CA Estate Planning for Non-Citizens

Short answer: A U.S. citizen can leave an unlimited amount to a citizen spouse free of federal estate tax, but that unlimited marital deduction does not extend to a spouse who is not a citizen. Lifetime gifts to a non-citizen spouse are capped instead of unlimited: for 2026 the annual exclusion for gifts to a non-citizen spouse is $194,000, compared with $19,000 for gifts to anyone else. The federal estate tax exemption itself, $15,000,000 per person for 2026, is available to citizens and to non-citizens who qualify as U.S. residents for tax purposes. Someone who is neither a citizen nor a U.S. resident is taxed under a separate, more limited set of rules, and a standard California trust plan is not built with that person in mind.

Estate planning guides are usually written assuming both spouses are U.S. citizens. If you or your spouse was born elsewhere and never naturalized, or one of you holds a green card while the other does not, some of the assumptions built into a typical plan stop working. The gap is not academic. It shows up in how much you can give each other during life and how a death is taxed.

Does the marital deduction still work if my spouse isn’t a citizen?

The unlimited marital deduction lets a decedent leave any amount to a surviving spouse free of federal estate tax. That deduction is written for transfers to a spouse who is a United States citizen. If the surviving spouse is not a citizen, at the time of death, the unlimited deduction is not automatically available, regardless of how long that spouse has lived in the United States or whether they hold a green card.

Congress built a workaround into the tax code: a Qualified Domestic Trust, or QDOT. Assets left to a non-citizen spouse through a properly structured QDOT can still qualify for marital deduction treatment, which defers the estate tax rather than triggering it immediately at the first spouse’s death. A QDOT is a drafting solution, not a substitute for planning. It needs to be set up correctly before the first spouse dies, not after.

The tax code also allows a separate marital planning tool, the QTIP trust, which lets a spouse control who ultimately receives trust assets (often children from a prior relationship) while still claiming marital deduction treatment on the first death. Citation: IRC section 2056(a) for the marital deduction generally, and IRC section 2056(b)(7) for the QTIP trust.

How much can I give my non-citizen spouse each year without gift tax?

Gifts between two citizen spouses are unlimited during life, with no gift tax consequence either way. Gifts to a non-citizen spouse are capped instead. For 2026, the annual exclusion for gifts to a non-citizen spouse is $194,000, well above the general annual exclusion of $19,000 that applies to gifts to anyone else, but still a real ceiling. A gift to a non-citizen spouse above $194,000 in a single year is a taxable gift that reduces the giver’s lifetime exemption and generally requires a gift tax return.

For families with one non-citizen spouse, spreading larger transfers across multiple years, using the $194,000 annual figure each year, is one of the more straightforward ways to move assets into the non-citizen spouse’s name over time without using up lifetime exemption.

What is my own exemption if I’m a citizen or a green card holder?

The 2026 federal estate and gift tax exemption is $15,000,000 per person, and it applies the same way to U.S. citizens and to non-citizens who qualify as U.S. residents for federal tax purposes, generally green card holders and others who meet the IRS residency tests. Citation: IRC section 2010(c). A married couple where both spouses are citizens or resident non-citizens can generally use both exemptions between them, including portability of a deceased spouse’s unused exemption where the executor files the required election on the estate tax return.

Does it matter if someone is a non-citizen who doesn’t live in the U.S.?

A person who is not a U.S. citizen and does not meet the tax law’s residency tests is taxed under a separate, considerably narrower set of rules than a citizen or resident non-citizen, and reaches only property connected to the United States, such as U.S. real estate or accounts at U.S. institutions. That regime is its own area of federal tax law, with its own filing requirements, and the numbers involved are not the same numbers that apply to a citizen or resident spouse. Anyone in this position, or married to someone in this position, needs a planning conversation built around their specific residency and citizenship facts rather than a generic California trust plan.

Does California law change any of this?

California has no state estate tax and no state inheritance tax. Citation: Revenue and Taxation Code § 13301. Every estate tax question for a California family, citizen or not, is a federal question. California’s community property system does matter for how assets are classified going into a plan. For a married couple’s community property, when the first spouse dies both halves of the asset, not just the deceased spouse’s half, generally receive a step-up in income tax basis to fair market value. Citation: IRC section 1014(b)(6). That basis rule applies the same way whether or not either spouse is a U.S. citizen, and it is a separate question from estate tax exposure.

Figures verified July 2026.

What to do next

If either spouse in your marriage is not a U.S. citizen, or if you are a non-citizen who does not live in the United States full time, do not assume a standard trust package covers your situation. Bring your citizenship status, your spouse’s citizenship status, and a rough list of what you own and where it is located to the first conversation with an estate planning attorney. From there, a QDOT, a gifting strategy built around the $194,000 exclusion, or coordination with a cross-border tax advisor may all be on the table, depending on the numbers.