Estate planning in California is important for every married couple, but it becomes even more critical when one spouse is not a U.S. citizen. California’s community property laws and federal estate tax rules create unique challenges that can affect how assets pass to a surviving spouse.
Without careful planning, couples may face unnecessary taxes, legal complications and unintended consequences. Understanding the rules and using the right planning tools can protect assets and ensure a smooth transfer to heirs.
The federal estate tax applies to a person’s assets at death. For 2025, the federal exemption is $13.99 million per individual. Starting in 2026, the exemption increases to $15 million per individual, with future adjustments for inflation. U.S. citizens and lawful permanent residents (green card holders) can pass this amount to heirs without triggering federal estate tax. California does not have its own estate tax, so only federal rules apply.
Non-resident aliens face stricter rules. A non-citizen spouse without U.S. residency receives only a $60,000 exemption for U.S.-based property. Assets above that amount may be subject to U.S. estate tax, which can be costly.
The marital deduction allows one spouse to leave unlimited assets to the other without paying estate tax, deferring taxes until the second spouse dies.
If both spouses are U.S. citizens or one is a green card holder, the marital deduction applies fully.
If one spouse is a non-resident alien, the unlimited marital deduction does not apply. Assets must typically go into a Qualified Domestic Trust (QDOT), which lets the non-citizen spouse inherit while deferring estate tax until distributions are made or the surviving spouse dies.
California is a community property state, meaning assets acquired during marriage generally belong equally to both spouses. Community property also provides a step-up in tax basis when one spouse dies, reducing potential capital gains taxes if property is later sold.
If both spouses are citizens or green card holders, the survivor receives the full step-up in basis.
If one spouse is a non-resident alien, community property may not be recognized if the non-citizen is not domiciled in California. In this case, the step-up may not apply, increasing future taxes.
Without planning, couples with a non-citizen spouse may face immediate estate tax, loss of community property benefits and complications with foreign assets.
Key strategies include: Establishing a revocable living trust to avoid probate, using a QDOT trust to preserve marital deduction benefits, titling property carefully to maximize tax advantages and coordinating cross-border planning when assets are located outside the U.S.
Estate planning is not one-size-fits-all, especially when one spouse is not a U.S. citizen. Understanding the rules around estate taxes, marital deductions, and community property is essential. With proper planning, couples can protect their spouse, minimize taxes, and avoid unnecessary complications. Taking the time to plan now can save your family significant stress and financial burden in the future.
Send your questions to ccolan@colanlegal.com and use “Alpine Mountaineer estate planning question” as the subject. We’ll answer your questions in our upcoming issues. This article is provided by your local estate planning attorney, Corina Colan. The Law Office of Corina I. Colan / (909) 265-3315 / www.colanlegal.com
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