Stockmarkets across the globe have been hitting record highs in 2020 despite you-know-what.
American markets have been soaring this year with the Dow Jones Industrial Average, NASDAQ, and the S&P 500 all hitting record highs.
With the Federal Reserve and other central banks printing trillions like it’s going out of style, money continues to flow into the markets. It’s almost certain that new record highs will be set in the near future.
Hopefully, you’ve experienced some of the boom and seen the value of your portfolio grow.
It’s prudent to protect yourself from a sudden crash (perhaps with some physical gold or silver).
But if you’re a non-US person with U.S. stocks, you need protection from something else…
… the IRS.
Under U.S. law, stocks of US-based companies are considered “U.S. property.”
As a result, non-US people who own U.S. stocks in their name are subject to U.S. estate tax.
Here’s an example:
Hans is an Austrian citizen who owns $1.5 million in U.S. stocks (such as Amazon, Apple, Google (Alphabet Inc.), Tesla, Microsoft, etc.). He plans to give all of their stock to his only child, Klaus.
Because Hans owns stocks in US-based companies, U.S. estate tax laws apply when Hans dies and bequeaths them to his son Klaus.
The U.S. government does allow for a small amount to be exempted from the estate tax – $60,000.
But everything above the exemption amount is subject to a 40% tax rate.
Let’s run the numbers for Hans and Klaus.
$1.5 million – $60,000 = $1.44 million that is subject to a 40% U.S. estate tax.
$1.44 million x 40% tax rate = $576,000 owed in taxes (paid by Hans’ estate)!
In the end, Klaus would only receive $924,000 (or 61.6%) of his $1.5 million inheritance.
Ouch!
At Esquire Group, we’re about finding solutions to keep more of what you’ve earned.
We created the U.S. Estate Tax Blocker Solution to help non-US citizens with U.S. stocks avoid the U.S. estate tax.
Thankfully, the solution is pretty simple.
You can avoid the U.S. estate tax by transferring your U.S. stocks to a foreign company – like a RAKICC company based in the United Arab Emirates.
By transferring your U.S. stocks to your RAKICC company, you are no longer the owner.
Your RAKICC company becomes the legal owner of the U.S. stocks.
You will only own shares in your RAKICC company – this is critical.
Because the RAKICC company is a non-US (i.e., foreign) corporation in the UAE, its shares are not considered “U.S. property.” As a result, you cannot be held liable for U.S. estate tax due to ownership of shares in a RAKICC company – even if that company owns U.S. stocks.
Plus, your RAKICC company is a foreign entity that exists perpetually. It doesn’t die. As a result, your RAKICC company is not subject to U.S. estate taxes.
Put simply; a RAKICC company shields your estate, your heirs, and your stocks from the U.S. estate tax.
Remember the example above?
The simple move of putting his stocks in a RAKICC company would save Hans’ estate $576,000 in taxes (or 38.4% of his $1.5 million portfolio).
Because of the U.S. Estate Tax Blocker Solution, Hans’ heir would receive the full $1.5 million inheritance rather than $924,000 – (assuming no estate taxes are owed in their home country)
How does that sound?
You can read more about RAKICC companies and the U.S. Estate Tax Blocker Solution by clicking here.