. estate tax return is filed and all taxes due are paid. This is because the account custodian will require a transfer certificate issued by the various U.S. taxing authorities, evidencing that the estate tax has been paid or that no tax is due.

The conference provided much timely information regarding international developments relevant to high net worth individuals and trusts, as well as an opportunity to connect with professionals from around the world who practice in the private wealth arena.