Excuse me for bringing up this topic again, just re-read the famous and great The $60’000 cap for US investments and am (still, again, more so) hating the US estate tax (having no ties with US myself). Basically as soon as you cross the 60’000$ threshold for US domiciled assets your heirs would have to go through the trouble of declaring to the IRS your exact worldwide assets - even if their tax bill will actually be zero if you inherit less than 11 million $. Effectively this leaves you with one of the following binary alternatives:
avoid US ETFs and instead stick to IE-ETFs, swallowing those higher TERs, swallowing the 15% L1WT on US stocks
I decided to read the posts better.
Somewhere @hedgehog shows that it doesn’t make sense for swiss or in switzerland. I don’t remember exactly. There is a tax treaty.
The rules are quite clear: (a) nothing to be done until 60’000$, (b) declare worldwide assets to IRS between 60’000$ and 11 million $, ( c) only above do you pay. So I guess to most of us it’s (b): nothing to pay, but you must declare (== lot of time needed).
Yes you are right but it seems to me you are considering the envelope of worst cases, say you get struck by a meteorite in the exact moment you reach 60’001 $ of US assets…
you can’t protect yourself by everything
2% dividend yield x 15% tax loss => 0.30% cost p.a. for the privilege of avoiding US funds, that’s a lot
You can buy a life insurance to cover 100% of your portfolio for less than that if you’re so afraid of dying. It’ll be cheaper and more money for your heirs
There’s also a third option, btw - swap-based funds, I think many of them (especially from LU) are engineered specifically to minimize tax losses, but you’d have to research yourself. Personally for me they don’t give quite offer the same peace of mind as simple, fully replicated and massively capitalized funds from trusted vendors like Vanguard. And I’m sure there’s no free lunch and there are some losses either way. (Besides, I work for yankees anyway and have more than $60k in RSUs so “below $60k” scenario doesn’t apply to me either way)
das «Form 706» ausfüllen müssen, ein 31-seitiges Formular. Die US-Steuerbehörde Internal Revenue Service verlangt innert einer Frist von neun Monaten nach dem Todesfall detaillierte Auskunft über alle Vermögenswerte des Erblassers – beispielsweise ist für jedes Kunstwerk im Wert von über 3000 $ eine Schätzung beizulegen. Es ist davon auszugehen, dass die meisten Leute diese Variante vermeiden möchten
(b) declare worldwide assets to IRS between 60’000$ and 11 million $, ( c) only above do you pay.
Sigh. USD 60k is an absolute number. The USD 11 Mio. is a relative one. It depends on US assets/total assets.
Let’s assume, your wealth is somewhat diversified on your last day:
House in Europe: 1 Mio.
Ireland ETFs: 1 Mio.
3a and Swiss Pension Fund: 1 Mio.
US ETFs: 1 Mio.
Total: 4 Mio., with 1/4 in US funds. The treaty limit is 11 Mio / 4 = 2.75 Mio.
Congrats, no taxes due.
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