An EB-5 green card can pull your entire worldwide estate into the US federal estate tax, which tops out at 40 percent. Domicile is the trigger. Once you move your family and your life to the United States, the IRS presumes you are domiciled here. From that moment every asset you own anywhere counts toward the taxable estate. Before you land, exposure is confined to US situs assets and the exemption is a fixed $60,000. That shift is the single largest tax consequence of EB-5 for a wealthy family, and it dwarfs the income tax question most investors ask about first.
Domicile is a state of mind that the IRS reads from your behavior
Income tax residency and estate tax domicile are separate tests with separate rules, and you can fail one while passing the other. For income tax, holding a green card makes you a resident from your first day of physical presence, as IRS guidance on determining an individual’s tax residency status explains.
Domicile works differently. Treasury regulations define it as living in a place with no present intention of leaving, and intention gets proved by facts: where your home is, where your family lives, where you are buried, where you vote, which country issued the driver license in your wallet. A green card holder who has genuinely relocated is presumed domiciled. Arguing otherwise after death is usually a losing position for the executor.
Note the asymmetry. Someone can be a non-resident for income tax and still be domiciled here for estate tax, and the reverse happens too. Both tests get run separately every time the family structure changes.
The $60,000 trap for anyone who dies before landing
A non-domiciliary receives a unified credit that shelters only $60,000 of US situs property. That figure is statutory and has not moved in decades, while the exclusion available to citizens and domiciliaries runs into the millions and is indexed for inflation. Consider what that means during the EB-5 wait. An investor from Mumbai who has wired $800,000 into a regional center partnership, bought a Miami condominium and not yet landed is sitting on a substantial US estate behind a $60,000 shield.
Death in that window is an expensive event, and the deadline arrives fast. Form 706 for a domiciliary, or Form 706-NA for a non-resident, falls due nine months after the date of death, with a six month extension available on request. An estate holding illiquid real estate and a locked up EB-5 partnership interest has a genuine cash problem at that point.
Which assets count as US situs?
Situs rules for non-domiciliaries are mechanical and occasionally counterintuitive. IRS material on the taxation of nonresident aliens is the starting point.
- US real property is always US situs. Holding it through a single member US LLC that is disregarded for tax purposes changes nothing.
- Shares in US corporations are US situs, whatever custodian holds them and wherever the certificate physically sits.
- Shares in foreign corporations are not US situs, even where the corporation owns nothing but American real estate.
- Deposits in US bank accounts unconnected with a US trade or business escape estate tax for a non-resident alien.
- Life insurance on the life of a non-resident alien is excluded, even where the insurer is American.
That foreign corporation rule is why offshore blocker structures exist. It is also why they get sold to people who should never buy one. A blocker that saves estate tax for a non-domiciliary becomes dead weight the day domicile attaches, and it can create income tax and FIRPTA problems costing more each year than the estate tax it was built to avoid. Any blocker put in place for the EB-5 wait needs an unwind plan drafted at the same time as the entry plan.
Where does the $800,000 EB-5 investment sit?
For a domiciliary the answer is easy. The limited partnership interest sits in the estate at fair market value like everything else, and if the project is mid construction when the investor dies, valuing it becomes an argument with the IRS.
For a non-domiciliary who dies before landing, the situs of a partnership interest is genuinely unsettled. The IRS has never issued clean guidance and practitioners argue for competing tests. Anyone who states the answer with confidence is selling something. Two practical responses exist: invest through a structure whose situs is unambiguous, or buy term life insurance sized to the exposure for the years the petition is pending. The Real Cost of EB-5: Fees and Expenses Beyond the Investment covers the other costs that stack up over the same period.
A non-citizen spouse and the missing marital deduction
Transfers to a surviving spouse normally pass free of estate tax without any limit. That deduction vanishes when the surviving spouse is not a US citizen, which describes most EB-5 couples throughout conditional residence and for years afterwards. Congress worried that a non-citizen widow would take the assets home and out of reach.
Two fixes exist. The surviving spouse can naturalize before the estate tax return is filed, which works when timing cooperates and is one more reason to track the five year path set out in EB-5 Citizen Pathway: Naturalization, Form N-400 and the 5 Year Rule. Failing that, the assets go into a Qualified Domestic Trust, which defers tax until the surviving spouse dies or takes principal out. A QDOT requires at least one US trustee, and where the trust holds more than $2 million the rules generally demand a US bank as trustee or a bond securing the tax. Neither route is cheap, and the annual administration cost runs for decades.
Gift tax works differently, and that is the opening
Non-domiciliaries pay US gift tax only on tangible property situated in the United States. Real estate and physical assets are caught. Shares in a US corporation escape, because they are intangible. This asymmetry is the most useful planning tool available before landing, and it closes the day domicile attaches.
In practice a wealthy investor can move appreciated foreign assets or US securities into a properly drafted non-grantor trust for the family while still a non-domiciliary, with no US gift tax. Make the same transfer afterwards and it eats into the lifetime exclusion or triggers tax outright. Timing decides everything here, which is why estate planning belongs in the same conversation as Pre-Immigration Tax Planning for EB-5 Investors: What to Do Before Landing rather than a separate one two years later.
Gifts to a non-citizen spouse are capped as well. The unlimited spousal exclusion that applies between citizens gives way to an annual ceiling indexed for inflation, generous by ordinary standards and small against a nine figure balance sheet.
Before you land, do these four things
- Value the whole balance sheet in dollars, foreign real estate and private company shares included, because the estate tax reaches all of it once domicile attaches.
- Complete gifts of intangibles while the US gift tax still ignores them.
- Review every foreign trust you already benefit from. Structures that work well in Hong Kong or Dubai frequently become US grantor trusts with punishing reporting.
- Line up annual compliance, because the FinCEN report of foreign bank and financial accounts and Form 8938 under FATCA both begin with your first resident year.
Treaties, and the countries that do not have one
The United States maintains estate and gift tax treaties with fewer than twenty countries. Those treaties can override situs rules, allocate taxing rights between two governments and sometimes give a non-domiciliary a pro rata share of the full US exclusion in place of the $60,000 floor. Germany, France, the United Kingdom and Japan are among the partners.
India and mainland China are not. Since those two countries supply a large share of EB-5 demand, most investors reading this get no treaty relief whatsoever. Planning happens under domestic law alone.
State estate taxes add a second layer
Around a dozen states levy their own estate tax on top of the federal one, and a handful more charge an inheritance tax, with thresholds far below the federal exclusion. Oregon starts at $1 million. Massachusetts starts at $2 million. Choosing where to settle carries an estate tax dimension that almost never surfaces when families compare school districts, and it interacts with the state income tax question examined in EB-5 for Retirement in the US: Florida, Healthcare, Taxes, Cost.
Leaving the US is also a taxable event
Handing back a green card stops being free once you have held it long enough. A long-term resident, meaning someone who was a lawful permanent resident in at least eight of the previous fifteen tax years, falls under the expatriation rules on surrender. Trip any of the income, net worth or compliance thresholds and you become a covered expatriate facing a mark to market exit tax on unrealized gains. A later gift or bequest from a covered expatriate to a US person is then taxed to the recipient at the top estate tax rate.
Eight years arrives sooner than families expect. An investor who lands in 2027 crosses that line during 2034, so the choice between naturalizing and surrendering wants making years earlier, alongside the questions covered in Maintaining Residency: Avoiding Green Card Abandonment and the USCIS guidance on maintaining permanent residence.