planning for foreign nationals

For producer use only.Not for distribution to the public.

PLANNING FOR FOREIGN NATIONALS

Andrea Valdez-Brandon, J.D., CLU, ChFCConsultant, Advanced Marketing


All solicitation and communication (including marketing materials) concerning the sale of the life insurance products, including all telephone, fax, or other electronic or delivered correspondence to a foreign national must take place in the U.S. For details, refer to “Growing Your Business Through the Foreign National Market, Guide to Foreign National Underwriting and Support (OLA 1871).

This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code. This material was written to support the promotion or marketing of the products, services, and/or concepts addressed in this material. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here.


Importance of Estate Planning for Foreign Individuals

Expanding global economy

Need for planning Impact of U.S.

transfer taxes


Breadth of the Market

Metropolitan Area % of Population that is Foreign Born

TOTAL U.S.A. 12.4%

Miami-Fort Lauderdale-Pompano Beach, FL 36.9%

Dallas-Fort Worth-Arlington, TX 17.7%

San Diego-Carlsbad-San Marcos, CA 23.0%

Los Angeles-Long Beach-Santa Ana, CA 34.6%

The foreign-born population includes anyone who was not a U.S. citizen or a U.S. national at birth.This includes respondents who indicated they were a U.S. citizen by naturalization or not a U.S. citizen. (U.S. Census Bureau, American Community Survey 2007 Subject Definitions).

Source: U.S. Census Bureau, 2005-2007 American Community Survey


Introduction to the Market

Non-U.S. citizens fall into 2 categories: Resident Aliens Non-Resident Aliens


Resident Aliens

Non-U.S. citizen with permanent U.S. home

Worldwide assets subject to U.S. estate and gift tax

Deprived of certain tax advantages available to U.S. citizens


Non-Resident Aliens

Only U.S. assets subject to U.S. estate and gift tax

Non-U.S. citizen with permanent home in another country


Estate Tax Comparison: RA vs. NRA

Resident Alien (RA) Non-Resident Alien (NRA)

Lifetime estate tax exemption

$5,000,000 $60,000

Estate tax rate 35% top tax rate 35% top tax rate

Unlimited marital deduction

Only if inherited assets are transferred to QDOT

Only if inherited assets are transferred to QDOT

Assets subject to U.S. estate taxes

All worldwide assets U.S. sitused properties, including most intangible properties*

* Intangible property includes stock in a U.S. corporation and interest in a U.S. partnership


Ideal Candidates

Non-Resident Aliens with significant U.S.-based assets

Married couples consisting of at least one non-U.S. citizen


Sample Fact Finding Questions

Sorting Out Citizenship and Residency Status

Are you and your spouse U.S. citizens?




Do you own a home in the U.S.?

Do you own a home in another country?




How much time do you spend in this country versus any other country?




Where are your friends and family located?




What is your immigration status?

Green card?


Indonesian National with Significant U.S. Assets

Wening Wulandari Indonesian national Widowed $10,000,000 in U.S. based

real estate and investments

What is Wening’s exposure to U.S. estate and gift tax?


Why Planning Is Important: NRAs

Wening Wulandari, Indonesian national, Non-Resident Alien$10 million in U.S. property and investments No advanced planning Death in either 2011 or 2012

Tentative Federal Estate Tax ($3,480,800) Less: Credit $13,000 Net Estate Taxes ($3,467,800) Net U.S. Assets $6,532,200

Estate Shrinkage = 35%


Gift Tax Comparison: RA vs. NRA

Resident Alien (RA) Non-Resident Alien (NRA)

Gift tax rate 35% 35%

Annual gift tax exclusion amount

$13,000 $136,000 for gift to

non-U.S. citizen spouse

$13,000 $136,000 for gift to

non-U.S. citizen spouseLifetime gift tax exemption amount

$5,000,000 None

Assets subject to U.S. gift taxes

All worldwide assets All U.S. sitused property including real property and tangible assets.* Intangible property is not included

* Tangible property includes cash, jewelry, paintings, automobiles



What is the value of your U.S.-based assets?



Did you know that the amount your children inherit may be reduced significantly due to

U.S. federal estate tax?



Will your children have enough cash to pay the estate tax bill

upon your death?


Non-Resident Alien

Wening Wulandari

Real estate & investments

CorporationWening’s Estate

Daughter SonDaughter

NRA with Significant U.S. Assets


Alternate Solution: Life Insurance

Non-Resident Alien

Wening Wulandari

*Female, 62, preferred nonsmoker

Real estate & investments

Wening’s Estate

NRA with Significant U.S. Assets

Lifetime Guaranteed Level Death Benefit*

Death benefit = $3.5 millionAnnual Premium = $54,430


Nonresident Aliens: U. S. Gift and Estate Situs Rules

* A gift of a life insurance policy on oneself may be subject to the IRC §2035 look back rule, and therefore may be subject to estate taxes if included within the decedent’s estate.

Type of property transferred

Subject to U.S. Gift tax

Subject toU.S. Estate tax

Real property located in U.S. Yes Yes

U.S. tangible personal property (i.e., cash, jewelry, paintings, automobiles) Yes Yes

U.S. intangible personal property (i.e., stocks in U.S. corp., interest in U.S. partnership)

No Yes

Ownership interest in a U.S. life insurance policy on the life of another No Yes

Ownership interest in a U.S. life insurance policy on oneself No* No


Mark and Anna, mid-60s Mark is a U.S. citizen Anna is a Swedish citizen

and Resident Alien

Non-citizen Married to Citizen



MarkU.S. Citizen

AnnaSwedish citizenResident Alien

No DeductionUnlimited Marital Deduction



Are you and your spouse U.S. citizens?



What is the value of your worldwide estate?


MarkU.S. Citizen Unlimited Marital

DeductionAnna

Swedish CitizenResident Alien



MarkU.S. Citizen Legacy Trust with

Life InsuranceAnna

Swedish CitizenResident Alien


Alternate Solution: Life Insurance


Why Transamerica?

Dedicated international underwriting team Access to experts & marketing materials Expand market

• No product limitations• Low or no minimum face amount*

Close more business• Best underwriting risk class generally available

* $25,000 minimum face amount for TransTermSM product.


Align with immigration and/or international tax attorneys

Do you have contacts in a U.S. immigrant community?

Partner with international banking and investment institutions

Are you fluent in more than one language?

Tapping Into the Foreign Nationals Market


Develop a champion client Do you live in a location with high foreign

national investment? Do you live in a resort/vacation destination?

Tapping Into the Foreign Nationals Market


Seizing the Opportunity

Review your book of business

Reach out to contacts that match the client profile

Strengthen and build your referral network


OLA 2119 0811

Transamerica Life Insurance Company (“Transamerica”), and its representatives do not give tax or legal advice. The material in this presentation is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here.

Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state or foreign laws and regulations upon clients and prospects. Clients should consult with and rely on their own legal and/or tax advisor to determine the consequences, if any, of owning or receiving proceeds from a Transamerica policy.

Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of August 2011.

planning for foreign nationals

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