Download - Planning for Foreign Nationals
For producer use only.Not for distribution to the public.
PLANNING FOR FOREIGN NATIONALS
Andrea Valdez-Brandon, J.D., CLU, ChFCConsultant, Advanced Marketing
For producer use only.Not for distribution to the public.
All solicitation and communication (including marketing materials) concerning the sale of the life insurance products, including all telephone, fax, or other electronic or delivered correspondence to a foreign national must take place in the U.S. For details, refer to “Growing Your Business Through the Foreign National Market, Guide to Foreign National Underwriting and Support (OLA 1871).
This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here.
For producer use only.Not for distribution to the public.
Importance of Estate Planning for Foreign Individuals
Expanding global economy
Need for planning Impact of U.S.
transfer taxes
For producer use only.Not for distribution to the public.
Breadth of the Market
Metropolitan Area % of Population that is Foreign Born
TOTAL U.S.A. 12.4%
Miami-Fort Lauderdale-Pompano Beach, FL 36.9%
Dallas-Fort Worth-Arlington, TX 17.7%
San Diego-Carlsbad-San Marcos, CA 23.0%
Los Angeles-Long Beach-Santa Ana, CA 34.6%
The foreign-born population includes anyone who was not a U.S. citizen or a U.S. national at birth.This includes respondents who indicated they were a U.S. citizen by naturalization or not a U.S. citizen. (U.S. Census Bureau, American Community Survey 2007 Subject Definitions).
Source: U.S. Census Bureau, 2005-2007 American Community Survey
For producer use only.Not for distribution to the public.
Introduction to the Market
Non-U.S. citizens fall into 2 categories: Resident Aliens Non-Resident Aliens
For producer use only.Not for distribution to the public.
Resident Aliens
Non-U.S. citizen with permanent U.S. home
Worldwide assets subject to U.S. estate and gift tax
Deprived of certain tax advantages available to U.S. citizens
For producer use only.Not for distribution to the public.
Non-Resident Aliens
Only U.S. assets subject to U.S. estate and gift tax
Non-U.S. citizen with permanent home in another country
For producer use only.Not for distribution to the public.
Estate Tax Comparison: RA vs. NRA
Resident Alien (RA) Non-Resident Alien (NRA)
Lifetime estate tax exemption
$5,000,000 $60,000
Estate tax rate 35% top tax rate 35% top tax rate
Unlimited marital deduction
Only if inherited assets are transferred to QDOT
Only if inherited assets are transferred to QDOT
Assets subject to U.S. estate taxes
All worldwide assets U.S. sitused properties, including most intangible properties*
* Intangible property includes stock in a U.S. corporation and interest in a U.S. partnership
For producer use only.Not for distribution to the public.
Ideal Candidates
Non-Resident Aliens with significant U.S.-based assets
Married couples consisting of at least one non-U.S. citizen
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Sorting Out Citizenship and Residency Status
Are you and your spouse U.S. citizens?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Sorting Out Citizenship and Residency Status
Do you own a home in the U.S.?
Do you own a home in another country?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Sorting Out Citizenship and Residency Status
How much time do you spend in this country versus any other country?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Sorting Out Citizenship and Residency Status
Where are your friends and family located?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Sorting Out Citizenship and Residency Status
What is your immigration status?
Green card?
For producer use only.Not for distribution to the public.
Indonesian National with Significant U.S. Assets
Wening Wulandari Indonesian national Widowed $10,000,000 in U.S. based
real estate and investments
What is Wening’s exposure to U.S. estate and gift tax?
For producer use only.Not for distribution to the public.
Why Planning Is Important: NRAs
Wening Wulandari, Indonesian national, Non-Resident Alien$10 million in U.S. property and investments No advanced planning Death in either 2011 or 2012
Tentative Federal Estate Tax ($3,480,800) Less: Credit $13,000 Net Estate Taxes ($3,467,800) Net U.S. Assets $6,532,200
Estate Shrinkage = 35%
For producer use only.Not for distribution to the public.
Gift Tax Comparison: RA vs. NRA
Resident Alien (RA) Non-Resident Alien (NRA)
Gift tax rate 35% 35%
Annual gift tax exclusion amount
$13,000 $136,000 for gift to
non-U.S. citizen spouse
$13,000 $136,000 for gift to
non-U.S. citizen spouseLifetime gift tax exemption amount
$5,000,000 None
Assets subject to U.S. gift taxes
All worldwide assets All U.S. sitused property including real property and tangible assets.* Intangible property is not included
* Tangible property includes cash, jewelry, paintings, automobiles
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
What is the value of your U.S.-based assets?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Did you know that the amount your children inherit may be reduced significantly due to
U.S. federal estate tax?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Will your children have enough cash to pay the estate tax bill
upon your death?
For producer use only.Not for distribution to the public.
Non-Resident Alien
Wening Wulandari
Real estate & investments
CorporationWening’s Estate
Daughter SonDaughter
NRA with Significant U.S. Assets
For producer use only.Not for distribution to the public.
Alternate Solution: Life Insurance
Non-Resident Alien
Wening Wulandari
*Female, 62, preferred nonsmoker
Real estate & investments
Wening’s Estate
NRA with Significant U.S. Assets
Lifetime Guaranteed Level Death Benefit*
Death benefit = $3.5 millionAnnual Premium = $54,430
For producer use only.Not for distribution to the public.
Nonresident Aliens: U. S. Gift and Estate Situs Rules
* A gift of a life insurance policy on oneself may be subject to the IRC §2035 look back rule, and therefore may be subject to estate taxes if included within the decedent’s estate.
Type of property transferred
Subject to U.S. Gift tax
Subject toU.S. Estate tax
Real property located in U.S. Yes Yes
U.S. tangible personal property (i.e., cash, jewelry, paintings, automobiles) Yes Yes
U.S. intangible personal property (i.e., stocks in U.S. corp., interest in U.S. partnership)
No Yes
Ownership interest in a U.S. life insurance policy on the life of another No Yes
Ownership interest in a U.S. life insurance policy on oneself No* No
For producer use only.Not for distribution to the public.
Mark and Anna, mid-60s Mark is a U.S. citizen Anna is a Swedish citizen
and Resident Alien
Non-citizen Married to Citizen
For producer use only.Not for distribution to the public.
Non-citizen Married to Citizen
MarkU.S. Citizen
AnnaSwedish citizenResident Alien
No DeductionUnlimited Marital Deduction
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
Are you and your spouse U.S. citizens?
For producer use only.Not for distribution to the public.
Sample Fact Finding Questions
What is the value of your worldwide estate?
For producer use only.Not for distribution to the public.
MarkU.S. Citizen Unlimited Marital
DeductionAnna
Swedish CitizenResident Alien
Non-citizen Married to Citizen
For producer use only.Not for distribution to the public.
MarkU.S. Citizen Legacy Trust with
Life InsuranceAnna
Swedish CitizenResident Alien
Non-citizen Married to Citizen
Alternate Solution: Life Insurance
For producer use only.Not for distribution to the public.
Why Transamerica?
Dedicated international underwriting team Access to experts & marketing materials Expand market
• No product limitations• Low or no minimum face amount*
Close more business• Best underwriting risk class generally available
* $25,000 minimum face amount for TransTermSM product.
For producer use only.Not for distribution to the public.
Align with immigration and/or international tax attorneys
Do you have contacts in a U.S. immigrant community?
Partner with international banking and investment institutions
Are you fluent in more than one language?
Tapping Into the Foreign Nationals Market
For producer use only.Not for distribution to the public.
Develop a champion client Do you live in a location with high foreign
national investment? Do you live in a resort/vacation destination?
Tapping Into the Foreign Nationals Market
For producer use only.Not for distribution to the public.
Seizing the Opportunity
Review your book of business
Reach out to contacts that match the client profile
Strengthen and build your referral network
For producer use only.Not for distribution to the public.
OLA 2119 0811
Transamerica Life Insurance Company (“Transamerica”), and its representatives do not give tax or legal advice. The material in this presentation is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here.
Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state or foreign laws and regulations upon clients and prospects. Clients should consult with and rely on their own legal and/or tax advisor to determine the consequences, if any, of owning or receiving proceeds from a Transamerica policy.
Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of August 2011.